How governments are reshaping SMB financial access and education in Asia Pacific
Financial inclusion is a critical factor for the growth and sustainability of small and medium-sized businesses (SMBs). With greater access to credit and financing options, SMBs will be able to drive business expansion, invest in new technologies, and manage operational costs effectively. The success of SMBs will stimulate local economies by hiring more employees and contributing to gross domestic product (GDP) growth.
Given the vast economic potential of SMBs, governments across Asia Pacific are focusing on several key areas to support financial inclusion. The areas include improving access to capital, ensuring more digital access to financial services, and elevating financial literacy. These initiatives are essential for creating an ecosystem where SMBs can thrive and contribute significantly to economic development.
Unlocking capital access with credit guarantee programs
One of the most impactful initiatives to improve SMB access to capital in Asia Pacific is the implementation of credit guarantee schemes (CGS). These schemes effectively mitigate default risk for lenders by sharing the burden, creating significant leverage through guaranteed loans. Additionally, they provide relief by absorbing a portion of losses incurred in the event of default. A notable example of this is the Alliance Bank Visa Platinum Business Credit Card, introduced in September 2024.¹ Developed in partnership between the Credit Guarantee Corporation (CGC), a Malaysian government-linked institution and Visa, it marks a significant advancement in financial solutions for SMBs in Malaysia.
The card is the first of its kind in the country to include CGC coverage, specifically designed to enhance financial flexibility for businesses that may struggle with collateral and credit history. This innovative product aims to ease day-to-day cash flow challenges by providing quicker access to funds. The application process is straightforward and requires minimal documentation, making it an accessible option for many SMBs.
Accelerating financial inclusion with technology
Governments in the Asia Pacific region are spearheading digital initiatives aimed at improving access to financial services, particularly through the integration of digital payment streams across various platforms. This integration encompasses technologies like QR codes and digital wallets, enhancing user engagement and convenience. A prime example is in Indonesia with the launch of the PROMISE II IMPACT (Promoting SME Enterprises through Improved Entrepreneurs’ Access to Financial Services) initiative in March 2023.² This collaborative effort between the International Labor Organization (ILO), Indonesia’s Financial Services Authority (OJK), and the Swiss State Secretariat for Economic Affairs (SECO) focuses on enhancing financial inclusion for SMBs.
PROMISE II IMPACT aims to create a supportive environment for SMBs by promoting digital technology adoption, improving access to finance, and strengthening the overall business ecosystem. The initiative simplifies access to financial resources, allowing entrepreneurs to leverage digital tools for improved productivity and market reach. As more SMBs adopt these digital solutions, they can tap into a broader customer base and enhance their competitiveness in an increasingly digital economy. This shift not only enhances sales opportunities but also reduces operational costs associated with traditional business practices.
Moreover, a number of governments across the region are establishing clear timelines for fully Open Banking standards, which support integration within the financial ecosystem. This encourages collaboration between traditional banks and fintech companies, leading to innovative payment and other financial solutions tailored for SMBs. For instance, partnerships between banks and fintech firms can result in integrated platforms that provide SMBs with access to financing options directly through their payment systems.
Upskilling SMBs for digital success
SMBs also need to be equipped with the right skills, which are often lacking. Governments here can play an important role by offering capacity-building programmes to fill this gap. These programmes empower SMBs with foundational digital financial literacy skills while enabling better access to financial services. One exemplary initiative is the SME Financial Empowerment (SFE) programme, launched by the Monetary Authority of Singapore in collaboration with the International Finance Corporation (IFC) and the United Nations Development Programme (UNDP).³ The SFE programme provides a structured curriculum that covers essential topics such as foundational financial literacy, international financial literacy, green financing, and understanding cross-border financial instruments.
Modules involving cross-border financial instruments are essential for SMBs looking to engage in international trade. By understanding these instruments, businesses can mitigate risks associated with currency fluctuations and navigate regulatory requirements in foreign markets. In addition, knowledge of green financing will help SMBs to prepare for environmentally friendly technologies and practices. As sustainability becomes increasingly important in business practices, this not only enhances SMBs’ competitiveness but also aligns them with global sustainability goals.
Programmes like SFE equip SMBs with the knowledge necessary to navigate the complexities of modern finance and participate effectively in the global economy. So far, 7,000 micro, small, and medium enterprises from 61 countries have benefited from SFE.⁴
As governments across the Asia Pacific implement innovative programmes to enhance financial inclusion, SMBs can take several steps to leverage these initiatives. For example, SMBs can gain valuable insights and open growth opportunities by engaging in government-led trials with new technologies like artificial intelligence.
Additionally, exploring government-supported, sector-specific digital transformation roadmaps will help SMBs remain competitive in an increasingly digital economy. SMBs can also plan for the future by leveraging trends like sustainability. By aligning their practices with government-led sustainability initiatives, they can better meet future demands while enhancing their corporate responsibility. Through active participation in these initiatives and embracing new technologies, SMBs can improve their prospects and accelerate their growth.
¹ Visa, Enabling Small and Medium-Sized Businesses (SMBs) with Access to Funding and Financial Education, 2024.
² International Labour Organization, Promoting SME Enterprises through Improved Entrepreneurs’ Access to Financial Services (PROMISE II IMPACT), accessed October 2024.