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SMEs Financing & Financial Policy SET AUNG 20 th December 2014 Picture sources: blogs.sap.com, pixgood.com.

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Presentation on theme: "SMEs Financing & Financial Policy SET AUNG 20 th December 2014 Picture sources: blogs.sap.com, pixgood.com."— Presentation transcript:

1 SMEs Financing & Financial Policy SET AUNG 20 th December 2014 Picture sources: blogs.sap.com, pixgood.com

2 SMEs Problems Multidimensional problems (not just access to finance) – Access to market – Quality and productivity – Access to information – Others More of less the same in many developing countries

3 Why is SMEs Financing Difficult Picture sources: clipartpanda.com, clker.com, ibom.biz, hackerspace.govhack.org, leansystemsinstitute.com

4 How Should SMEs Get Financed? Equity Debt Picture source: lindasdailylivingskills.com

5 Traditional Financing Others’ money Own money Equity Debt Bank loans Bonds

6 Investment Vs Financing Investors Companies Stocks Investment Financing Projects Investment Bonds

7 Investors’ Side Direct equity investment at stock exchanges (e.g. AIM) Portfolio investments – Passive investments Small/Large Index Growth/Value Index – Active investments Market timing Investments in fixed-income securities (e.g. corporate bonds, debentures)

8 Companies’ Side Trade-off theory of capital structure Various sources of debt financing – Banks – Venture capital/ Angel financing – Trade finance (Factoring, discounting) – Leasing – Bonds – Crowd funding

9 What is Needed for SMEs Financing Information - Credit Bureau system - Banks’ database system - Collateral registration - Credit Bureau system - Banks’ database system - Collateral registration Financial Products & Sources - Banks and NBFIs (Crowd funding in future?) - Factoring, leasing, etc. - SME Fund, Credit line, Guarantee scheme - Banks and NBFIs (Crowd funding in future?) - Factoring, leasing, etc. - SME Fund, Credit line, Guarantee scheme - Bank branches (Mobile banking/payment) Accessibility Lack of knowledge & capacity - Training & awareness (Automated advice?) Collateral - Movable assets registry

10 Impacts on SMEs Impact of inflation/lowflation/deflation Impact of high interest rate (how can it be mitigated?) & credit crunch Impact of high risk/ high return concept

11 Impacts on SMEs (Cont’d) Impact of FDIs to change strategy – SMEs Vs. SIs – How to take advantage of AEC Impacts of the exchange rate – Borrowing in FX – Current situation of offshore loans – 1997 financial crisis

12 Near-Future Positive Impacts on SMEs Once-Stop-Service-Centers Loans from policy banks (including two-step- loans) – SMEs may still get denied (Vietnam’s case) Credit guarantee system Credit Bureau system/ Collateral registration

13 Future Positive Impact (Cont’d) Trade finance (factoring, discounting, leasing, etc., by banks and NBFIs) Payments and e-Commerce Forwards & Swaps for hedging FX risk

14 Thank You for Your Attention Picture sources: blogs.sap.com, pixgood.com


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