ACCESS TO FINANCE

RATE Summary

This document presents the findings of the Regional

Agricultural Trade Environment (RATE) assessment
conducted in the ASEAN region in 2012 by the Maximizing
Agricultural Revenue through Knowledge, Enterprise
Development, and Trade (MARKET) Project.
ACCESS TO FINANCE
Regional Agricultural Trade Environment (RATE)
Summary

USAID Maximizing Agricultural Revenue through Knowledge, Enterprise

Development and Trade (MARKET) Project

SUBMITTED TO
USAID Regional Development Mission for Asia

UNDER CONTRACT
486-I-01-07-00008-00
Task Order AID-486- T0-11-00009

SUBMITTED BY
Nathan Associates Inc.
www.nathaninc.com
December 2013

On the cover: A worker in Laos loads coffee in a new factory constructed with bank financing.
Photo credits: Nathan Associates Inc.

DISCLAIMER

This document is made possible by the support of the American people through the United States Agency for International
Development (USAID). Its contents are the sole responsibility of the author or authors and do not necessarily reflect the
views of USAID or the United States government.
In Brief
ACCESS TO FINANCE
Why Access to Finance? Micro, small, and medium-sized agricultural producers, processors, and traders need
access to a variety of financial services in order to maintain and grow their businesses. Among ASEAN Member
States, small producers and agricultural enterprises often lack sufficient access to the financial services they need,
or available services—often informal and unregulated—come with unfavorable terms. With more access to credit,
small farms and enterprises could expand or become more productive, and thus earn more, improve their
livelihoods, and increase the supply of food in their countries. And a stronger legal and institutional environment
for credit could reduce risk to lenders and the cost of finance for agricultural enterprises, a cost ultimately
reflected in food prices for consumers. Other financial services, such as insurance, can also promote agricultural
lending and investment by reducing the risk to investors.

ASEAN’s Approach. The ASEAN Economic Regional Findings. Sources of finance in the agriculture
Community Blueprint includes a framework for sector vary from the formal to the informal, with the
promoting SME development, a key component of greatest needs for credit among SMEs. Lending to SMEs
which is increasing access to credit to enhance SME against moveable collateral—such as equipment, stored
competitiveness in ASEAN. The framework includes crops and other inventory, and livestock—is
activities to establish an SME financial facility in each increasingly accepted in theory, but not in practice.
ASEAN Member State, conduct a feasibility study of Lending against intangible collateral, such as accounts
SME credit systems, and set up a regional SME receivable or intellectual property, is even rarer.
Development Fund. The ASEAN Insurance Training and
Formal credit reporting is increasingly used to diminish
Research Institute is a resource for insurance
risk in lending, but rural borrowers are widely
institutions focusing on developing insurance capacity in
overlooked by reporting systems. Insurance in the
ASEAN’s lower-income Member States.
agriculture sector is not widely available, but there is a
growing interest in insurance as a means of reducing
risk to lenders.
Opportunities for ASEAN and Regional Entities
• Develop regional guidelines on the legal and institutional framework for collateral lending
• Develop regional guidelines on the role of state-funded agricultural development banks
• Encourage a regional discussion of agricultural insurance
• Finalize and implement the proposed ASEAN SME Policy Index

Opportunities for Member States

• Streamline secured transactions laws
• Create or strengthen collateral registries to reduce lenders’ risks
• Create or improve the effectiveness of credit reporting systems
• Expand access to microfinance services for SMEs
• Improve collection of statistics on access to finance in rural areas
• Improve women’s access to finance
 ACCESS TO FINANCE: RATE SUMMARY

AT ISSUE: ENSURING ACCESS TO RESOURCES FOR ALL WHO

CONDUCT BUSINESS
Micro, small, and medium-sized producers, processors, and traders in the Member States of the
Association of Southeast Asian Nations (ASEAN) seek finance for a variety of purposes. Whether at the
beginning of an agricultural value chain or well into the continuum of trading, processing, and further
trade and distribution, they seek loans to pay for critical inputs, to bridge the gap between planting of
crops and receipt of payment for harvested goods, to purchase processing equipment or storage facilities,
or to expand into new markets. 1 They are often disappointed. The risks involved in lending to newer,
smaller, or agriculture-based enterprises are often too great for banks and other formal lenders to assume.
These risks include inadequate financial infrastructure, limited forms
of collateral, difficulty in enforcing contracts, a dearth of insurance
products, and the particular risks faced by agriculture, such as
seasonality, environmental disaster, and potential for spoilage.

As a starting point for strengthening the environment for credit,

countries need a strong legal and regulatory framework for lending. 2
Essential components of the framework include not only general
laws governing the establishment and supervision of banks and other
lending institutions, but also a real property law and a secured
transactions law that allow the use of “real property” (land and
buildings affixed to the land) or “movable property” (goods and
equipment that can be moved) or even “intangible property”
(accounts receivable, government bonds, corporate shares,
intellectual property) as collateral to secure loans. Collateral lending
lowers the risk of default because borrowers will normally pay off
What is collateral?
their loans rather than risk losing the property used as collateral. A
well-structured secured transactions law expansively defines the Collateral is an asset owned by a
property that can be used as collateral, and thus expands access to borrower that is pledged to a
lender, who can legally hold or seize
credit. In modern systems, collateral ranges from tangible property,
the asset in lieu of partial or total
such as tractors and processing equipment, to intangible property
repayment of a loan should the
such as future crops or long-term contracts. Livestock and inventory borrower fail to comply with the
can also serve as collateral, even though the individual items may terms of the loan.
change over time. 3

In addition to enacting laws to support the credit environment, countries need strong financial institutions
that can manage the risk of lending. Among these institutions is a collateral registry that allows lenders to
search existing registrations and confirm that a borrower has not already pledged a piece of collateral as a
security for another loan. Another important institution is a national credit reporting system, a cornerstone
of lending in modern financial systems. Through automated systems, lenders can query one or more credit
bureaus to determine the history of a borrower’s use of credit—for example, the number and value of past
loans, and whether they were repaid in full and on time. Legal and regulatory structures governing the
operation of public and private credit bureaus help ensure that lenders have adequate and correct
information about borrowers’ creditworthiness. 4

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 ACCESS TO FINANCE: RATE SUMMARY

Agricultural enterprises, including farmers, microenterprises,

and small and medium-sized enterprises (SMEs), seek A strong collateral registry should
finance from a range of financial institutions, from
Allow quick and efficient creation of new
commercial banks for larger businesses, to state-run
registrations and search of existing registrations
agricultural development banks for medium or small
enterprises, to microfinance institutions (MFIs) and informal Be comprehensive and up to date
lenders for small farms and microenterprises. In any Be automated but not overly complex
economy, banks should be the principal engines of credit.
Have a clearly defined mandate, adequate and
Commercial banks tend to be risk-averse, so they often
well trained professional staff, and sufficient
neglect smaller players in the agricultural sector in favor of resources
less risky sectors. In high-risk environments, commercial
Be free from political influence
banks often require collateralization rates of 200 percent or
more of the value of the loan and they also hesitate or simply
refuse to accept movable or intangible forms of collateral.

Many developing countries support state-owned development banks and agricultural development banks.
Such banks provide general retail, advisory, currency, and other banking services, and may offer farmers
or small agricultural enterprises preferential access to credit or loan terms uncommon in private
commercial banks. Though a valued alternative to private banking in many economies, such banks may
deter private banks from supporting agriculture-based enterprises because private banks do not enjoy the
competitive advantage of government-supported lending.

Microfinance can be an effective way of extending financial services— including deposits, loans,
payment services, money transfers, and insurance—to low-income farmers and micro and smaller
enterprises. 5 Oriented to poor households and microenterprises, MFIs take on riskier clients than
commercial banks and are more likely than banks to accept movable collateral to secure a loan or not to
require collateral at all. International best practice is for MFIs to be regulated in a manner analogous to
banks, but not exactly the same, and for a clear distinction to be made between those that accept deposits
and those that do not. 6 In addition to MFIs, producers and small enterprises often turn to informal or
semi-formal lenders, including traders or middlemen, nongovernmental organizations (NGOs), or money-
lenders.

A common form of agricultural finance is contract farming, in which a firm that processes or markets an
agricultural product provides credit to farmers through contracts against the future harvest that the farmer
will sell to them. Informal contract farming occurs when farmers obtain credit from traders or middlemen
based on an agreement to sell their products to them and repay the loans after harvest. “Value chain
financing” is a related option directed at various actors in a value chain to receive financing from or
provide financing to other members of the chain.

Another financial product is insurance, particularly crop or shipment insurance. Insurance is especially
important where agricultural enterprises face a high risk of natural disaster. While insurance companies
do not provide credit directly, they can have a tremendous impact on access to credit. Banks are much
more willing to lend and interest rates are likely to be lower when agribusinesses have credible insurance
policies.

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 ACCESS TO FINANCE: RATE SUMMARY

This paper summarizes research on the ability of producers, processors, and traders of agricultural
products in ASEAN to access finance, especially in the context just described. In addition to discussing
the state of the legal and institutional framework for collateral and credit reporting, this paper suggests
regional and country-specific opportunities for promoting access to finance in ASEAN’s agriculture
sector.

WHAT IS ASEAN’S CURRENT APPROACH TO ACCESS TO

FINANCE?

ASEAN Policy Blueprint for SME Development

The ASEAN Economic Community (AEC) Blueprint, which lays out the strategy for regional economic
integration by 2015, includes a framework for promoting SME development. 7 One component of the
framework is opening up access to financing in order to enhance the competitiveness of SMEs in
ASEAN. The ASEAN Policy Blueprint for SME Development (APBSD) 2004-2014 8 contains
framework details along with activities to be carried out over a 10-year period:
• Establish an SME financial facility in each Member State, drawing on a survey of best practices
in SME finance to be conducted by Malaysia and Brunei.
• Conduct a feasibility study of SME credit systems for enhancing SME access to bank lending and
loan guarantee in ASEAN, with a survey to be conducted by Indonesia.
• Establish a regional SME development fund to provide services to ASEAN Member States.
The proposed development fund envisions many opportunities to support enterprises in all sectors. These
include innovative financing support systems for techno-entrepreneurs, including those based on newly
developed financing concepts and schemes. The fund would also provide support to SME-related regional
infrastructure through initiatives such as an ASEAN SME Web Portal to provide information and
education; virtual ASEAN agencies linking up SME-related agencies; and, ultimately, the development of
an ASEAN Credit Bureau. The fund would also provide direct financing to SMEs, develop regional
capital markets for SMEs, help get SMEs listed in the stock market, and create a national and regional
SME credit guarantee scheme. Finally, the fund would support networking among groups such as high-
technology SMEs, financing agencies providing services to SMEs, and management experts.9

SME Working Group

The SME Working Group, which consists of representatives from the SME agencies of each Member
State, is advancing ASEAN’s goals for access to finance. In parallel with the APBSD, regional
cooperation on SME development is guided by the Strategic Action Plan for ASEAN SME Development
(2010-2015). The working group is updating the action plan to ensure that it aligns with regional
developments. Public information on AEC Blueprint activities, however, is limited. The working group is
developing an ASEAN SME Policy Index to help monitor progress in making the sector competitive and
innovative and to ensure that regional and national policies, programs, and institutions are supportive of
SME development. 10

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 ACCESS TO FINANCE: RATE SUMMARY

What is an SME?
There is no single definition of small and medium sized Others (such as Vietnam) do not set a floor for number
enterprises in ASEAN, or even in individual Member of workers or value of revenue, effectively including
States. Most countries determine whether a firm is microenterprises in their definition of SME. Most formal
small or medium sized on the basis of number of definitions pertain to businesses that have been
employees, value of assets, and/or value of annual sales. registered or formalized in some manner, and exclude
small-scale, informal family enterprises. However, there
For example, Cambodia categorizes firms with between
is often ambiguity with respect to whether unregistered
11 and 50 employees and fixed assets of $50,000 to
businesses employing non-family members, maintaining
$250,000 as “small” and firms with between 51 and 200
recognizable non-family assets, and taking in significant
employees and fixed assets of $250,000 and $500,000
annual revenues qualify as SMEs.
as “medium-sized.” The Indonesian government uses
total assets and annual sales to define SMEs, while In a 2010 report on SME access to finance in ASEAN,
generally disregarding numbers of employees. Other the Economic Research Institute for ASEAN and East
factors that may affect how local and national Asia recognized varying definitions of SME among
authorities categorize an enterprise include invested ASEAN Member States, while generally treating all firms
capital, production capacity, and the sector in which the with fewer than 200 employees (including
firm operates. microenterprises and informal businesses) as SMEs for
the purposes of its own survey. A U.N.-sponsored
High-value farming operations that seasonally employ a
article on the topic notes that, because “SMEs typically
significant number of casual workers may or may not be
make up more than 90 per cent of all registered
regarded as SMEs, depending on the country and the
enterprises in any country,” they tend to “dominate the
context. Moreover, some Member States distinguish
corporate community” in most ASEAN Member States.
between a microenterprise and a small enterprise, with
the former generally applying to household enterprises
with fewer than 10 workers, most of whom are casually
employed.

SOURCES: U.N. Economic and Social Commission for Asia and the Pacific, SMEs in Asia and the Pacific (2012); Economic Research Institute
for ASEAN and East Asia (ERIA), Small and Medium Enterprises (SMEs) Access to Finance in Selected Asian Economies (2010).

ASEAN Finance Ministers Meeting

The ASEAN Finance Ministers Meeting (AFMM) is the body of ministers responsible for considering
regional cooperation on finance.11 In 1999, the AFMM initiated the ASEAN Surveillance Process (ASP)
to enable peer review and discussion among senior central bank and finance officials on economic
developments and policy issues. The ASP has evolved into an important economic monitoring and
surveillance mechanism. Key achievements include (1) the establishment of a unit at the ASEAN
Secretariat dedicated to regional surveillance and facilitating cooperation activities in finance; (2)
capacity-building and training programs on regional economic monitoring and surveillance for finance
and central bank officials; and (3) technical studies and policy papers on finance and economic issues.

In 2003, the AFMM established a roadmap for monetary and financial integration of ASEAN, which
includes a financial services liberalization activity. The activity is intended to achieve a freer flow of
financial services by 2015, including through streamlined transfer of funds for inward, outward and
liquidation of FDI and portfolio flows. In addition to capital account liberalization, the plan encourages
capital market development and cross-border cooperation among capital markets; integration of capital

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 ACCESS TO FINANCE: RATE SUMMARY

Agriculture, even simple greenhouses, often cannot be modernized without

financing.

markets, including through the harmonization of Member State laws pertaining to capital markets; and
strengthened cooperation among Member States’ insurance markets. 12

Insurance Cooperation
Member states cooperate on insurance matters in a number of ways. They share insurance statistics to
achieve a unified form of statistics, exchange views on regulatory issues, observe core principles related
to insurance markets, and run research and capacity-building programs for insurance regulators.
Established in 2000, the ASEAN Insurance Training and Research Institute is a resource for insurance
institutions that focuses on the development of insurance capacity in lower-income countries. 13

ACCESS TO FINANCE IN ASEAN: HIGHLIGHTS FROM THE RATE

ASSESSMENT
The RATE assessment analyzed access to finance in ASEAN in four areas: legal framework,
implementing institutions, supporting institutions, and social dynamics. 14 Questions centered on the
presence of a formal legal and institutional framework for collateral and credit reporting that is in step
with international best practice, as well as on other aspects of finance in the agriculture sector, including
availability of microfinance services and access to agricultural insurance. Key findings of the assessment
are set forth below.

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 ACCESS TO FINANCE: RATE SUMMARY

Collateral lending: Increasingly Accepted in Theory, But Not in Practice

In its 2010 report on SME access to finance in ASEAN and selected Member States, the Economic
Research Institute for ASEAN and East Asia (ERIA) summarized three primary sources of funding for
SMEs: (1) formal sources, including commercial banks and government-backed sources; (2) informal
sources, including grey-market lenders and certain MFIs; and (3) internal funds, provided from own
accounts or family members. 15 Internal funds are used by 75 percent to 90 percent of SMEs. The success
of enterprises with formal lenders depends on their evident strengths and weaknesses, including length of
time in business, value of assets, and existing debt. For SMEs that own assets—land, equipment, accounts
receivable, and other tangible and intangible items of value—most ASEAN Member States have laws on
mortgages (for land or land use rights) or secured transactions (for other types of property) that allow
them to use that property as collateral. The laws permit borrowers to secure loans with land and land
rights and with other assets, such as farm
equipment, crops, or livestock. But
commercial banks are not likely to accept
Laws and Institutions for Accessing Credit Across
ASEAN’s Developing Countries most movable or intangible collateral and are
Secured Credit therefore unlikely to lend to SMEs that lack
Country Collateral
Transactions Information sufficient real property in the form of land or
Registry
Law System buildings.
Burma None None
Several Member States have passed new or
Cambodia √ Weak Strong
reformed secured transactions laws over the
past decade, including Malaysia in 2001,
Cambodia in 2007, and Vietnam in 2009.
Indonesia Weak Weak
Indonesia has a number of laws and
regulations that aim to provide for securing
Laos √ Weak None
of loans through moveable and other types of
collateral, but the complex and opaque
Malaysia √ Strong Strong
system of implementation does not meet the
standard of international best practice.
Philippines √ None Weak
Indonesia would benefit from a streamlined
law on secured transactions that is accessible
Thailand √ None Weak
in particular to individuals who lack
ownership rights in real property.
Vietnam √ Strong Weak

Even in Member States that have a legal

framework for accepting movable collateral, lenders tend to consider doing so too risky because they fear
they will not be able to locate and seize movable or intangible property in case of default. Examples of
this were reported during the RATE assessment in Cambodia, Indonesia, Malaysia, and Vietnam. In the
Philippines, lenders expressed greater willingness to accept moveable collateral that is registered to the
owner, such as vehicles, but resist unregistered items such as equipment, crops, or inventory. In Thailand,
banks have traditionally accepted only land as collateral, but have become more flexible in accepting
movable collateral, such as inventory or receivables, from qualified borrowers. Thailand’s SME
Development Bank, for example, accepts collateral from SMEs in the form of current assets. Vietnam’s
financial institutions have also become more open to accepting movable forms of collateral in recent
years because of improvements in that country’s secured transactions law.

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 ACCESS TO FINANCE: RATE SUMMARY

One reason commercial banks hesitate to accept movable

or intangible collateral from SMEs in the agriculture sector View from Vietnam
is the lack of an effective collateral registry through which
A NEW SECURED TRANSACTIONS
lenders can secure that collateral. Collateral registries
DECREE
reduce the risk of lending so long as there is a firm
expectation that the registered collateral can be possessed Vietnam has improved its legal framework for
collateral lending in the past several years.
in the event of default. But the existing registries are often
Vietnam’s Civil Code provided a structure for
inefficient or expensive and not widely used. For example,
using fixed and moveable collateral to secure
despite the progressiveness and simplicity of Cambodia’s loans. The law allowed any business to use
2007 law on secured transactions, use of the collateral moveable assets as collateral while keeping
registry since its creation has been weak. Lending against possession of them and did not require a specific
secured moveable collateral remains rare in Cambodia, description of the secured assets. In practice,
mainly because lenders believe that the country’s troubled however, the use of agricultural collateral,
and underfunded courts will afford little redress if the particularly for farmers, was not working well.
borrower fails to repay the loan. Farmers were routinely denied the ability to use
their property, including land use rights and
Indonesia has different agencies for registering different breeding animals, as security for loans. In 2006,
the IFC recommended to the Ministry of Justice
types of property, such as real property, moveable
how the secured transactions system could be
property, and warehouse receipts. The Fiduciary Guarantee
modernized. By 2009, the Ministry of Justice had
Registry, which is charged with registering loan pledges of implemented a number of those
moveable property, does not fulfill the role of a modern recommendations, including enactment of a new
secured transactions registry. It does not provide adequate Secured Transactions Decree. Thereafter,
priority assurance due to lack of sufficient priority rules Vietnam’s “getting credit” score on the annual
and it operates in relative secrecy. Registration of property Doing Business analysis improved considerably.
for collateral purposes in Indonesia is considered slow and
costly.

Malaysia and Vietnam have stronger collateral registries. Housed at the Companies Commission,
Malaysia’s registry is regarded as highly effective, as evidenced by the country’s high legal rights score
on the “getting credit” indicator in Doing Business in 2013. The registry, however, does not yet provide
for online searches of registration and the system has not spurred willingness among lenders to accept
moveable or intangible property as security for loans, aside from some lenders who accept boats or other
large assets that maintain value over time. In Malaysia, there is a “missing middle” of loan products for
SMEs that do not qualify for the government’s generous services to new companies and that do not have
enough assets to satisfy the collateral requirements of commercial banks.

To improve systems for collateral lending, the Government of Vietnam created a web-based movable
collateral registry to simplify registration and provide easy access to reliable information. As of 2012, the
registry was in full operation and is considered easy to use. It is unified geographically and by asset type,
with an electronic database indexed by debtors’ names. In theory, use of collateral to secure loans in
Vietnam’s agricultural sector should work. Still, implementation of the collateral law is weak and
continues to constrain the use of movable assets to leverage financing. Banks reportedly do not
understand, or are not aware of, the use of nontraditional collateral such as crops and livestock as a means
of securing loans in the agriculture sector.

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 ACCESS TO FINANCE: RATE SUMMARY

Credit Reporting: A Range of Experiences

Credit reporting systems vary widely across ASEAN Member States, and include a mix of public and
private-sector approaches. Malaysia has a consistent, reliable, and thorough reporting system, ranked by
the World Bank as one of the world’s most effective in maintaining credit information. Public and private
credit bureaus are permitted to operate in Malaysia. Lenders are well acquainted with the process of
obtaining credit information about potential borrowers, including through records of positive and negative
credit experience, and viewing even poor credit scores with a critical eye. A law on privacy limits the
disclosure of credit information only to eligible financial institutions. Ultimately, banks rely on their own
systems—including an assessment of the borrower’s “character” and hands-on business experience—in
deciding whether to extend a loan. Borrowers still complain that lending standards are too high and not
transparent enough.

In contrast, Laos has no legal framework for public or private credit reporting. The government is
reportedly working on starting a public system and some private banks have discussed teaming together
to create a private alternative. Burma similarly has no formal credit reporting system.

Thailand enacted laws to regulate the credit information

business after the 1997 financial crisis, and in 2005 the View from Vietnam
country merged two credit reporting agencies to create
SUBSIDIES TO REDUCE
a national bureau. The Thai national credit bureau is POSTHARVEST LOSS
useful, but credit information is available only through
Vietnam’s Ministry of Finance lends cash or
the banking system and is reportedly difficult to access.
inputs to farmers directly or through small
By law, credit information can be disclosed only to
lending programs. Such loans are subject to
members or users who wish to use the information for rapidly changing policies and the government
credit analysis and evaluating credit card applications, tends to focus disproportionally on the rice
and only with the consent of the information owner. sector and other cash crops for export.
Credit reporting agencies can store positive and Government loans also tend to be short-term,
negative information, but there is a limit on the length although the agricultural sector badly needs long-
of time negative information can be stored: three years term loans to finance capital and productivity
for consumer credit and five years for commercial improvements.

credit. In July 2012, the State Bank of Vietnam

announced a subsidy policy to reduce losses for
Vietnam established its Credit Information Center farmers following agricultural and aquatic
(CIC) in 1999. It now exists as an independent unit harvests. Subsidies are offered to institutions,
under the State Bank of Vietnam. The CIC is also households, and individuals who borrow money
to purchase machines and equipment aimed at
charged with overseeing independent credit bureaus
reducing postharvest losses. Similarly, entities
that track customers’ legal profiles, financial status,
that invest in rice and maize storage and storage
outstanding loans, loan guarantees, loan security, and of aquatic products, vegetables, fruit, and coffee
bad debt. Only one private credit bureau has been are eligible for government support. Five banks
established. The main users of credit bureau have committed to providing loans with
information are banks, government agencies, and other subsidized and investment development interest
financial institutions. It is not clear whether rates. In addition to this program, Vietnam has
microfinance clients feed into the bureaus. In 2011, the expanded opportunities for smaller borrowers
CIC issued a draft regulation requiring 20 commercial to save and borrow money, although wariness of
banks remains common.
banks to provide credit information exclusively to each
credit bureau in order for the bureau to be recognized;

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 ACCESS TO FINANCE: RATE SUMMARY

in turn, those 20 banks would be allowed to obtain data only from that credit bureau. As pointed out by
EuroCham, this draft regulation “does not promote healthy competition in this field” and recommended
that credit institutions be permitted to use the services of more than one credit bureau.16

A strong and inclusive credit reporting system is considered critical to improving access to finance for the
poor in general and for women entrepreneurs in particular. Worldwide, women as borrowers receive just
5 percent of available credit; 17 unfortunately, definitive statistics on credit dispersed to women in ASEAN
are not readily available. Women in ASEAN and beyond do tend to participate widely in available
microfinance schemes. In fact, microfinance can serve as an important marker of creditworthiness to be
registered in credit bureaus. For example, Thailand’s credit registry includes microfinance loan histories,
which means that women who start off borrowing small amounts of money can theoretically build a credit
history over time and eventually get access to larger loans on more advantageous terms.

Since its establishment in 2006, Indonesia’s public credit bureau has strengthened data quality and
infrastructure and given users wider coverage but there is room for improvement, especially with respect
to smaller transactions, including reporting of micro-loans.

The Cambodian Credit Bureau (CCB) was launched in Phnom Penh in March 2012 after a planning
process that began in 2008. Significantly supported by the IFC, CCB aims to centralize loan information
from Cambodia’s banks and MFIs.

Lenders of First Resort: Sources of Finance in the Agriculture Sector

The following sections discuss some of the sources of finance that smaller producers and SMEs in
ASEAN are most likely to access: agricultural development banks, MFIs, and informal lenders.

Agricultural Development Banks and Related Sources of Funds

State-funded agricultural development banks or other state-funded programs are a common source of
credit for farms, microenterprises, and SMEs that cannot access sufficient credit, either from friends and
family or from commercial banks. Agricultural development banks also frequently provide finance to
other financial institutions that serve the agriculture sector, such as rural banks and MFIs. Agricultural
banks may provide support to build the capacity of microenterprises and SMEs so that they are eligible
for credit from private financial institutions. However, in some cases these government-funded finance
programs are inefficient or even corrupt and may inject too much subsidized credit into the economy,
which can discourage lending by private institutions.

There are several examples of agricultural development banks and other state-funded sources of finance
in ASEAN Member States. One relatively strong example is Cambodia’s Rural Development Bank
(RDB), a public, autonomous bank established in 1998. The RDB’s primary goal is to provide finance to
commercial banks, MFIs, credit operators, associations, development communities, and SMEs. As part of
this work, the RDB encourages enterprises to formalize and thereby become eligible for more forms of
finance. The RDB receives significant funding from donors, including the Asian Development Bank and
others, and so must be accountable to those sources in executing its lending function.

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 ACCESS TO FINANCE: RATE SUMMARY

In Malaysia, new and small companies have access to many forms of government-backed finance,
including through the “government-linked” AgroBank. Finance opportunities for SMEs and/or farms
include the following:
• Heavy subsidies for certain inputs, including seed and fertilizer.
• Rent assistance from local development agencies for the first year or two of doing business.
• Grants and loans from the Ministry of Agriculture and Agro-Based Industries and other agencies
for start-up capital or to obtain key certifications, such as Halal or HACCP (Hazard Analysis and
Critical Control Point).
• Financial assistance to engage in trade promotion.
• Loan guarantees provided by associations.
• Other sources of direct finance and financial support.
The government has also invested significantly in building the capacity of new businesses, including
food-processing enterprises, to diminish lending risk. Unlike some Member States, Malaysia has been
careful not to extend excessive amounts of subsidized credit into the economy. Despite pressure to extend
credit liberally throughout the country, the Central Bank took steps in 2010 to prevent overextension of
household credit by raising interest rates, an act that reportedly has restrained inflation. 18

In Thailand, the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is the primary
source of funding for farms, cooperatives, and SMEs. Established in 1966, the bank functions as a
financing center for agricultural cooperatives and individual farmers. To access these loans, cooperatives
must have at least 100 members and have existed for at least two years. BAAC works directly with
farmers to decrease the ratio of non-performing loans. For the segment of society that is too poor to
borrow, BAAC offers the solution of “community
banks,” which charge higher interest rates than regular View from Philippines
loans—generally 12 percent, as opposed to 7 percent. GOVERNMENT SUPPORT FOR
The government also provides seeds and other input FARMERS AND FISHERS
through “village funds.” On the other hand, BAAC is
The Philippines has several government-backed
substantially involved in Thailand’s rice-pledging
programs to support agribusinesses in getting
program, through which the government guarantees to credit. The Agro-Industry Modernization Credit
purchase rice from farmers at prices up to 50 percent Financing Program (AMCFP) is mandated by the
above global market prices. As BAAC contributed at Agriculture and Fisheries Modernization Act. It is
least US$4 billion to the program, losses in 2012 a financing program for agriculture and fisheries
amounted to US$3.2 billion. designed to make credit more accessible by
including banks, cooperative rural banks, self-
In Laos, the state-owned Agricultural Promotion Bank help groups, farmers’ associations, and NGOs as
(APB) offers short-term loans for the pre-harvest and retailers of the AMCFP fund.
harvest seasons. Loan products are tailored to producers, Another lending program under the AMCFP is
rather than those at other points along the value chain. A the Agri-Fishery Micro Finance Program, which is
new program offers small, six-month, no-collateral loans meant to improve the incomes of small farm and
to groups of farmers at a discounted 8 percent interest fishing households through improved access to
financial services that can help them diversify
rate. The APB uses a social collateral model, in that
income sources and improve profitability.
groups of families guarantee each other. Few farmers are
interested, however, because the loan amounts are small

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and the terms too short, and also because each farmer becomes individually liable for the debt of the
others. In general, the APB has limited resources and most lending is short-term (under a year). The APB
reaches just 2 percent of rural households and farmers often find it difficult to access loans it offers.

Microfinance Institutions
Most ASEAN Member States have one or more laws allowing and regulating the use of microfinance. For
farms and small enterprises seeking to assure stability through off-season off-farm employment and
entrepreneurism, microfinance can be an important factor in business growth. Microfinance institutions
often allow group guarantees or “social collateral” to maintain loan security in lieu of more traditional
individuals’ collateral to secure a given loan. Across ASEAN, there are a range of experiences in
microfinance.

In Indonesia, microfinance is generally referenced in the lending laws, but there is no microfinance law
and certain important conditions for micro-lending are not clear. A law that would expand access to
microfinance services has been under consideration
for 10 years, with little movement toward getting it How Access to Finance Relates to
passed. While farmers in Indonesia may use MFIs for Other RATE Topics
savings, small farmers interviewed for the RATE Informal Economy. Informal businesses rarely have
assessment rarely get loans from MFIs. Farmers most collateral. Informal lending to them is common
frequently mentioned Bank Rakyat Indonesia (BRI), and terms are often usurious.
which specializes in microfinance and is 70 percent
Competition. State-owned enterprises often have
owned by the government. Most loans through BRI, preferential conditions for access to finance, an
however, consist of inputs—fertilizer and seed— unfair advantage over private competitors.
repaid in cash or seed. Most farmers and
Gender. Women often lack access to collateral
microenterprises stated they did not have access to
because it is registered in their husbands’ names.
more formal means of finance because commercial There is enormous opportunity for specialized
banks require documentation and collateral that they lending products for women.
cannot provide.
Transparency and Accountability. Absence of
transparency and accountability in the
Laos and Vietnam have microfinance laws but the
governance of financial institutions can lead to
sector is still relatively weak and does not serve a
financial crisis; in recent years, banks in ASEAN
significant portion of the population in need of have strengthened their practices.
microfinance services. There are only about 35
registered MFIs in Laos serving about 1.3 percent of
the population (2012). In Vietnam, the law provides a regulatory framework for microfinance by
requiring the transformation of semiformal lenders, including MFIs, into formal financial intermediaries.
However, the microfinance sector is not a significant resource for the poor. The banking sector has a poor
record in microfinance: it subsidizes credit, has low repayment rates, and is poorly managed. Semiformal
institutions, such as those set up by international NGOs, are not covered by the law and find it difficult to
become formal MFIs.

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Legal and institutional support for the microfinance sector can be significant in some Member States,
particularly in Malaysia and Cambodia. Microfinance is widely available in both countries. In Cambodia,
in addition to formally licensed MFIs, is an abundance of unregistered small service providers, along with
hundreds of informal credit schemes. The availability of funds for “even the poorest farmers in the
poorest regions,” as one donor says, is considered an accomplishment by some, while others note that that
interest rates of 2 percent to 3 percent per month have not declined in eight years, thus showing little
change in the costs and risks that lenders assume.

Real Bank Interest Rates in ASEAN, 2010-2011 (%)

SOURCE: World Bank; Data for Cambodia and Burma not available.

Recently MFIs have been planning to incorporate specialized financial products for agriculture, such as
credit for building small-scale irrigation facilities. Credit officers in MFIs work closely with clients
during application, loan use, and repayment periods. In the 2003-2012 period the share of agriculture
lending in microfinance ranged from 16 percent to 28 percent of loans, hitting 19 percent in 2012.

In Malaysia, small micro-loans are available to poor and marginalized populations, and small businesses
have many avenues of financial assistance. Malaysia has a comprehensive MFI framework, through
which commercial banks, development financial institutions, and credit cooperatives have been identified
to provide microfinance to viable microenterprises. Malaysia’s national institution charged with
supporting new and small businesses, SMECorp, works with banks to facilitate government-backed

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lending. Amanah Ikhtiar Malaysia (AIM) is the dominant provider of traditional microfinance, offering
Grameen-style, interest-free loans to poor borrowers for the purpose of income generation.

Market traders are often heavily burdened by usurious interest rates.

Value-chain financing, contract farming, and informal lenders

When financial services are not available from formal financial institutions, producers, processors and
traders in ASEAN often turn to other types of lenders, including buyers, suppliers, traders, pawn shops,
and moneylenders. Some arrangements involve a formal contract, such as agreements between farmers
and larger agribusinesses or processors. “Value-chain” finance allows actors across a value chain to
receive finance from or to provide finance to other members of the chain. For example, a processing plant
may arrange to pay for new equipment to a manufacturer or distributor over time, with the equipment
itself serving as collateral. In contract farming arrangements (a subset of value-chain financing), farmers
obtain credit or inputs from the buyer of their products. After the harvest, the farmers sell their products to
the buyer and their loans and interest are deducted from the payment.

Formal contract farming arrangements are common in Indonesia, for example, where certain large food-
processing companies that use Indonesian inputs, such as dairy products and cocoa, provide financing to
farmers from whom they buy. However, in Indonesia as in many ASEAN Member States, small farmers
are more likely to engage in informal contract-farming with traders or middlemen, in which there is only a
verbal agreement. In these types of arrangements, farmers wield little power and often must accept high
interest rates or unfavorable terms. Dissatisfaction often goes both ways. Lenders and buyers interviewed
during the RATE assessment complain that farmers often sell on the side the very products they
committed to selling exclusively to them earlier in the season. One small Vietnamese processor of
cassava, for example, terminated its contract farming arrangements, reasoning that it would likely obtain

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the same amount of product from the same farmers at harvest time, without the risk of losing the value of
inputs loaned at the beginning of the season.

In Indonesia, farmers usually receive credit in the form of cash or inputs, such as seed or fertilizer, from
the middleman or “tengkulak” that serves their area. Competition among these traders is limited, so
farmers usually do not have the ability to sell to the trader that offers the best price or lowest interest. As a
result, farmers have little leverage to negotiate on price or loan terms. Prices obtained through these
arrangements are often significantly below market price. Although farmers may pay high interest and sell
their products below market price, they still believe the middleman is important in providing finance.
Middlemen offer more flexible terms than most other credit providers, accepting future crops as collateral
and fitting the lending period to the agricultural cycle. Middlemen also provide other services, such as
delivering inputs and transporting farmers’ products.

In other ASEAN Member States, smallholders also obtain credit through informal contract farming.
These arrangements can be risky to the farmer and the lender when there is no formal contract in place.
(And even when there is a written agreement there is little hope of enforcement.) Small farms and
agribusinesses also obtain credit from other informal arrangements. Cambodia has many small
unregistered financial service providers and informal credit schemes. Some entrepreneurs seek solutions
to the finance problem by joining forces, increasing volumes to export and soliciting financing from
international organizations or investors.

In Thailand, although credit is widely available to small farmers from formal sources (BAAC in
particular), farmers often seek additional credit from informal lenders. As in Indonesia, farmers in
Thailand typically have verbal agreements with informal lenders such as traders, using their future harvest
as collateral. Thailand also has illegal lenders who lend to farmers at monthly interest rates as high as 15
percent. The government does not seem motivated to stop or formalize these lenders because they meet a
market need. In Vietnam, small enterprises also rely on family financing or other informal sources of
credit, such as loans from middlemen. Informal sources of credit in Vietnam generally offer more flexible
terms and appropriate lending periods for the agricultural cycle, although they may place farmers in a
vulnerable position if they fail to repay their loans.

Insurance in the Agriculture Sector: Of Growing Interest to SMEs

Insurance is not widely available or is inappropriate for the agriculture sector in many ASEAN Member
States. Still, governments seem interested in reforming the insurance industry. The limited availability of
agricultural insurance hampers the growth of agribusiness in ASEAN because the region faces many
natural disaster risks. Without insurance, the business of agriculture is extremely risky and farmers and
agricultural enterprises are less likely to invest and grow. Farming without insurance also drives up loan
costs because the risk of crop failure makes default more likely. Many countries are planning to reform
insurance industries or promote insurance programs, so this is an area to watch for improvements.

Crop insurance in not available in Laos or Thailand. Shipment insurance is available in Thailand but it is
expensive. Crop insurance is available in other economies but is limited or not widely used. In Vietnam,
for example, crop insurance for noncommercial farming is non-existent, although the government has
tried to stimulate interest in collective insurance schemes. Indonesia’s insurance industry is small and
fragmented and suffers from a lack of transparency and weak governance. Most providers are small and
many are undercapitalized. The threat of insolvency among insurance providers means that there is a lack

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of confidence generally in the industry. The industry could benefit from reforms such as consolidation,
transparency improvements, and capacity-building among suppliers and regulators. Farmers in Indonesia
face great risk from natural disasters and there is no insurance against that risk. Where crop insurance
does exist, it is not appropriate to
farmers’ needs.

Insurance is more widely available to

the agriculture sector in the
Philippines and Malaysia, but is still
not adequate. In the Philippines, crop
insurance is provided by the
Philippines Crop Insurance
Corporation (PCIC), which is
connected to the Department of
Agriculture. In Malaysia, crop
insurance tends to be used primarily
by the country’s large-scale
plantations, while smaller and
informal producers rarely use it.

Governments in ASEAN appear eager

to make insurance more available for
the agriculture sector given the risks
of flooding, disease, pests, and climate
change. In 2011, 15 provinces in
Cambodia experienced severe
flooding that affected 93,000 families
and 170,000 hectares of rice. Only
about 5 percent to 10 percent of those
affected had insurance, and those were
primarily commercial plantations;
smallholders who lost their crops were
left empty handed. In response, the
government enacted a temporary
micro-insurance law, with a general
Crop insurance can provide the comfort farmers need to
law still under consideration. A
invest savings in new foods and techniques.
number of companies and NGOs in
Cambodia are also considering at micro-insurance and are working with the government. The World
Bank and other donors are examining the potential for a weather-indexed crop insurance product in
Cambodia.

Other ASEAN Member States also have plans to improve availability of insurance to the agriculture
sector. Indonesia’s Ministry of Agriculture is piloting a crop insurance program. Vietnam is running a
pilot crop insurance program for poor farmers in 20 provinces. The program provides 100 percent
insurance fee support for the poorest farmers, 80 percent insurance for those who are just under the
threshold, and 60 percent for those slightly above the threshold. The implementation period for the pilot

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project is 2011-2013 and results will be evaluated with an eye toward scaling up availability to the
national level.

As part of Laos’s WTO accession process, the government is trying to reform the insurance industry. The
Ministry of Finance is reportedly finalizing a new Insurance Law for submission to the National
Assembly. The draft law aims to set a foundation for insurance sector development and to enhance the
level of insurance services to regional and international standards. The Government of Malaysia recently
pushed to improve the availability of crop insurance and there was a program supporting this effort in
their 2012 budget.

OPPORTUNITIES FOR ACTION

There are many pathways to change in ASEAN and its Member States. Reforms can be advanced by a
single, visionary champion or a by a groundswell of influential stakeholders. Some reforms take root after
many years, while others happen quickly once empowered people act quickly and decisively in a way that
reflects public demand and best practice. In most cases, a “big idea”—including the type often promoted
by international organizations such as the World Bank—can be broken down into many smaller tasks that
can be executed by a variety of public and private actors. Accordingly, the Opportunities for Action set
forth below are multifaceted. They may be viewed as a foundation for regional or domestic policy
development, as a resource for private sector initiatives, as a benchmark for tracking change, as a
reference for academic instruction, and, most immediately, as a “jumping off point” for stakeholder
discussion and consensus-building.

Opportunities for ASEAN and Regional Entities

Develop Regional Guidelines on Legal and Institutional Framework for Collateral

Lending
The quality and effectiveness of the laws and institutions governing collateral lending in ASEAN Member
States varies widely. As described above, there are several examples of strong laws on secured
transactions, effective collateral registries, and credit reporting systems. Member states that need
improvement in certain areas could benefit from regional guidelines on the legal and institutional
framework for collateral lending. Such an initiative
could be led by any number of entities—the ASEAN
Finance Ministers Meeting, a regional meeting of One of the main recommendations [to ASEAN]
is to develop a range of programs or approaches
Central Bank leaders, or even the regional association of
to provide financing for SMEs with little
banks and bankers. Most important, regional guidance
collateral, such as credit insurance or guarantee
should reflect input from SMEs, larger companies, schemes, credit rating or borrower risk rating, a
financial institutions, local finance experts, donors, and ‘one finance advisor-one village’ approach, and
other stakeholders. The guidelines will be most valuable training local financial institutions on risk
if they do the following: management and borrower-risk rating.

• Include a model law on secured transactions, —Economic Research Institute for ASEAN and
along with recommendations for creating and East Asia, Small and Medium Enterprises Access
to Finance in Selected Asian Economies (2010)
maintaining effective collateral registries and
credit reporting systems.

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• Draw on strong systems already in place in ASEAN and the experiences of those few lenders who
have shown willingness to extend loans secured by moveable collateral. Malaysia, Cambodia, and
Vietnam can each serve as models for some of these guidelines.
• Set forth proposed benchmarks and timelines for harmonizing collateral lending frameworks,
such that lenders may become increasingly confident that extending credit to smaller borrowers is
worth the risk.

Develop Regional Guidelines on Role of State-funded Agricultural Development Banks

Most ASEAN Member States have some form of a state-funded agricultural development bank, but the
effectiveness of these varies. Some government-funded finance programs are inefficient or nontransparent
and may inject too much subsidized credit into the economy, thereby discouraging private lending.
Member states could benefit from guidelines on the appropriate role of state-funded credit programs that
support SMEs in the agriculture sector. Again, a number of entities could lead such an initiative, among
them the ASEAN Ministerial Meeting on Agriculture and Forestry (AMAF), drawing on input from the
ASEAN Finance Ministers Meeting and the ASEAN Economic Ministers Meeting, or a high-level experts
group formed by stakeholders. The guidelines will be most valuable if they do the following:
• Draw on the successes and failures of state-funded agricultural development banks over the past
generation.
• Explore the role of agricultural banks in targeting areas that cannot be well served by commercial
banks or private microfinance, such as remote rural areas where other financial institutions do not
penetrate.
• Encourage Member States to improve the transparency and accountability of their agricultural
development banks and to avoid overextending subsidized credit.
• Discuss approaches to building the capacity of small or growing agribusinesses to access credit
from private sector financial institutions when possible.

Encourage Regional Discussion of Insurance Products for SMEs and Agriculture

Although agricultural insurance is not widely available in the region, many Member States are making
plans to reform their insurance industries or promote insurance programs. Insurance for SMEs and for the
agriculture sector is challenging to develop and there are few examples of such insurance in the
developing world. Still, insurance products for SMEs and farms in ASEAN Member States could
significantly reduce business risks and mitigate risks associated with natural disasters. Drawing on the
expertise of the ASEAN Insurance Training and Research Institute, ASEAN or a private-sector led
working group could build on the interest of Member States and opportunities for developing agricultural
insurance in Member States. Private insurers and Member State officials should be invited to discuss their
views on reforming their insurance industries to promote SME and agricultural insurance, to share
knowledge, and develop best practices for the region.

Finalize and Implement the ASEAN-SME Policy Index

The ASEAN SME Policy Index is a joint effort of the ASEAN SME Working Group and ERIA, which,
according to the ERIA mid-term review of the AEC Blueprint, has been backed by the ASEAN
Leaders. 19 The index is still being developed with the cooperation of the OECD, which originated similar

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indices for the Balkans, the Middle East, and countries of North Africa. As of March 2013, ERIA was
carefully developing the index in cooperation with the SME Working Group so that the priorities of all
Member States are duly incorporated. Ultimately, the index will reflect a regional view of priorities for
SME development, including access to finance. Implementation of the index will illustrate how different
Member States are instituting best practices in SME development and allow for observation and
integration of positive experiences across borders.

Opportunities for Member States

Streamline Laws on Secured Transactions

The greatest opportunity for improvement in this area is in Indonesia, where the system of laws and
regulations governing secured transactions is complex and difficult to understand. Indonesia would
benefit from a streamlined law on secured transactions that clearly permits financial institutions to accept
movable or intangible forms of collateral.

Create or Strengthen Collateral Registries to Reduce Lenders’ Risks

Despite the existence of secured transactions laws in most ASEAN Member States that allow the use of
movable collateral, the lack of effective collateral registries discourages financial institutions from
accepting collateral other than real property. Countries that do not have a unified collateral registry—the
Philippines and Thailand—should create them in keeping with the best practices outlined in this report.
Where there are registries, they tend to be inefficient, expensive, and not widely used. Member states
should strive to make these registries efficient, perhaps moving to an electronic or online registry, and less
expensive for lenders and borrowers. Member states can follow the examples of collateral registries in
Malaysia and Vietnam, and eventually look to ASEAN regional guidelines in the future.

Improve Effectiveness of or Create Credit Reporting Systems

The effectiveness of credit reporting systems varies widely across ASEAN Member States. Laos should
work to develop a credit reporting system and Indonesia, Philippines, Thailand, and Vietnam should
improve their systems. Credit bureaus should be easy for financial institutions to access and should report
both positive and negative credit information. They should also be prohibited from disclosing credit
information to anyone other than eligible financial institutions.

Expand Access to Microfinance Services for SMEs

Small and medium agribusinesses have limited access to microfinance services in many ASEAN Member
States. In Indonesia, the problem is mainly related to the unclear legal framework for microfinance
lending. Although a new law is not essential, producers and traders need clarity about how to obtain
microfinance, the relative strengths and weaknesses of their borrowing options, the terms and conditions
for microfinance, and the consequences of default. Regulators, lenders, and borrowers should be
encouraged to forge consensus about how information can be simplified and packaged for greater
understanding and awareness among stakeholders in the agriculture sector who would benefit from
meaningful access to microfinance. Even Member States with clear microfinance laws still need to
expand access. Laos and Vietnam should promote policies to expand the use of microfinance, since their
microfinance sectors do not serve significant portions of the population in need of microfinance services.

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 ACCESS TO FINANCE: RATE SUMMARY

In Malaysia and Cambodia, microfinance services are widely available to micro and small enterprises, but
there is a gap in services available to medium sized agribusinesses, and these countries should work to
bridge that gap by expanding financial services for the mid-sized business.

Improve Collection of Statistics on Access to Finance in Rural Areas

To improve policymaking related to agricultural finance, ASEAN Member States need better information
about levels and types of finance available to the agricultural sector. The World Bank collects this
information at the national level, but does not disaggregate information on rural and urban areas. 20
Financial services are much more readily available in urban areas, so existing statistics on access to
finance do not present an accurate picture of the challenges faced by agribusinesses in rural areas. The
statistics bureaus in Member States should gather information on financial services in rural areas and
which types of finance are being used in the agriculture sector. In addition, ASEANstats should compile
this data from Member States to provide a picture of the rural finance sector across the region.

Improve Women’s Access to Finance

Despite laws mandating equality in land ownership and inheritance, women throughout the ASEAN
region encounter difficulty securing land title and collateral for loans or space to launch enterprises. The
Philippines and Cambodia present some positive examples in this area. In the Philippines, the government
is sensitizing national, provincial, and local officials to the importance of having both spouses’ names on
land certificates. In Cambodia, a gender social impact assessment done in advance of a land-titling project
resulted in 78 percent of new titles being in both spouses’ names. With the support of the World Bank,
Vietnam has also worked to equalize the rate at which women’s names appear on land titles held by
married couples.

In addition to addressing issues of land, ASEAN Member States can do several things to make access to
finance easier for women. A number of countries can adopt legislation that makes microfinance easier and
more conducive to long-term responsible use of credit. Thailand’s credit registry links to MFIs, which
women are more likely to use than formal banks. As set forth in the 2010 USAID/GenderCLIR diagnostic
for Vietnam, 21 additional approaches to improving women’s access to finance include the following:
• Partner with universities and develop curricula for entrepreneurs’ skill development that can be
delivered through women’s business associations.
• Create marketing programs that target women-owned SMEs. Larger banks can use their sizable
branch networks to conduct seminars on getting access to capital and on their financial products.
Hold quarterly networking events so women can get to know local bank managers and lenders.
• Study opportunities to create formal networks that can be used to support SME capacity-building
assistance, information-sharing, and advocacy services. Stronger managerial skills and business
know-how on the part of women business owners will persuade more banks to loan to women-
owned businesses.
• Integrate women into private-sector supply chains and establish relationships with banks to
encourage them to use purchase order agreements with their companies as collateral.
• Invest in women’s entrepreneurship funds or venture capital firms that serve women-owned
businesses.

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Endnotes
1See USAID/Enabling Agricultural Trade, Agribusiness Commercial Legal and Institutional Reform project,
Lessons from the Field: Getting Credit (2011).
2 See generally, World Bank Doing Business initiative, Research on “Getting Credit,” available at
http://www.doingbusiness.org/research/getting-credit.
3 USAID/BizCLIR, “Secured Transactions Law—Ethiopia,” available at
http://www.bizclir.com/cs/countries/africa/ethiopia/securedtransactions.
4 See generally, World Bank Doing Business initiative, Research on “Getting Credit,” available at
http://www.doingbusiness.org/research/getting-credit.
5 See Mamiza Haq, Mohammad Hoque, and Shams Pathan, “Regulation of Microfinance Institutions in Asia:
A Comparative Analysis,” Int’l Rev. of Business Research Paper, Vol.4 No.4. (Aug-Sept 2008).
6 Id.

7 ASEAN Economic Community (AEC) Blueprint (2008).

8 ASEAN, Strategic Action Plan for ASEAN SME Development (2010-2015).

9 See Kenan Institute Asia, Regional SME Development Fund Conceptual Framework (undated).

10 ASEAN Secretariat, “ASEAN Economic Community Handbook for Business 2012,” Jakarta: ASEAN
Secretariat, November 2012, available at http://www.asean.org/resources/publications/asean-
publications/item/asean-economic-community-handbook-for-business-2012?category_id=382.
11 See ASEAN Finance Ministers Meeting, “Regional Cooperation in Finance” (summary available at
http://www.asean.org/communities/asean-economic-community/category/asean-finance-ministers-meeting-afmm).
12 Aladin D. Rillo, ASEAN Integration Monitoring Office, “Road to Financial Integration in ASEAN”
(PowerPoint, February 7, 2012).
13 See website of the ASEAN Insurance Training and Research Institute:
http://www.aitri.org/cms/index.php?option=com_content&task=view&id=12&Itemid=28.
14 For a full description of the methodology, see the RATE methodology document.

15 Economic Research Institute for ASEAN and East Asia (ERIA), Small and Medium Enterprises (SMEs)
Access to Finance in Selected Asian Economies (2010) at 21.
16 EuroCham/Vietnam, Trade and Investment Recommendations (2012).

17 Gates Foundation, Agricultural Strategy Presentation (2012).

18 New York Times—Malaysia page and accompanying links (2012).

19 Economic Research Institute for ASEAN and East Asia (ERIA), Small and Medium Enterprises (SMEs)
Access to Finance in Selected Asian Economies (2010) at 34.
20 See http://data.worldbank.org/indicator/FS.AST.DOMS.GD.ZS/countries.

21 USAID/GenderCLIR, Women’s Participation in Vietnam’s Economy: Agenda for Action (2010) (Women
and Credit).

20