Small- and medium-sized enterprises (SMEs) are the backbone ofAsia’s economies, but they need better access to finance to grow andgenerate badly needed new jobs for the region, the Asian DevelopmentBank (ADB) said in a new report.
"Most of Asia’s smaller firmsare faced with difficulties in obtaining finance,” said NoritakaAkamatsu, Deputy Head of ADB’s Office of Regional Economic Integration,which produced the inaugural edition of Asia SME Finance Monitor,released on April 4.
“SMEs need to be able to tap a wider rangeof nonbank financing options in addition to bank loans, includingcapital markets if they are to realise their potential,” the ADBofficial added.
SMEs - defined differently in differentcountries but generally with a small workforce or low assets - make up98% of all businesses and provide jobs for 66% of the labor force inAsia, but they represent only 38% of the region’s gross domestic product(GDP), indicating that governments can boost economic growth bydeveloping SMEs.
However, small firms have trouble getting thefinance they need to grow. They lose out to larger companies where bankloans are concerned, particularly with banks cutting back their lendingto SMEs in the wake of the 2008-2009 global financial crisis as theyavoided risk and sought financial stability.
Although manygovernments have developed comprehensive policy frameworks to promoteSME growth, most measures focus on helping SMEs get loans from banks,the report said.
It added that more needs to be done acrossthe region to incorporate nonbank financing options into nationalpolicies and nurture other options, such as increased use of asset-basedfinance and capital market instruments.
The report, whichincludes data on SMEs in 14 countries in the region, found that as theworld economy becomes increasingly interlinked, SMEs that are part ofintricate global supply chains will need access to further tradefinance, supply chain finance, and innovative funding models that enablethem to expand their business globally.
The new report is beinglaunched in tandem with a joint ADB-OECD study on SME access tofinance, which looks at lessons for the industry from the 2008-2009global financial crisis and Europe’s sovereign debt troubles.-VNA
"Most of Asia’s smaller firmsare faced with difficulties in obtaining finance,” said NoritakaAkamatsu, Deputy Head of ADB’s Office of Regional Economic Integration,which produced the inaugural edition of Asia SME Finance Monitor,released on April 4.
“SMEs need to be able to tap a wider rangeof nonbank financing options in addition to bank loans, includingcapital markets if they are to realise their potential,” the ADBofficial added.
SMEs - defined differently in differentcountries but generally with a small workforce or low assets - make up98% of all businesses and provide jobs for 66% of the labor force inAsia, but they represent only 38% of the region’s gross domestic product(GDP), indicating that governments can boost economic growth bydeveloping SMEs.
However, small firms have trouble getting thefinance they need to grow. They lose out to larger companies where bankloans are concerned, particularly with banks cutting back their lendingto SMEs in the wake of the 2008-2009 global financial crisis as theyavoided risk and sought financial stability.
Although manygovernments have developed comprehensive policy frameworks to promoteSME growth, most measures focus on helping SMEs get loans from banks,the report said.
It added that more needs to be done acrossthe region to incorporate nonbank financing options into nationalpolicies and nurture other options, such as increased use of asset-basedfinance and capital market instruments.
The report, whichincludes data on SMEs in 14 countries in the region, found that as theworld economy becomes increasingly interlinked, SMEs that are part ofintricate global supply chains will need access to further tradefinance, supply chain finance, and innovative funding models that enablethem to expand their business globally.
The new report is beinglaunched in tandem with a joint ADB-OECD study on SME access tofinance, which looks at lessons for the industry from the 2008-2009global financial crisis and Europe’s sovereign debt troubles.-VNA
