1. Imagination at work. November 2015 Secured Transaction Reform Benefiting SMEs Chris Wohlert GE Capital International GE Confidential - Distribute to authorized individuals only.

2. MSME/SME access to finance impaired by inadequate secured lending infrastructure Leveraging moveable collateral difficult, costly or impossible in many economies MSME/SME prevented from achieving growth potential Secured lending is the BRIDGE between reputational collateral and capital markets access for MSME, SME and mid-market firms …. 2 The Challenge…

3. Benefits of Secured Transaction Reform  Development of functioning laws and collateral registries governing secured transactions provides greater access to credit for enterprises, including MSMEs.  Recent reforms in certain economies have led to both greater access to and lower cost of finance for SMEs  Diversification of financial services sector as non-bank financial institutions expanded into secured lending to SMEs  In China 2, following reforms, more than $570B in financing secured by accounts receivable (40% of which supported SMEs) extended by lenders  Led to development of both commercial leasing and factoring industries SME/MSMEs benefit … time to build the bridge 1 Collateral Registries for Moveable Assets: Does their Introduction Spur Firms’ Access to Bank Finance?; Inessa Love, Maria Soledad Martinez Peria and Sandeep Singh; http://www.ifc.org/wps/wcm/connect/8891c280415edb709ba3bb9e78015671/Collateral%252BRegistries%252Bfor%252BMovable%252BAssets%252B%252BDoes%252BTheir%252BIntroducti on%252BSpu%252BFirms%252BAccess%252Bto%252BBank%252BFinance.pdf%3FMOD%3DAJPERES&sa=U&ved=0CAgQFjACahUKEwjRzfrDvNXHAhUD5KYKHQFwCzM&client=internal- uds-cse&usg=AFQjCNEb3ml0qAuv54daPPP74q-URicSdw 2 Secured Transaction Systems and Collateral Registries, International Finance Group, January 2010. 3 In the chart above, this study 1 compared firms’ average access to finance before and after registry reform as compared to economies that did not implement such reforms

4. Secured Transaction Reform – Key Issues 4 Transparency Enforceabilit y Efficiency Transparency: Security interest is accessible, and secured creditor can readily see all competing interests. Enforceability: High degree of confidence in ability to secure collateral quickly in event of debtor default – even for moveable and rapidly depreciating assets (inventory & AR) Efficiency: Process to register is simple, fast, and cheap. Maximising access to secured credit for SMEs depends upon confidence of the secured creditor in the value of the collateral – and ability to perfect and enforce quickly and efficiently. Three pillars … plus education

5. Recent Reforms across APEC CHINA: Enforcement framework continues to be enhanced providing greater certainty for secured lenders following the release of the latest Judicial Interpretations of the Law on Civil Procedure issued January ’15; factoring judicial interpretations issued November 2014 and September 2015 PHILIPPINES: Development of a self-service chattel mortgage registration system in process, initially launching through major banks with planned later expansion to an online system. VIETNAM: Coordination with IFC to jointly train local bankers on moveables lending through symposiums and workshops leveraging industry and subject matter experts, resulting in a near doubling of security interest registrations and registry searches between 2012 and 2014. Reforms are progressing … at various speeds 5