A senior economist from the Asian Development Bank (AfDB) said a local scholarship program for micro, small and medium-sized enterprises (MSMEs) is essential to get more registrations to its board of directors for small businesses , as well as to attract more investors.
“Design is very important in developing capital markets that are more realistic and tailored to the requirements of viable MSMEs,” AfDB senior economist Shigehiro Shinozaki said at the Philippine Stock Exchange (PSE) forum last week.
“To overcome several challenges for developing MSME capital markets… it is worth considering examining and testing, testing different market models suitable for financing demand from MSMEs and investors,” he said. -he adds.
The AfDB has classified MSME capital markets in Southeast Asia into three types. The most common is a sponsor-led alternative investment market, which can be seen on Catalist of the Singapore Stock Exchange, the ACE and LEAP markets of Bursa Malaysia, and the alternative investment market in Thailand.
Some have a dedicated market for MSMEs, such as the SME (Small and Medium-Sized Enterprise) Council of the Philippines and the Accelerator Council of Indonesia.
Meanwhile, the AfDB said Vietnam’s UPCoM (Unlisted State-Owned Enterprise Market) is an example of non-MSME-focused market advice, but offers preferential listing requirements.
The main challenges affecting the development of MSME capital markets include low market liquidity, high listing costs, which include corporate governance requirements.
The mindset of MSME owners also affects the development of the capital market, as well as the poor knowledge of the capital market among the owners.
“The importance of capital markets, especially the equity market, will further increase as a channel for the distribution of growth capital to MSMEs and growth-oriented entrepreneurs,” Mr. Shinozaki said.
For its part, the PES has relaxed listing rules for initial public offerings (IPOs) to encourage small businesses to tap the capital markets for financing. It also introduced guidelines for companies wishing to join the board of directors of SMEs through a sponsorship model.
The PSE also hosted a webinar last week with the Department of Trade and Industry and the Securities and Exchange Commission (SEC) to educate and encourage more SMEs to list on the local stock exchange. The PSE said it has seen “strong interest” from provincial businesses.
“It is important for us to make it clear that raising capital in PSE is not exclusive to large established companies or companies based in Metro Manila,” said PSE President and CEO, Ramon S. Monzon, in a statement emailed Saturday.
“The stock market is open to SMEs that need capital to take a new step in the growth of their business,” he added. – Keren Concepcion G. Valmonte