Acronis and Minterest offer cybersecurity, financing to Singapore businesses

Acronis, a global player in cyberprotection, is now offering Singapore businesses financing through a partnership with Minterest, a Singapore-based online financial services solutions provider. The two have joined forces to launch Acronis #CyberFit Financing, Powered by Minterest to provide Singapore-based businesses with financing support to remain resilient and #CyberFit during the COVID-19 pandemic.

Through this partnership, Acronis and Minterest hope to empower businesses by providing easy access to customised financing solutions to tide them through this difficult period while building their cybersecurity capabilities to ringfence their businesses.

The COVID-19 pandemic has forced businesses globally to operate remotely and people to work from home, Acronis observed. Very often, they work with unsecured digital networks and are vulnerable to cyberattacks. As a cyberprotection company, Acronis is dedicated to helping organisations safeguard their data, applications, and systems so they can remain productive and avoid costly downtime. During the COVID-19 outbreak, essential services will need cyberprotection to be #CyberFit, ensuring their IT infrastructure remains protected and operational.

Serguei Beloussov, Founder and CEO of Acronis, said: “Cybercriminals are ruthless— they see the coronavirus pandemic as an opportunity to target new vulnerabilities such as those caused by many staff migrating to home offices. Now more than ever, cyberprotection should be a key concern for every business, as a data breach that costs a company valuable data can cripple even large organisations.

"Acronis Cyber Protect Cloud is a solution we have developed to combat this global threat. Acronis is dedicated to doing our part to help businesses both in the digital and the real world. With support from our capable partners at Minterest, we hope to provide streamlined access to vital funding to ensure business continuity for as many Singapore businesses as possible.”

Beyond the heightened cybersecurity risk, businesses often face urgent cash flow issues. Minterest is able to bring speed to lending, as it is able to process and approve loan applications within 48 hours, upon full submission of necessary documents.
Charis Liau, CEO of Minterest, commented: “The COVID-19 outbreak has sent shock waves throughout the global economy and many companies are facing deteriorating business conditions and cash flow liquidity crunches. We are pleased to partner with Acronis to accelerate the access to financial aid for Singapore-based firms. We want to be here for them; not just get through the pandemic, but beyond that as well.”

Source: Acronis. The new Acronis #CyberFit Financing, Powered by Minterest initiative is a partnership between Acronis and Minterest.

Details:

All companies and limited liability partnerships registered in Singapore can sign up for Acronis #CyberFit Financing, Powered by Minterest

Hashtag: #CyberFit

Singapore fintech aims to offer better B2B lending terms

Singapore-based startup Cash-IN-Asia has launched its business-to-business (B2B) fintech lending platform. Its approach to provide a 100% digital experience allows business owners to obtain financing from their mobile device.

Cash-IN-Asia plans to serve micro, small and medium enterprises (MSMEs) in Singapore with products that not only address existing needs, but also assist these key members of Singapore’s economy to realise their business potential well after the crisis is over.

Its ISO27001-certified platform is powered by artificial intelligence (AI) and data analytics, and aims to provide a one-stop solution for transparent and flexible financing to MSMEs. By using AI and analytics in their credit decision and fraud detection engine, Cash-IN-Asia combines conventional risk assessment methods with alternative data and behavioural analysis for quicker and more accurate processing.

Two types of financing are offered: credit line and term loan. Amounts start at S$3,000 for a credit line to a maximum of S$150,000 for a term loan. Term loan tenures range from six months to three years, with no pre-payment penalties.

The platform requires a three-minute application, and promises an outcome in less than three hours. Successful applicants can request their approved funds to be disbursed in the next three hours. The time-to-cash process is one of the fastest amongst Singapore-based lenders today, the company said.

According to Cash-IN-Asia, studies* reveal that a significant percentage of small businesses in Singapore tend to be self-funded by business owners who may turn to their personal credit cards when difficulties arise. Credit card interest is high, and robs businesses of the opportunity to build their corporate credit history.

To offer a better alternative, Cash-IN-Asia prices financing rates lower than those of credit cards. The rates start at 20% for a credit line and 18% for a term loan. Cash-IN-Asia also structures its products to incentivise MSMEs to build a credit history that ultimately rewards good customers with cheaper financing over time.

Said founder and CEO, Eldwin Wong: “Our initial rate may be 20%, but the final rate they are charged eventually depends on them. If our clients perform well, confidence rises and trust is built. Our rates then come down, which is one of our unique value propositions for clients.”

Cash-IN-Asia also employs a “don’t use, don’t pay” model for its products. Sign up and application is free, and upon approval, clients are granted a credit facility with no fees or obligations. This is unlike other lenders that may impose a recurring facility fee.

