SMES Engines Of Econ Growth
By Lyna Mohamad

Bandar Seri Begawan - "The government through the Ministry of Industry and Primary Resources as the main agency facilitating the development of SMEs is committed in nurturing and assisting Brunei SMEs to become significant contributors to economic growth and diversification.

"Through organisational streamlining, incentives and appropriate legislation, new or revitalised programmes, the government promotes the formation of SMEs startups, reduces the risk of failure, sustains their growth and facilitates the expansion of the export market."

The head of Entrepreneurial Development Centre at MIPR, Awg Effandi Hj Salleh, said this during the opening of the Asean-Japan Policy Workshop on SME development yesterday. Brunei's SMEs account for almost 98 per cent of the estimated 7,000 business establishments that are currently active.

The government is continuously making efforts to improve its lending mechanisms and at the same time monitoring the progress and development of those SMEs that have already received financial support, he said.

He said SMEs worldwide that dominate more than 90 per cent of total businesses have been recognised as important entities that could support and enhance the sustainable development of the country's economy.

"They serve as engines of economic growth and have become one of the main movers towards globalisation. In a rapidly evolving environment and in the era of globalisation and innovation, the SMEs role has become even more significant. SMEs hold promise in higher income growth, fuller employment of domestic resources, more gainful integration through global and regional trade and investment as well as greater equity in access, distribution and development.

"Financial markets have been created through the long history of human civilisation. Among the financial institutions, banks are major economic institutions that deal with money in a broad way sense.

"It is revealed that the success to financial services has a strong impact on improving the start-up or in developing or expanding the business, micro and small enterprises in particular.

"Micro-finance development is one of the most impressive success stories on global scale but between supply and demand of micro-finance services, micro and small enterprises particularly, there is a huge gap. "A huge number of micro-financial institutions (MFIs) - has emerged both spontaneously and from a variety of public interventions but there is still a need for a coherent development strategy for the industry that addresses regulatory and capacity building issues to be formulated," he said. It is important for private or public related agencies directly involved in financial services to make greater efforts in providing a conducive environment for financial services, micro-finance in particular.

"The benefits of micro-finance in stabilising and increasing income of micro-entrepreneurs are beyond doubt. Besides contributing to private sector development and economic growth, micro-finance also improves social welfare and is an effective tool for achieving the Millennium Development goals.

"A comprehensive strategy to develop micro-finance as an effective tool for private sector development has to take a number of particular features into account and in this regard, the overall total framework for the development of strong financial institutions that sustain financial services would require applying at least five strategies/elements.

"Such strategies or elements include the microfinance policy which supports to strengthen micro-finance institutions rather than focusing on channelling programme credits. Secondly, regulations that enable MFIs to increase out reach to entrepreneurs and provide basis for controlling their soundness.

"Third is an effective supervision system, capable of protecting MFIs clients and helping MFIs to maintain or achieve soundness; fourth is capacity building through standardised and high quality training of MFI managers and staff. Lastly, the building up of business linkages between banks and non-bank MFIs or MFIS operating at the national, provincial, district, sub-district and village levels.

"The schemes have a cumulative amount of loans approved at nearly B$25.2 million, of which 73% was approved to 66 SM1; 8 under the enterprise Facilitation Schemes with the remaining amount being loaned out to 356 micro enterprises," he said. -- Courtesy of Borneo Bulletin

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