APEC delegates discuss hurdles to supply chain finance

International delegates take part in the APEC SME Finance Forum in HCM City. - VNA Photo Thanh Vu.

Nguyen Hoa Cuong, chair of the APEC SME Working Group and a senior official in the Ministry of Planning and Investment, said in his opening speech: “MSMEs stimulate domestic demand through job creation, innovation and competition, and are thus a driving force behind a resilient national economy. In addition, SMEs in global supply chains promote international trade.

“Prioritising SMEs’ development is therefore critical for promoting inclusive economic growth. This priority for APEC 2017 will help maintain important momentum to advance APEC’s work with regard to MSMEs.”

But lack of access to finance is a major barrier to their growth, he said.

“Given the diversified nature of SMEs, there is no one-size-fits-all solution for SME finance. However lending sophistication and the diversification of financing modalities can help SMEs access the right type of finance for their evolving needs along their growth path.”

Julius Caesar Parrenas, APFF coordinator, APEC Business Advisory Council, and senior advisor at the Japanese-based Nomura Research Institute, told Viet Nam News: “The traditional sources of finance have been banks, but it has been very difficult for SMEs to access finance through banks, mainly because most developing countries in the region do not have the financial infrastructure, a system to implement or credit information.

“And so from the point of view of banks, it is very difficult for them to lend to SMEs because of the risks involved due to the underdevelopment of the financial market infrastructure.

“Now that is being addressed and APEC is doing a lot about it, but in the meantime the question is: what are the sources we can tap to finance SMEs?

“And so we are looking at the innovation space. There has been a lot of innovation in the financial sector, which opens up a lot of opportunities for SMEs to access finance.”

At the first session of the forum, titled “Challenges of SME finance and the recent innovations around the Asia Pacific region”, speakers reflected on the difficulties faced by SMEs in obtaining funding and took stock of significant recent innovations in the region, especially in digital finance, and discussed the associated challenges.

How to organise and optimise receivables and inventory finance by leveraging the chain relationships and the role of supply chain finance in the SME finance market were also highlighted.

A session on “Scaling up supply chain finance to strengthen SME competitiveness and innovation” reviewed the developments in supply chain finance in the Asia-Pacific region.

It discussed the main lessons from developing a sustainable and inclusive supply chain finance market, the value-addition that supply chain finance provides in building competitive eco-systems, whether supply chain finance benefits SMEs to the desired extent, how supply chain finance can be best used to strengthen SME competitiveness and innovation, and how APEC economies can leverage more cross-border supply chain finance to deepen regional economic integration.

At another session on “Developing electronic supply chain finance platforms in the digital age”, delegates discussed the increasing movement of supply chains online together with their financial institutions, as a result of which electronic supply chain finance platforms have emerged strongly in some markets.

They also discussed if these platforms have fulfilled their promises in general, made supply chain finance easier and cheaper for SMEs with the digital channels and helped more SMEs participate effectively in global and regional supply chains.

The last part of the forum, a panel discussion, considered the way forward and what more could be done to promote the development of supply chain finance and electronic supply chain finance platforms.

Delegates heard that these could involve further policy and regulatory reforms and sector capacity building or at the level of specific supply chain finance providers.