Handbook of APEC Webinar on Relieving MSMEs’

Transcript:Handbook of APEC Webinar on Relieving MSMEs’:
Handbook of APEC Webinar on Relieving MSMEs’ Financial Difficulties in the Next Normal: Access to Finance and Credit Mediation Hosted by the Office of SMEs Promotion (OSMEP), Thailand on March 24, 2022 Agenda Background: pain point of MSMEs access to finance and credit mediation What is credit mediation? Case study: success case EU and APEC member economies Policy recommendations Background: pain point of MSMEs access to finance and credit mediation 40% of MSMEs in developing economies have unmet demand for financing, and this demand gap is reported to be the highest in Asia-Pacific. MSMEs as informal businesses tend to have insufficient records to apply for formal credit, as well as have inadequate management experiences. These problems are structural in nature and not the consequences of COVID-19. Financial institutions would likely find it risky to lend to MSMEs in view of their low value-added products and services, as well as small asset size. MSMEs’ lack of standardized fixed asset, especially liquid asset, exacerbates the risk profiles further. Furthermore, not all firms can access government support for financing. Smaller and younger firms tend to face greater challenges and receive less government support. Agenda What is credit mediation? Background: pain point of MSMEs access to finance and credit mediation Case study: success case EU and APEC member economies Policy recommendations What is credit mediation? Credit mediation schemes and credit review mechanisms are typically characterized by a mandate to facilitate information exchange between prospective lenders and borrowers, as well as to advise entrepreneurs on supporting services, monitoring of credit markets and reporting to competent authorities. Conduct independent assessments, submitted to the Financial Institutes (FIs) Facilitating communication between firms and the FIs Engaging professional networks and local institutions Informing the parties about guarantees and public support measures Why Credit mediation? To overcome information asymmetry between FIs and MSMEs Relatively low-cost interventions for governments: government bodies work as facilitators Credit mediation process Source: OECD Agenda Case study: success case EU and APEC member economies Background: pain point of MSMEs access to finance and credit mediation What is credit mediation? Policy recommendations Case study: success case EU and APEC member economies The case of France and Ireland Case study: success case EU and APEC member economies The case of Indonesia Indonesia has successfully improved MSMEs’ access to finance by targeting accommodative regulations and incentives to the supply side. To enhance MSMEs’ financial capability, the member economy government