The Philippines has taken the first step to achieve one of the deliverables under the Cebu Action Plan—an updated development roadmap for the Asia Pacific Economic Cooperation (APEC)—with the launch of the Financial Infrastructure Development Network (FIDN).
The FIDN an initiative under the Cebu Action Plan that was approved by APEC finance ministers last September, will help transform financial systems in region by expanding the reach of credit and other financial services.
It is particularly aimed at micro, small and medium enterprises (MSMEs) whose development seen as a significant factor in helping reduct poverty.
In a press conference on Thursday, Finance Assistant Secretary Ma. Teresa Habitan said the FIDN would look the financial infrastructure of member economies and examine how these could be further developed and aligned with international best practices.
“APEC, has in the past, been looking at identifying concrete actions that financial policy makers can take to expand the reach of financial services to the unserved and underserved. These may include small firms and households that have difficulty in accessing credit for various reasons,” she said.
Citing International Finance Corp. data, Habitan said that in the APEC region, only 15 percent of MSMEs have access to credit and that 22 percent of these cite access to finance as the barrier. While 45 percent claim to not need credit, 40 percent are unserved and another 10 percent are underserved, she added.
Only 5 percent of MSMEs is well serviced by the credit sector, Habitan noted.
“This amounts to an estimated total credit value gap in the region of about $840 billion. This underscores the potential and the need for deeper integration of SMEs into the national and regional economy,” she said.
The Securities and Exchange Commission (SEC) on Thursday also said it agreed that there was a pressing need to integrate more people and enterprises to capital markets so they become part of the formal sector.
“There is no true capital market development—and there is no meaningful economic progress—if many are left out,” SEC Chairperson Teresita Herbosa said.
Besides the Philippines, the FIDN is also composed of the World Bank Group’s International Finance Corp., APEC Business Advisory Council, SME Finance Forum and the Organization for Economic Co-operation and Development.
It is supported by leading global financial industry associations and firms that have joined the Asia-Pacific Financial Forum, a platform established by APEC finance ministers in 2013.
The Cebu Action Plan, to be presented to APEC leaders who will be meeting in Manila next week, is the centerpiece of the Philippines’ hosting of the organization’s annual summit.