Page 65 - ASEAN BUSINESS AND INVESTMENT SUMMIT 2019

ASEAN Business & Investment Summit 2019 65

Financial Inclusion Driven by

Digitalization Trade and Supply Chain

Next Generation Credit Information

ON 17 – 18 JUNE 2019, BANGKOK, THAILAND

In most emerging markets, small and medium enterprises, or SMEs, lack access to the credit
and liquidity they require for their daily working capital needs. This is partly due to the fact that
the credit risk of such businesses is typically difficult to assess, and their working capital needs are
unpredictable. In most countries, these businesses operate primarily in the retail and wholesale trade
segments, and banks have generally not done enough to finance their domestic or international
trade operations, especially open account transactions. Supply chain finance structures offer an
alternative solution to finance the trade flows of these enterprises, with benefits for all stakeholders,
including large enterprises, their SME trade counterparts, and financial institutions. This type of
financing helps banks extend working capital finance to SMEs by leveraging commercial and trust
relationships between the SMEs and the corporates; it helps large corporates improve their working
capital management and decreases supply chain disruptions; and it enables banks to better
assess, measure, and manage risks of extending financing to SMEs. However, unavailability of data,
fragmented data, and incomplete credit bureau coverage of MSMEs is an important bottleneck
inhibiting the flow of formal financing to the MSME sector.
A robust credit information framework provides the basis for fact-based. The 21 century
st
brings opportunities that 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.