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    Meeting Small Firms' Trade Finance Needs


    © International Trade Centre, International Trade Forum - Issue 4/2005

    Photo: ADFIAP Standing, left to right: Y.B. Tan Sri Nor Mohammed Yakcop, Finance Minister II of Malaysia, and Ybhg. Datuk Zamani Abdul Ghani, Deputy Governor, Malaysia Central Bank. Seated, left to right: Ambassador Jesus P. Tambuting, ADFIAP Chairman, Dato Md Noor Yussof, ADFIM Chairman, and Carlo F. Cattani, ITC.

    Lending institutions in Asia and the Pacific are exploring how to meet small exporters' financing needs in a new initiative spanning 27 countries.

    Small businesses are the backbone for sustainable growth and jobs in developing countries. Access to credit for business start-up and development, however, remains difficult for most. Banks and other financial service providers, used to dealing with larger firms, rarely have the knowledge to assess the potential and evaluate risk areas of small companies.

    ITC, together with the Association of Development Finance Institutions of Malaysia (ADFIM) and the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), which represent 56 organizations from 27 countries, launched an Asia-Pacific Small and Medium Enterprises Finance Initiative to improve small firms' access to trade finance in the region.

    Lenders: build expertise in SME needs

    The three agencies launched the initiative during the International Chief Executive Officer Forum of Development Financing Institutions (CEO Forum) held in Kuala Lumpur in September 2005. Preparatory discussions for the conference had revealed the lack of specialized institutions for small and medium-sized enterprises (SMEs). Opening the Forum, Malaysia's Finance Minister II also announced the restructuring of the country's banking sector and the creation of an "SME Bank", the first of its kind in Malaysia. The initiative consists of:

    • The CEO Forum, an annual business networking event where chief executives from finance institutions in the Asia-Pacific region share experiences and meet experts from other regions.

    • The SME Finance Initiative Portal (to be launched shortly), a web site containing a list of active members, resources available for financing small firms, a roster of experts, best financial products and practices, information on training and specialized analysis.

    • The SME Training and Advisory Centre (opening early in 2006), which helps members to strengthen their skills in banking for small firms.

    The SME Finance Initiative is backed by Asian financial institutions committed to building their expertise so they can shift from traditional lending criteria, based on heavy collateral, to more flexible processes, targeted to small firms. The initiative aims to become a centre of excellence and reference for SME banking in the Asia-Pacific region by providing development finance institutions with training, information, management tools and networking opportunities with related organizations.

    For more information, see the ADFIAP web site (http://www.adfiap.org) or contact Carlo Federico Cattani, ITC Senior Adviser on Trade Finance, atcattani@intracen.org