The treatment of delinquent loans is another example of how the lender approaches things differently. The common practice with most traditional lenders is to declare these loans “in default” and resort to legal proceedings. Cash-IN-Asia prefers to work towards long-term “win-win” relationships instead. Troubled clients are given the opportunity to restructure their loans on acceptable terms that will help restore their businesses to health and service their loans.

Wong elaborates: “We believe in helping small business owners with their cashflow. That way, they get to focus more on their business and their chances of doing well increases. In turn, we will be able to scale up their loans and do more for them. One example of that is an automatic review of all client accounts every two months, to raise the credit limits of those in good standing for future growth.”

Cash-IN-Asia is the first B2B fintech lending company in Singapore to attain the ISO 27001 certification for information security. The certification allows it to meet diverse challenges of operating in the digital economy with high standards of business protocols and data integrity.

*Bain & Co, Fulfilling its Promise – The future of Southeast Asia’s digital financial services, 2019; and Deloitte Southeast Asia, Digital banking for small and medium-sized enterprises, 2015.

Dubai Chamber white paper analyses Dubai startup funding environment

Source: Dubai Chamber. Cover for the white paper.

Startups in the UAE need a practical guide to help them navigate the UAE’s funding landscape along with access to a wider network of investors who are eager to finance new business ventures, a new white paper published by the Dubai Chamber of Commerce and Industry has said.

The report, Helping Startups Access Funding, was published in collaboration with Roland Berger, and released during Dubai Startup Hub’s Entrepreneurship Advocacy Series event in March. Dubai Startup Hub is the entrepreneurship arm of the Dubai Chamber of Commerce and Industry. The initiative provides clarity and direction in the journey of a startup entrepreneur through a wide range of programmes, workshops and training.

The white paper also called for allocation of more investment for startup incubators and accelerators, as well as for closer cooperation between universities, government agencies and investment funds to expand the scope of investments, to support the growth of startups in the UAE.

Navigating the complex local funding ecosystem, high hurdle rates to qualify for equity capital, and insufficient risk appetite of debt lenders were listed as key challenges for startups in the UAE. In addition, many banks still require startups to have an established company track record of at least three years before they can qualify for funding. The report also found that investor appetite is limited to a select number of business models, technologies and sectors.

Although the UAE has successfully attracted a diverse set of investors, interest in startups as an asset class is still relatively new, the white paper noted, with the bulk of investment still primarily directed towards other asset classes such as real estate and commodities. The document added that a lack of reliable market data adds complexity, cost and uncertainty when it comes to due diligence.

Building sector and technology specific ecosystems is the way forward to further elevate the role of startups in the economy, the report said. This in turn would help drive the UAE forward in its mission to be a world leader in innovation, and develop an entrepreneurial ecosystem where startups, small and medium sized enterprises (SMEs), and major corporations can promote the use of modern technology, leading to the diversification of the economy, and the creation of new job opportunities.

The white paper also underlined the need to build more incubator capacity to cater to the growing number of entrepreneurs, adding that most of the currently available spaces still come at a cost that require start-ups to run on a self-financed basis for a fair period.

Startups still continue to experience some degree of difficulty in opening a bank account in the UAE, largely due to the various risk policies adopted by banks, the report said, calling on government entities to play a leading role in reducing the risks incurred by banks in financing early-stage startups.
On a positive note, the report said the building blocks for a thriving ecosystem are now in place, noting that the number of startups in the UAE has grown considerably in recent years as the country has become a preferred regional destination for entrepreneurs operating across a wide variety of sectors and fields.

Results of the new white paper were based on insights obtained by a survey of banks, startups, venture capital firms, angel investors, incubators, accelerators, and government entities in the UAE.

Explore:

Download the Helping Startups Access Funding white paper (PDF)

New moneylending regulations in Singapore

The Singapore Ministry of Law will implement the first phase of the Moneylenders (Amendment) Act 2018* and Moneylenders (Amendment) Rules 2018 to provide better protection for borrowers and strengthen the regulation of licensed moneylenders from 30 November. 

The new rules will introduce aggregate loan caps to limit the amount an individual may borrow from all licensed moneylenders combined. As announced on 4 October 2018, the following caps will apply to Singapore citizens and permanent residents, as well as foreigners residing in Singapore**:

To facilitate the implementation of the aggregate loan cap, a regulatory framework has been introduced for the Moneylenders Credit Bureau (MLCB). The new framework places obligations on the MLCB and licensed moneylenders to strengthen the confidentiality, security, and integrity of borrower data. This will better enable the MLCB to function as a central repository of moneylending data, and help moneylenders make more informed and responsible lending decisions, the ministry said. 

The new rules also provide for a self-exclusion*** framework, to help borrowers regulate their borrowing behaviour and participate in debt assistance schemes which typically require self-exclusion. Under the framework, licensed moneylenders are prohibited from lending to any individual who has applied for self-exclusion. Implementation of the self-exclusion system is on-going; more details will be available in due course. 

