05 November 2013

Financing the SME Value Chains

Financing SMEs in Asia: proposed framework to allow formal lending organisations to compete with alternate sources of finance.

Asia’s economic miracle is often associated with large, multinational companies. While these organisations have been important drivers of the region’s growth, small and medium enterprises (SMEs) accounting for more than 98% of the enterprises have played a key role. These SMEs contribute around 40% to their country’s GDP in the ASEAN region. In developed nations such as the USA, UK, France and Singapore, SMEs contribute more than half of their country’s GDP.

Addressing SMEs’ needs for finance, it is assessed that formal financial lending organisations represent a weak link in the financial supply chain for SMEs in the region. The problem also hinders the physical supply chain in that SME’s are key drivers of business growth in the region. This paper, “Financing the SME Value Chains”, proposes a framework for financial lending to allow formal lending organisations to compete with the alternate sources of finance SMEs seek.

by Asad Ata, Mahender Singh, Manish Shukla

  • MISI (Malaysia Institute for Supply Chain Innovation)