ADB : Asian SMEs need access to capital

ADB : Asian SMEs need access to capital

- The Asian Development Bank ( ADB ) in a recent report stating Small and Medium Enterprises ( SMEs ) in Asia , as the backbone of regional growth , need better access to capital to grow and prepare jobs .

" Most small units in Asia face problems in terms of financing , " said Deputy Head of ADB 's Office of Regional Economic Integration , Noritaka Akamatsu in the development of SME financing statement received here on Friday .

Noritaka explain SMEs need to develop a broader capital scheme that is from non-bank financial institutions , so as not to rely only on financing from the banking sector .

" SMEs need a broader financing scheme through option nonbank financial institutions , to support the financing of the banking sector , including the support of capital market sector potential , " he said .

ADB report describes the SMEs can be defined as a unit that has a small workforce with limited assets , contributing as much as 98 percent of the business activities and provides 66 percent of employment in the region .

However , SMEs accounted for only 38 percent of Gross Domestic Product ( GDP ) in the Asian region , which means there is great potential that can be used by the government to encourage higher economic growth through SME sector .

The report adds SMEs are still unable to compete with larger companies in obtaining capital from the banking sector , especially after the global financial crisis in 2008-2009 , due to concerns over risk and to maintain financial stability .

Although many governments have given birth to a comprehensive policy to support the growth of SMEs , but the focus is very urgent financing from banks , such as KUR in Indonesia and Thailand , capital schemes in Malaysia and Bangladesh as well as mandatory lending in the Philippines .

ADB report cited China's SMEs have contributed 50 percent of tax revenues , 60 percent of GDP and 80 percent for the urban employment . Alternative financing is available through the equity market in the Shanghai stock exchange , bonds SMEs and micro-credit firm .

The condition shows the situation of SMEs in China are different from other Asian countries , but further study is needed to find the relationship between the broader scheme of financing the growth of the SME sector .

Many things have to be pursued across the region , to realize the non-bank capital option as a national policy and maintain other options , such as the use of an asset-based financing and capital market instruments .

The ADB report includes data on SMEs in 14 countries , and stated that SMEs be one part of a global economic chain that can provide access to trade finance capital and innovative models for the integration of the global business environment .