MANILA - While the Association of Southeast Asian Nations (ASEAN) has available programs and pushing for policies that will boost micro, small, and medium enterprises (MSMEs), the region needs to introduce more financial and technical support to MSMEs, an ASEAN study said.
The report “Towards Inclusive and Sustainable Growth in the ASEAN Economic Community” launched at the ASEAN Inclusive Business Summit Wednesday highlighted that greater financial and technical support to MSMEs will ensure growth and prosperity in the region.
The report is a joint project of ASEAN Business Advisory Council, ASEAN CSR Network, Oxfam, and Asian Venture Philanthropy Network, and is funded by Rockefeller Foundation and the Government of Sweden.
According to the study, despite the availability of financing options for MSMEs, the sector’s uptake to these financial facilities remains generally low.
“Loan applications typically facing rejection due to incomplete financial records, small sized enterprises, non-participation in production networks, and lack of sound business plans,” it noted.
It also indicated that primary sources of finance for MSMEs are own savings and funds from family and friends.
Moreover, the report said limited technical competencies are considered as major barrier of MSMEs to access external finance.
“While ASEAN member states have extended technical support to MSMEs primarily in the form of advisory centers, such effort needs to be reinforced to equip MSMEs with hard business skills,” the study stated.
To address these challenges, key recommendations for the ASEAN including strengthening collaboration between large companies and MSMEs; deepening technical support like training on hard business skills and strengthening entrepreneurial network for MSMEs; promoting alternative finance with emphasis on inclusive financing options; providing targeted support to improve access to finance for women; and promoting responsible finance.