Page 62 - ASEAN BUSINESS AND INVESTMENT SUMMIT 2019

62 ABIS 2019

ASEAN-Japan Forum

“Towards 4 Industrial Revolution”
th

Regional Trade Transformation Seminar

Sustainable Financing SMEs in the 21 Century Seminar
st
ON SITE VISIT TO LEAVE A NEST

ON 27 – 29 MARCH 2019, TOKYO, JAPAN

Background

The 21 century brings opportunities that
st
can help SMEs overcome barriers to their growth
and expansion. Advances in technology and
digitalization have made it possible for more SMEs
to access global markets and supply chains. Lower
costs and more efficient ways of communicating,
getting information, producing goods, providing
services, marketing and distribution are enabling
SMEs to reach levels of competitiveness that a few decades ago were thought beyond their reach.
Many of today’s largest and most valuable companies spearheading the new industrial revolution
represent the new breed of successful enterprises that were mere start-ups only a generation, some
even just a few years ago.
Even though not all SMEs are destined to become future giants, a more dynamic SME sector
is critical for continued economic growth and job creation, especially in developing economies
seeking to avoid the middle-income trap. In order to promote this, it is important to address the
most difficult challenge facing SMES – access to finance. In most ASEAN economies, this means
addressing obstacles to the flow of financing to SMEs from the largest source of capital in the region
– traditional financial institutions. However, it also means enabling SMEs access to innovative finance,
whether provided by new players with new business models or by incumbent institutions that have
developed innovative services by themselves or in partnership with FinTech firms.
This approach requires actions on three fronts. First, it requires the development of effective
and efficient legal, regulatory and institutional ecosystems that will enable the traditional sources of
credit to expand their services to SMEs. These are the ecosystems for the use of credit information and
a wider range of collateral and for public-private collaboration to promote the financial sustainability
of SMEs. Second, it requires the modernization of legal and regulatory frameworks, in conjunction with
industry standardization, codes of conduct and self-regulation, to allow the wide-ranging adoption
of new technologies and the digitalization and automation of the financial services sector. Finally,
it requires the establishment of regional platforms for public and private sector collaboration and
regulatory sandboxes to promote financial innovation.