To prevent undesirable characters from entering the moneylending industry, the approval of the Registrar of Moneylenders will be required before any licensed moneylender can employ or engage any assistant in the business. The Registrar’s approval will also be required before anyone can become a substantial shareholder of, or increase his substantial shareholdings in, a licensed moneylender. 

In addition, it is now an offence for any licensed moneylender to enter into a loan contract that breaches regulatory caps on interest and fees. 

Legislative changes relating to the professionalisation of the moneylending industry will take effect in the first quarter of 2019. All licensed moneylenders will be required to be incorporated as companies limited by shares with a minimum amount of paid-up capital of S$100,000, and to submit annual audited accounts to the Registry of Moneylenders.

*The Moneylenders (Amendment) Act 2018 was passed by the Parliament on 8 January 2018.

**The aggregate loan caps apply to all holders of Work Passes, Dependent’s Passes, Student Passes and Long Term Visit Passes. Holders of Short Term Visit Passes (up to 90 days) will not be covered. 

***In a self-exclusion framework, someone can request that their name is added to a list of people who are excluded from an activity. In the traditional sense, they would be banned from borrowing money though the regulations could implement self exclusion differently - they could be allowed to borrow much less money instead, for example.

AsiaKredit launches consumer lending platform in the Philippines

· AsiaKredit aims to advance financial inclusion in the Philippines by improving both the availability of credit to those with limited or no banking history, as well as their approval rate

Source: pera247 website. Screenshot of the pera247 app.

· Pera247 is a fully digital lending solution that aims to provide unsecured small-ticket, short-term consumer loans for up to 90 days through a mobile wallet

· Credit assessment tools analyse mobile behavioural data and other alternative sources of data to make fast and reliable credit decisions

AsiaKredit, a digital consumer lender focused on Southeast Asia, today announced the launch of pera247 in the Philippines. The digital lending solution aims to provide unsecured small-ticket, short-term consumer loans for up to 90 days to the country’s underbanked population with no existing credit or collateral history, via a mobile app.

As part of the credit assessment process, pera247 considers both traditional and alternative sources of data, such as behavioural mobile data from an applicant’s smartphone. AsiaKredit says pera247 is capable of highly predictive digital credit assessments that increase loan approval rates while reducing its risk. 

At the end of the credit decision journey, the pera247 app also acts as a mobile wallet for the successful applicant, where funds will be disbursed to and linked to thousands of physical payment centres, within hours of the application.

AsiaKredit’s Co-Founder and CEO Mike Singh commented: “We are excited to take consumer lending fully digital in the Philippines as we see a dynamic shift in consumer digital behavior to access financial services through mobile and online channels. Through pera247, AsiaKredit has a huge opportunity to impact the lives of hundreds of millions unbanked clients in Southeast Asia, leveraging the high mobile penetration in the region to foster financial inclusion. 

AsiaKredit plans to expand its product offering to other countries across Southeast Asia, with Indonesia in its sights for 2018.

MAS relaxes regulations on finance companies to ease SME financing in Singapore

The Monetary Authority of Singapore (MAS) has announced regulatory changes to strengthen the resilience of finance companies and enhance their ability to provide financing to small and medium sized enterprises (SMEs).

Finance companies complement banks, providing what are often more personalised and customised solutions for smaller-sized businesses. MAS will relax some business restrictions that currently apply to finance companies.

The limit on a finance company’s aggregate uncollateralised business loans will be raised to up to 25% of its capital funds, from the current 10%. At the same time, the limit on uncollateralised business loans to a single borrower will also be raised to up to 0.5% of capital funds, from the current S$5,000. These changes will better enable finance companies to serve their SME customers, many of whom require unsecured credit for working capital, MAS said.

Finance companies will be allowed to offer current account and chequing services to their business customers  They will also be allowed to join electronic payment networks, including Inter-bank GIRO, Fast and Secure Transfers (FAST) and Electronic Funds Transfer at Point of Sale (EFTPOS). These changes will enable finance companies to provide more comprehensive credit and deposit services to SMEs.

MAS will retain other regulatory restrictions on finance companies, such as restrictions on foreign currency exposures and derivatives trading. MAS will also require finance companies to enhance their corporate governance and risk management. This will include stricter rules on related party transactions and limits on exposures to the property sector.

MAS will phase in the above regulatory changes starting from this year.

MAS will further liberalise its existing policy of not allowing a foreign takeover of a finance company. This will accord finance companies greater flexibility to explore strategic partnerships and innovative business models that can strengthen their SME financing business. Specifically, MAS is prepared to consider an application for a merger or acquisition if the prospective merger partner or acquirer commits to maintaining SME financing as a core business of the finance company. In addition, the merger partner or acquirer must be able to demonstrate expertise in SME financing and present proposals to enhance the finance company’s SME lending activities with new technologies, methodologies or business models.

Ong Chong Tee, Deputy MD, MAS, said: “The liberalisation of finance companies will facilitate their efforts to invest in new capabilities to enhance their core SME financing business. These changes are part of MAS’ ongoing efforts to ensure that our financial sector continues to be able to support enterprise development.”

There are three licensed finance companies in Singapore. In Q216, finance companies accounted for just under S$7 billion of outstanding SME loans.

Car loan requirements eased in Singapore

The Monetary Authority of Singapore (MAS) has announced that the maximum loan-to-value (LTV) ratios and loan tenure allowed for motor vehicle loans will be eased, although restrictions will remain in place for the long term. 

The adjustments follow the sustained moderation in certificate of entitlement* (COE) premiums and in resulting inflationary pressures over the last three years.

Restrictions on motor vehicle loans by financial institutions were introduced in 2013 to moderate the demand for cars and COEs and alleviate inflationary pressures. The measures also served longer term purposes: to encourage financial prudence and to support efforts to promote a car-lite society.

Since then, the contribution of private road transport (excluding petrol) to CPI-all items inflation has eased from +1.3% points in 2011-2012 to -0.5% point in Q116. In addition, outstanding motor vehicle loans have declined by 32% from S$14.13 billion in Q113 to S$9.55 billion in Q116.

The allowable vehicle population growth rate remains capped at 0.25% per annum. However, COE quotas have expanded in recent quarters alongside an increase in de-registrations*.

Taking these developments into account, the rules on motor vehicle loans will be revised as follows**:

Open Market Value of motor vehicle	Maximum LTV^	Maximum loan tenure
Less than or equal to S$20,000	70% (previously 60%)	7 years (previously 5 years)
More than S$20,000	60% (previously 50%)

^LTV is the amount of the loan expressed as a percentage of the purchase price of the motor vehicle. The purchase price includes relevant taxes and price of the COE.

Ong Chong Tee, Deputy Managing Director, MAS, said, “In 2013, when we introduced the measures, our immediate aim was to help restrain escalating COE premiums and consequent inflationary pressures. Since then, demand conditions have moderated and it is timely to ease the measures. MAS will, however, continue to have the LTV and loan tenure framework in place for the long term to promote financial prudence and help support the promotion of a car-lite society.”

The Ministry of Trade and Industry will apply the revised financing restrictions to non-MAS regulated entities which extend motor vehicle financing on a hire-purchase basis. The Ministry of Law will also require licensed moneylenders to comply with the revised financing restrictions.

*A COE is required for every car to be registered in Singapore. A COE represents the right to use the vehicle for 10 years, after which vehicle owners may choose to de-register their vehicle or to revalidate their COEs for another five or 10 years. The total number of COEs available in the May-July 2016 period has risen by 9% and 21% respectively to 13,300 for Category A and 8,772 for Category B, up from 12,171 and 7,252 in the February-April 2016 period.

**The rules will apply to financing granted for the purchase of motor vehicles where the date on which the agreement to purchase a motor vehicle is on or after 27 May 2016, or where there is no agreement to purchase a motor vehicle, the date on which the borrower successfully obtains a COE is on or after 27 May 2016.

QIB signs up for Al-Dhameen SME funding programme

Source: QIB. Abdulaziz Bin Nasser Al-Khalifa, CEO of Qatar Development Bank (QDB), and Bassel Gamal, Qatar Islamic Bank (QIB) Group Chief Executive Officer, signed the Al-Dhameen agreement. The ceremony was attended by QDB officials Khalid Abdulla Al Mana, Executive Director of Business Finance and Jawaher Al Noaimi, Al Dhameen Programme Manager. QIB was represented by Tarek Fawzi, General Manager, Wholesale Banking Group, Mazen Al Thalathini, Assistant General Manager-Corporate Banking, and Basem Shahrouri, Head of Business Banking Division. 

Qatar Development Bank (QDB) has signed a new Al-Dhameen Programme Portfolio Agreement with Qatar Islamic Bank (QIB) for small and medium enterprise (SME) financing in Qatar.

Al-Dhameen, which is sponsored by QDB, helps startups and existing companies with lack of collateral to obtain funds for growing their businesses. All main sector business activities are eligible for support under Al-Dhameen except the agriculture, fishing and livestock; non-oil mining and quarrying; wholesale and retail trade; financial and insurance, and real estate industries.

The programme does not provide direct finance to SMEs, instead offering the business owner access to the required finance from a partner bank in the form of guarantees in favour of the bank. Al-Dhameen guarantees 85% of the finance value not exceeding QR15 million). 

The Al-Dhameen programme was enhanced after feedback from partner banks and related parties, primarily to expand the base of beneficiaries, allow partner banks to determine which SMEs receive financing, and to fund them more flexibly. A record QR846 million in guarantees have been disbursed to over 348 SMEs since the beginning of the programme in 2010. 

The new QR100 million Al Dhameen portfolio aims to speed up approvals to guarantee the value of the funding provided by the partner bank to small and medium enterprises lacking sufficient guarantees. QDB has prepared a special portfolio guide that describes the terms, conditions, and international standards, due diligence, credit monitoring, applications and guidelines development, to help QIB to take the necessary decisions without referring to QDB.

Abdulaziz Bin Nasser Al-Khalifa, CEO of QDB said: "The Al Dhameen programme primarily facilitates financing to some of the most important sectors of industry, such as education, healthcare, and value-added services. The programme targets mainly companies and startups. We are delighted with this partnership with QIB, which (reinforces the priority) that all banks operating in Qatar have to support and develop the SME sector, diversifying the private sector and building a knowledge-based economy.” 

Bassel Gamal, QIB Group Chief Executive Officer said: “This agreement underscores QIB’s commitment towards supporting the country’s economy, by enhancing the role of the private sector and contributing to a suitable economic diversification as part of the Qatar National Vision 2030. It enables our existing and potential customers to get what they need swiftly and seamlessly, thus supporting the establishment of new SMEs and helping operating companies with their business expansion plans.

“We are proud of our strong ties with QDB, and we are committed to further enhance the mutual cooperation to achieve the agreement’s objectives which will contribute significantly in speeding up the process to provide financing solutions for SMEs. Supporting the SME sector is one of our top priorities, and for that reason, we have a dedicated programme, Aamaly, designed to cater for all the financial needs of SMEs in Qatar.”

Commercial Bank and Doha Bank are also partner banks for Al-Dhameen, having signed agreements with QDB in July 2015.

Interested?

SMEs can enquire about applications at the nearest QIB branch.

World Bank to help Indian, Kazakhstani SMEs grow

The World Bank has approved a US$500 million loan for the MSME Growth Innovation and Inclusive Finance Project to improve access to finance for micro, small and medium enterprises (MSMEs) in the manufacturing and services sector in India. This includes MSMEs from early to growth stage, including those which provide innovative financial products.

In India, MSMEs account for more than 80% of total industrial enterprises, produce over 8, 000 value-added products and employ an estimated 60 million people. It contributes around 45% to manufacturing output and about 40% to exports, both directly and indirectly. In addition, over 50% percent of MSMEs are rural enterprises and widely distributed across low-income states, making them an important sector for promoting economic growth and poverty reduction.

However, lack of adequate finance is one of the biggest challenges facing the MSME sector. Financial institutions have limited their exposure to the sector due to a higher risk perception, information asymmetry, high transaction costs and the lack of collateral. The MSME census of 2006-07 estimated that about 87 % of MSMEs did not have any access to finance and were self-financed. Credit towards micro and small enterprises represent only 13 to 15% of formal financial institutions portfolios.

The project will support MSMEs through direct financing by the Small Industries Development Bank of India or SIDBI, an apex financial institution for promotion, financing and development of MSMEs in India, and also through participating financial institutions across three components. These include support to startup debt financing and risk capital as well as support to service and manufacturing sector financing models.

“With 8 million people entering the labour force every year, MSMEs have the potential to be an important source of wage employment and entrepreneurship in India, foster innovations as well as be the cradle for the government’s `Make in India’ vision formulated recently. For these ideas to take shape, addressing the key constraints that inhibit MSMEs from accessing finance is of utmost importance. This project will work with the government in developing innovative products that address the current constraints of MSMEs, respond to the changing needs of the Indian economy and also catalyse private sector financing,” said Onno Ruhl,World Bank Country Director in India.

The project's first component will support SIDBI in developing, innovating and scaling up its startup debt financing programme as well as encourage participation of potential financing institutions in the development of this missing financial market segment. The India’s startup ecosystem is currently one of the fastest growing in the world and the third largest startup base with 3,100 startups (after the US with 41,500 start-ups and the UK with 4,000). While there has been incredible growth in equity financing in the Indian ecosystem, debt financing is non-existent for the majority of the vast growing startup enterprises which severely constrains the necessary rapid growth startups need to survive. The project will seek to address this gap to demonstrate financial products that both align with a fast growth economy and address missing financial markets that can unlock the incredible potential of India’s startup and early stage ecosystem.

Its second component supports service sector firms’ financing. Although the structure of the Indian economy is shifting towards services, now 65% of Indian GDP, enterprises in this sector continue to face challenges in accessing formal finance mainly due to lack of physical assets to provide as collateral. Financial depth (credit to GDP) for this sector is 25%*. In an attempt to address this issue SIDBI has introduced new products and considering their potential to grow, this project will support scale up of innovative products which are better tailored for MSMEs in the service sector such as use of movable and intangible assets, including light assets and franchise financing. Information asymmetry and credit risk will be mitigated by using information from alternative/multiple sources (such as franchisors for franchisee financing).

The project will also support manufacturing MSMEs through innovative financial products including loan extension services and cluster financing - including women-led clusters. Particular focus will be to expand manufacturing activity in financially underserved areas, including low income states especially through refinancing, as banks and other public financial institutions have a deeper network in these states.

“Addressing financial constraints of MSMEs and start-ups should generate multiplier effects across the economy by unlocking their inherent growth potential, fostering entrepreneurship and creating employment opportunities,” said Gloria Grandolini, Senior Director of the World Bank Group Finance and Markets Global Practice.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a five-year grace period and a maturity of 10 years.

The World Bank earlier approved a US$40 million loan to help enhance the competitiveness and management capacity of small and medium sized enterprises in Kazakhstan as well.

“Small and medium sized enterprises are widely identified as important sources of economic growth and employment and, therefore, an essential foundation for shared prosperity,” said Ludmilla Butenko, World Bank Country Manager for Kazakhstan. “The project is expected to increase the competitiveness of Kazakhstani SMEs to contribute to diversification of the economy by reducing its reliance on extractive industries.”

Lack of professional and management skills as well as limited market connections are some of the key obstacles for Kazakhstan’s private sector. The SME Competitiveness Project is aimed at strengthening the management capacity of SMEs to grow and create more and better jobs. Existing SME advisory programmes will be enhanced in terms of quality and methodology in line with international standards. Several hundred business consultants will be trained and certified to deliver in turn professional consulting to several thousand entrepreneurs and SMEs.

The project will also focus on increasing market linkages for SMEs in non-extractive sectors with a market-based growth potential. The new linkages between SMEs and large buyers will provide entrepreneurs with an increased access to markets. To facilitate the process, the project aims at piloting a supplier development programme and enhancing the capacity of policy making authorities in developing competitive sectors in emerging areas of the economy. The evidence-based policy making will be strengthened through improved existing monitoring and evaluation frameworks and public-private dialogue.

All these activities will result in increased firm productivity and revenues as well as overall contribution of SMEs to the country economy.

The implementation of the five-year project (2015-2020) will start after the country approval process is completed. The SME Competitiveness Project will be financed through a US$40 million IBRD loan, with a 15-year maturity period and a five-year grace period, with US$6 million in co-financing from the government of Kazakhstan.
*Reserve Bank of India figures.

posted from Bloggeroid

Indian government and World Bank sign loan agreement to support MSMEs

The Government of India (GoI) and the World Bank today signed a US$200 million loan agreement to enhance the productivity of micro, small and medium enterprises (MSMEs) by expanding and upgrading Technology Centers across India.

Today, the manufacturing sector in India is facing several constraints including difficulties in accessing markets and finance, poor infrastructure, disincentives for MSMEs to grow and difficulties for MSMEs to access technology and skills. Technology Centers are shared facilities – often located near industry clusters – that enable MSMEs to access technologies, business advisory and training that can directly help them improve their productivity and competitiveness.

The Technology Center Systems Program (TCSP) will develop the technological and skills base of MSMEs in selected manufacturing industries. The Technology Centers (TCs) will support industry clusters across manufacturing chains, both upstream (tooling industry) and downstream (such as automotive, electronics and fragrance and flavour industries).

“Select manufacturing industries face shortages of skilled labour and have limited access to advanced technologies. Technology Centers under this programme will provide practical machine-based and hands-on vocational training for MSMEs and youth, especially women, in select manufacturing industries and clusters,” said Tarun Bajaj, Joint Secretary, Department of Economic Affairs, Ministry of Finance.

The loan agreement was signed by Bajaj on behalf of the Government of India and Onno Ruhl, World Bank Country Director in India, on behalf of the World Bank.

“With the largest youth population in the world, India has the potential to benefit from an immense demographic dividend. However, with 13 million young people entering the labour force each year, increasing the skills base of its youth will have to be a key priority for the country to gain from this demographic dividend,” said Ruhl.

The programme will set up 15 new Technology Centers and upgrade the technological capabilities of the existing 18 Centers by developing links with Indian and international research institutes and leading manufacturers.

“The unique proposition of this programme is that it aims to create an ecosystem of engagement for Technology Centers and Small and Medium Enterprises. Through introduction of entities such as cluster network managers, technology partners and a pervasive IT platform, Technology Centers can learn from each other and help their end customers better,” said Manju Haththotuwa, Senior Private Sector Development Specialist and World Bank’s Task Team Leader for the programme.

The programme will also complement the work being done by public private providers of vocational training like the Industrial Training Institutes (ITIs), the polytechnics, the Advanced Training Institutes (ATIs) and Nettur Technical Training Foundation (NTTF); help them improve their curricula; train their trainers; and establish links between the Technology Centers and other institutes like the National Skill Development Agency.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a seven-year grace period, and a maturity of 22 years.

SMEs get incentives galore in Malaysia's Budget 2015

Offering a helping hand for small and medium sized enterprises (SMEs) was a big part of the Malaysian Budget 2015, which was announced by Prime Minister and Finance Minister Datuk Seri Najib Tun Razak on October 10. 

"Currently, SMEs contribute 33% to GDP and the share is targeted to increase to 41% by 2020," he noted in his speech.

To accelerate the participation of SMEs in economic activity, the Malaysian government proposes the implementation of the SME Investment Partner programme. Under the programme, SMEs will be given financing assistance in the form of loans, equity or both, particularly at the startup stage. An initial fund totalling RM375 million will be provided for a period of five years, of which RM250 million is from SME Bank and RM125 million from private investors. In addition, RM10 million will be allocated for the Business Accelerator Programme under SME Corp.

To enhance use of new technology, automation and innovation in the development of SMEs, RM80 million is allocated for a Soft Loan Scheme for Automation and Modernisation of SMEs under Malaysian Industrial Development Finance.

TEKUN, the national agency  which provides business opportunities, business capital financing and guidance and support services for entrepreneurs, has already channelled loans totalling RM3.1 billion to nearly 300,000 borrowers with loan limits of between RM1,000 and RM100,000. "In 2015, TEKUN will provide additional funds of RM500 million which will be distributed as follows:

First: RM350 million is allocated for Bumiputera entrepreneurs to provide financing to nearly 33,000 new borrowers;
Second: RM50 million will be allocated to Indian Entrepreneurs Financing Scheme that will benefit 5,000 Indian entrepreneurs;
Third: RM50 million will be allocated to the Young Professional Women Entrepreneurs Development Programme that will benefit 5,000 professional women; and
Fourth: RM50 million will be allocated to the Armed Forces Veteran Entrepreneur Development Programme that will benefit 5,000 veterans," said Najib. "To assist SME entrepreneurs from the Chinese community, the Government will provide soft loans totalling RM50 million, and RM30 million for hawkers and petty traders."

Additional help for SMEs in the service sector is also forthcoming. The government wants the services sector to contribute 60% of GDP by 2020, up from 55.2% in 2013. To boost the services sector, Malaysia is implementing various initiatives, including:

• Setting up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs in the services sector;
• Establishing a Research Incentive Scheme for Enterprises (RISE) with an allocation of RM10 million to encourage companies to set up research centres in high technology, ICT and knowledge-based industries;
• Reintroducing the Services Export Fund (SEF) totalling RM300 million to encourage SMEs to conduct market feasibility studies and undertake export promotion to penetrate new markets; and
• Strengthening the Franchise Development Scheme under the Ministry of Domestic Trade, Co-operatives and Consumerism in collaboration with the Malaysian Franchise Association. 

"The RISE addresses several longstanding economic agendas, and to have them refreshed in the new fiscal budget underscores the criticality of these goals in the nation's long-term roadmap. With RM10 million set aside to encourage the founding of research centres in high-tech, ICT and knowledge-based industries,  IDC expects this capital injection to further catalyse the inflow of foreign direct investment (FDI).  Although it was not made clear if RISE's coverage would be fully extended to include foreign investors, such a motion would be extremely relevant and well-timed – large multinationals such as Intel and AMD have long flagged Malaysia for its competitive advantage in the R&D sector relative to peer Asian nations, and further incentives would serve to validate this view," Ho Sui-Jon, Market Analyst, IDC Financial Insights Asia/Pacific, representing IDC Malaysia commented.

"Additionally, RISE will also play a none-too-small role in pushing Malaysia forward in the high-tech goods value chain. This pursuit was last backed by policy-makers during the announcement of the latest Financial Sector Master Plan, where it was stated that value-added manufacturing will replace the nation's dependence on parallel medium industries moving forward.

"Should IDC's assumptions hold true, we can expect cross-sector spillovers that will far surpass the RM10 million outlay in scope, taking the form of more aggressive enterprise resource planning (ERP) investments moving forward."

The Government will also introduce a new Islamic finance product for investment in 2015 called the Investment Account Platform (IAP). The IAP is expected to provide opportunities for developing viable SMEs, he added. 

Automation is being encouraged in the manufacturing industry, with high labour intensive industries such as rubber products, plastics, wood, furniture and textiles to enjoy an automation capital allowance of 200% to be provided on the first RM4 million expenditure incurred within the period from 2015 to 2017. For other industries, the automation capital allowance of 200% will be provided on the first RM2 million expenditure incurred within the period from 2015 to 2020.

