Sustaining SMEs; A Rationale

Small & medium enterprises (SMEs) play an important role in the economies of most countries in the Asia-Pacific region not only because of their sheer number but also the variety of their activities. In part, SMEs contribute to countryside development, as well as support large industries and serve as a breeding ground for innovation and adaptation. SMEs thus can be looked upon as a source of constant renewal in commerce and industry and as a wellspring of competition and dynamism.

Development financing institutions (DFIs), by the nature of their development orientation and mandate, have been for many years in the forefront of SME promotion and assistance in their respective countries.

The success, however, of DFIs in assisting SMEs varies from country to country because of differences in priorities, policy directions and pronouncements set by each country. Recent developments, especially in the technology arena, as well as the standardization of rules of business via the World Trade Organization, have enabled DFIs to find some common ground in its resolve to further support SMEs.

The Association of Development Financing Institutions in Asia & the Pacific (ADFIAP), the Association of Development Finance Institutions in Malaysia (ADFIM) and the International Trade Centre (ITC) have come together to embark on an undertaking called SME Finance Initiative (SME/FI), pooling their respective experiences, expertise and resources in the continued promotion of SME development through the provision of finance and other support services to this economic sector.

The SME/FI was formally launched in Kuala Lumpur, Malaysia on September 12, 2005 during the International CEO Forum on SMEs, with the three organizations signing the tripartite agreement.

From L-R: ADFIAP Chair, Amb. Jesus Tambunting, ADFIM Chair Dato’ Md. Noor Yusoff, ITC Sr. Adviser on Trade Finance, Carlo Cattani. Back L-R: Y. B. Tan Sri Nor Mohammad Yakcop and Yb ng. Datuk Zamani Ghani.

What is SME/FI?

The SME/Finance Initiative (SME/FI) is a knowledge cum business network that will put together development banks, other specialized financial institutions and development organizations in different countries to discuss and address specific issues in the financing of and other support services to SMEs.

What is the purpose of the Initiative?

The purpose of the Initiative is to enable and promote an international exchange of information, experiences, and best practices on financing SMEs among banking and finance professionals and institutions and to further improve the development and growth of the SME sector.

The SME/FI aims to eventually evolve into the largest public/private partnership of like-minded institutions in sustaining SMEs.

Who can participate in the Initiative?

The Parties/Initial Signatories agree to be members to participate in the Initiative. New parties from other international organizations in the banking and finance sector which are responsible for the promotion and development of SME/FI may also join as members. Notwithstanding that, their participation must be consented to by the Parties/Initial Signatories by majority vote.

What is the Initiative’s focus?

The Parties/Initial Signatories will specifically focus on the goals of the SME/FI through exchange of ideas, experiences and best-of-industry practices; organization of and participation in conferences, seminars and similar activities; and promotion of the Initiative in their respective newsletters, periodicals, and journals, as well as websites.

What are the main areas of cooperation?

To assist members and constituencies of the respective institutions to develop common projects under the SME/FI;

  • To facilitate an international learning exchange; and,
  • To develop electronic networks for information exchange.

Follow this link to know more about SME/FI: