MANILA, PHILIPPINES - The Asian Development Bank (ADB) is funding a study of market and finance barriers to boost cross-border trade by small and medium sized enterprises (SMEs), which could help pave the way for an increase in trade and a reduction in poverty in poor border areas.
ADB is providing a $1.5 million technical assistance grant, sourced from the Regional Cooperation and Integration Financing Partnership Facility, which will be used to carry out a survey of border traders, financiers, and border posts and to recommend policy and regulatory changes which are needed to improve SME traders' access to finance. It will also provide suggestions, in conjunction with local financial institutions, on new financial products for SME traders and will help address changes needed in nonfinancial areas to enhance trade efficiency and information access for SMEs.
SMEs make up the vast majority of all firms in the countries of the Greater Mekong Subregion and in Central Asia, and they are critical to balanced growth. Cross-border trade has grown rapidly in recent years with many countries building new roads and improving border facilities, aided by support from ADB. However, while physical infrastructure has expanded, a lack of market information and financial products and services for SME border traders has prevented them from achieving their potential growth.
"The technical assistance will address gaps in knowledge and provide ways to improve SME access to information, financing, and faster border transit," said Betty Wilkinson, Senior Finance Specialist (Microfinance) in ADB's East Asia Department.
The goals of the project are to boost SME border trade, target the availability of at least two new financial products for border traders, and expand credit volumes for SMEs. There is significant scope for greater cross-border SME trade in Asia, particularly between the People's Republic of China (PRC) and Mongolia, and between Viet Nam and southern PRC.
The Regional Cooperation and Integration Financing Partnership Facility was established by ADB in 2007 to provide financing for regional cooperation and integration initiatives in Asia and the Pacific, in conjunction with support from development partners. ADB will be the executing agency for the project, which will run for 30 months, with an expected completion date of April 2012.