To develop creative industries such as animation, filming, designing and cultural heritage, the Government has allocated RM200 million to MyCreative Ventures in 2012. To further promote the industry, a Digital Content Industry Fund will be set up under the Communications and Multimedia Commission with an allocation of RM100 million.

"The  Digital Content Industry Fund, an extension of the MyCreative Ventures fund of 2012 will be set up under the Communications and Multimedia Commission, with RM100 million allocated. Given that this directly benefits the film, animation, design and other associated industries, all of which are data-intensive, IDC expects a significant portion of the fund to be channelled back into Third Platform IT investments. Ranging from the management of proprietary data through virtual, cost-effective and secure services, to the delivery of media on various alternative channels beyond mass broadcasting, it is hoped that this initiative heralds the conception of a much more vibrant app/ media/ mobility ecosystem in Malaysia," said Ho.

A more specialised incentive package is to be offered for investment projects based on technology, innovation and knowledge, particularly involving highly qualified employees with high salaries. RM1.3 billion has been set aside for the Ministry of Science, Technology and Innovation to implement several programmes including:

• A target of 360 high-impact innovative products to be commercialised within the next five years;
• Research funds of RM290 million to implement high-impact R&D&C programmes;
• Rebranding of SIRIM, the national agency for R&D and quality standards. For this, an SME Technology Penetration and Upgrading Programme and technology auditing will be implemented;
• Introduce a new Public Private Research Network spearheaded by Ministry of Education in collaboration with the Malaysian Technology Development Corporation with an allocation of RM50 million; and
• Strengthen the Technology Commercialisation Platform Programme by Agensi Inovasi Malaysia with an additional allocation of RM50 million.

For infrastructure, the High-Speed Broadband (HSBB) network will continue to be implemented in areas of high economic impact, covering state capitals and selected major towns nationwide. A sum of RM2.7 billion will be spent over the next three years to build 1,000 new telecommunication towers and laying of undersea cables.

Ho noted:  "The recalibration of various subsidy schemes is likely to have a positive, albeit delayed, impact on the adoption of consumer and enterprise technologies. However, the national budget has also disclosed more direct interventions – the RM2.7 billion earmarked for the development of a national HSBB being the more significant of these – which will potentially have more far-reaching effects.  While there seems to have been a shift away from the goal of providing universal access to HSBB across Malaysia, there is hope that this investment will bring the nation into a more competitive positions – in terms of cost, speed, and coverage – with other countries in the region.

"The amount of investment ploughed into fast-tracking the establishment of a truly 'barrier-less' nationwide retail internet infrastructure will serve as both precedent and stepping stone for future higher-value, higher-sophistication technological propositions with broader commercial applications.  More importantly, such an infrastructure should align itself seamlessly with the Digital Malaysia initiative, and will prove to be a crucial enabler for the 'Third Platform' of technology development (comprising of the Big Data, Cloud, Social and Mobility domains).

Ho noted that changes under 'Mainstreaming Technical and Vocational Education', under which the government has committed RM1.2 billion to enhance vocational and community college programmes, could also impact the IT industry.  "While it was not made clear exactly how these initiatives will be iterated, IDC is cautiously optimistic that they would take a form beyond tuition subsidies and fee waivers, to include actual enhancement of education facilities as well as, quite possibly, the establishment of new academic programmes. If that should be the case, it would give rise to significant potential in new applications of IT and ICT in the country, as well as preparing next-generation talent with the tools to compete locally and globally," he said.

Ho added that enforcement of GST in mid-Q2 2015 will disrupt the local sale of personal devices such as mobile phones, tablets, and PCs during the periods near to the launch date. "IDC expects a measureable acceleration in purchasing trends in the first quarter, in anticipation to the impending pricing hikes and commensurately, we will witness a reduction in sales numbers after its implementation.  We expect that this will only be a short term phenomenon and that the market will normalise by the end of the year," he said.

Ho observed that a budget item overlaps with existing Digital Malaysia initiatives, relating to the technological uplifting of the local SME sector. "RM150 million has been provisioned for qualifying enterprises to purchase GST-compliant accounting software. In IDC's opinion, this would have been an exemplary move, had it been made one year ago.  Given the short remaining time left before the planned enforcement of the new tax model, it is unlikely that end-users and system integrators will be able to meet the deadline if they are indeed only now beginning to embark on the transition. The subsidy will nonetheless find some utility if and when the compliance deadline is extended, depending on the number of non-compliant SMEs remaining come Q2 2015," he said.

"However, it would also be interesting to see if this programme would accommodate organisations which have already completed or are in the process of their transformation in complying with the GST – for instance, rebates to reimburse/reward the relevant parties for being on or ahead of schedule with compliance."