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Upgrading MSME Access to Finance in a Digital Age

Date 13/09/2017 - 21:27:00 | 160 views
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(MPI) – Under the framework of APEC 2017 SME Ministerial meeting, on September 11th 2017, the APEC SME Finance Forum: Leveraging technologies to scale up supply chain finance took place in Ho Chi Minh city.

Whole scene of the Forum. Photo: MPI

The Forum focuses on a review of the latest experience and lessons in SME finance innovations and discussion of more details the development and challenges of supply chain finance in the region. As a systematic way to reach out to SME clients by leveraging chain relationships and modern technologies, supply chain finance has found to be useful for integrating a great number of SMEs into the formal financial system. The 2017 Forum will bring together both finance and SME development policy-makers, industry practitioners and academic researchers, and come up with a set of recommendations.

SMEs account for approximately 97% of businesses in the APEC region but account for only 35% or less of direct exports. The Asia – Pacific Financial Forum (APFF) has done considerable work in financial infrastructure reforms (secured transactions, credit reporting and insolvency) as well as trade and supply chain finance in support of MSMEs. These need to be disseminated to the policy-making, financial institution and MSME communities through APEC Financial Infrastructure Development Network (FIDN) under APEC Viet Nam 2017. This project is designed to strengthen the understanding and cross-economy exchanges among the policy-makers and practitioners about the latest digital innovations and financial infrastructure reforms in the space of MSME finance. Activities will be done in collaboration with FIDN. As a key initiative under the Cebu Action Plan (CAP), FIDN was formally launched on November 12th 2015. The 2015 APEC Finance Ministers Meeting recognized that FIDN seeks to promote the development of effective credit information systems, secured transactions and insolvency frameworks that would provide a better foundation to enable financial institutions to support MSMEs. Further, the 2015 APEC Economic Leaders Meeting welcomed the establishment of FIDN under CAP, recognizing the importance of MSMEs’ access to finance as a key enabler for MSME growth, internationalization and productivity improvement.

This project will help to implement the Leaders’ instructions as it will contribute to increase access to financial services for MSMEs through public-private dialogues, cross-economy experience sharing and fertilization among policy-makers and market players on the relevant innovations and reforms in a digital age. Those digital innovations in lending and the associated reforms are happening in some APEC Economies but not yet in others. A wider exchange and promotion will be good for greater regional integration.

The main objectives of the project are providing a platform for open dialogues between the public and private sectors on the opportunities and challenges of access to financial services by MSMEs in Viet Nam and in the region under an increasingly digital context; further promoting modern secured transactions and credit reporting reforms in support of MSME finance; providing for networking and cross-fertilization among MSMEs experts from the public and private sectors across the region; linking the extensive work that APFF has completed on MSME financing and the many financial institutions that are members of APFF with the MSME community; advocating for the development of digital finance platforms which link up value chain players for financing purpose and can reduce transaction cost for the borrowers.

At the Forum, delegates believed that finance using non-traditional data, leveraging the electronic finance platforms, based on movable assets, etc. are the new ways to upgrade the MSME finance markets in APEC Economies./.

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