Micro, Small, and Medium Enterprises (MSMEs) are the life blood of ASEAN’s economy. They make up for over 97% of all businesses, provide nearly 70% of employment, and contribute around 40% to the region’s GDP. These businesses could be big or small – they could be the street-side food vendors in Bangkok, the family-owned coffee processors in Vietnam, and the tech startups emerging in Singapore’s bustling ecosystem. Yet, despite playing a critical role in driving growth and innovation, they face a persistent, almost enigmatic problem: financing.
Governments, banks, and even fintech platforms are pouring in funds to address this gap. Hence one would assume that it would be much easier for MSMEs to access the funds they need. But it may not be true. As per a report by ADB, there is a significant financing gap across ASEAN that exceeds a staggering $300 billion annually. It leaves many asking: Why, after so many initiatives and so much support, do MSMEs continue to struggle for financing?
Governments of ASEAN member states are making strategic moves to tackle this issue. An example would be Indonesia’s recent loan forgiveness program. The initiative was just recently launched in November 2024, which allows MSMEs with debts under 500 million Indonesian rupiah to clear their bad loans........