APEC Building Financial Sector into Catalyst for More “Inclusive Economies”
New joint measures were taken forward during a four-day assembly of APEC finance officials that just concluded in Tagaytay City, Cavite, the Philippines, 55km south of Manila. Among the priorities include boosting access to capital and markets, particularly for small businesses which account for over 97 per cent of firms and half of employment in APEC economies but only 35 per cent or less of their direct exports.
“Opening up opportunities for a greater number of people and businesses can go a long way to address economic imbalances and improve growth,” said Philippine Treasurer Roberto Tan during the APEC Finance and Central Bank Deputies' Meeting tasked with engineering a regional plan for action. “An enabling financial sector that is sufficiently integrated, transparent and shock-resistant, and meets changing infrastructure needs, is part and parcel to building inclusive, resilient economies and what we are working towards in APEC.”
Focus is on developing and linking credit information bureaus among APEC economies to provide readily available credit information on potential borrowers and allow for easier analysis of risks and faster financing access—benefiting micro, small and medium enterprises, including manufacturing suppliers and service providers, that may not have an established credit history. At present, only seven, or one third of all APEC economies, have a bureau in place.
Emphasis is also on the development and linkage of movable collateral registries in the region to create transparency and security in lending transactions, and further enhance access to finance. Eleven APEC economies currently have a registry operational though moveable assets account for about 80 per cent of capital stock for micro, small and medium enterprises, according to World Bank estimates.
“Levelling the playing field for small businesses in many ways begins with greater access to financial services essential to get off the ground and develop,” explained Gil Beltran, Philippine Undersecretary of Finance and chair of the meeting which built on inputs from an earlier public-private dialogue on financial inclusion. “We want to position more firms to participate in cross-border trade and supply chains—a centerpiece of the action plan we are now developing for the financial sector to strengthen our economies.”
Fiscal transparency and policy reform is a further point of emphasis. The aim is to heighten scrutiny of tax expenditures and efficient use of government resources for development priorities, including infrastructure needed to reduce the time, cost and uncertainty of moving people, goods, services and capital around the region, and provide added relief to resource-strapped small businesses. The publication of tax expenditure, fiscal risk statements and scaling up public investment are among the measures on the table.
New efforts to facilitate public-private partnership (PPP) infrastructure projects are also underway, drawing on recommendations generated here during a meeting of APEC’s PPP Experts Advisory Panel. This includes the standardization of PPP project terms and practices to improve negotiation and structuring, as well as the creation of a “one-stop-shop” information portal to make project development easier and increase the rate of their successful completion, in coordination with the Asian Development Bank and International Finance Corporation.
“The more small businesses and aspiring entrepreneurs tap into the resources and markets needed to take advantage of trade and investment opportunities, the better off the sector and economies writ large will be,” concluded Dr Alan Bollard, APEC Secretariat Executive Director. “Taking financial inclusion and connectivity to the next level in the Asia-Pacific will be key to unlocking new growth that benefits more of the region’s three billion people and puts the global economy on more solid ground.”
APEC Finance Ministers will review progress and decide the next step when they meet on 9-11 September in Cebu, the Philippines. It will help set the tone for further policy cooperation during the APEC Small and Medium Enterprises Ministerial Meeting on 21-25 September in Iloilo, the Philippines.
For more:
Learn more about APEC member economies’ joint initiatives to strengthen small and medium enterprises at this link.
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