SMEs need quick access to funds

Leo Kasim
BANDAR SERI BEGAWAN

LOCAL small and medium enterprises (SMEs) need an ecosystem which gives them quicker access to finance and will allow them to scale their operations.

According to Haslina Taib, APEC Business Advisory Council (ABAC) member for Brunei, local SMEs often have difficulty getting funds on time or are constrained by the lack of market opportunities within local borders.

She said SMEs in regional countries such as Indonesia and the Philippines are often funded privately by venture capitalists (VCs) or angel investors resulting in less administrative burden.

But in Brunei, most funding come from the government. SMEs have to go through a more complex administration of funds.

“So there needs to be a policy or process that allows private sector to get a license to operate funding in Brunei,” she told The Brunei Times.

Haslina, who is also co-chair of the ABAC SME working group, said it is important for government process to be simpler to attract more VCs and angel investors into the country.

She said the private investors could be given licences to run their investment operations while the government monitors their business dealings.

Such a system will limit SMEs expectations of getting government funding and give them quick access to much needed funds.

“At this stage, we need them (VCs and angel investors) more than they need us,” she said.

Haslina said the system should be based on an open market where the investors provide not just financing but also business links.

For their part, SMEs would promote their products and services to win investors over.

Alternative financing needs to function in an environment where it is not overburdened by regulation, she said, adding that SMEs would also need to have the idea of being financed by alternative means “embedded” in them.

Hafimi Abdul Haadi, another ABAC member, said SMEs often do not have business models that fit the criteria of conventional financing methods provided by banks.

“When you innovate, you can only see results only when you’ve done it. So most SMEs come up with a business model that does not really equate to what is going to happen in the future,” she said.

She said this makes alternative financing from VCs important to SMEs which are developing their products. In 2014, ABAC reported the total unmet need for credit by SMEs globally is about US$2.1 trillion ($2.91 trillion) to US$2.5 trillion.

In its report entitled “APEC Framework for Innovative SMME Financing Mechanisms”, ABAC said East Asia faces a credit gap in the range of US$900 billion to US$1.1 trillion while South Asia sees a gap of up to US$370 billion.


Sumber - The Brunei Times