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  • While Australia and Thailand governments are directly involved in creating Venture Capital Funds to provide investments for innovative SMEs, Canada, China and Mexico only participates in the network formation of market venture capitalists with start-ups. These economies do not have special banks or credit guarantee institutions for SMEs. Loan-focused economies except Philippines have created equity investment programs in recent years especially targeting for high-tech innovative SMEs.
  • Access_to_Financing_APEC_KIM.ppt

    1. 1. Access to Financing for SME Innovation in APEC 2008 INSME Annual Meeting Guangzhou (Canton), China July 2-4, 2008
    2. 2. Introduction <ul><li>Research objective </li></ul><ul><li>Research framework </li></ul><ul><li>Research approach </li></ul><ul><li>Selection of 10 member economies </li></ul>
    3. 3. Research objective Promoting innovative SMEs in APEC For Innovating products, processes, marketing and organizational efficiency of SMEs in APEC By Studying and disseminating SME innovation policies and best practices in APEC Identifying coherent environment conducive to SME innovation Through
    4. 4. Research framework
    5. 5. Research approach <ul><li>Stage 1 : literature review in April, 2006 </li></ul><ul><li>Stage 2 : questionnaire survey in June, 2006 </li></ul><ul><ul><li>Mail to 10 member economies </li></ul></ul><ul><li>Stage 3 : expert forum in June, 2006 </li></ul><ul><ul><li>Preliminary forum with 7 member economies </li></ul></ul><ul><li>Stage 4 : interview survey in July, 2006 </li></ul><ul><ul><li>Visit to 10 member economies </li></ul></ul><ul><li>Stage 5 : final reporting in December, 2006 </li></ul>
    6. 6. Selection of 10 member economies
    7. 7. Financing policy <ul><li>Equity financing </li></ul><ul><li>Debt financing </li></ul><ul><li>Financial system stage </li></ul><ul><li>Comparison </li></ul>
    8. 8. Financing Policy Framework Official guarantee about SMEs to financial institutions Certification of SMEs Credit guarantee program Loans with favourable interest rates or often with long-term fixed rates Direct loan program Debt Financing Providing communication channels to business angels, venture capitalists, investors and entrepreneurs BANs Governmental special-purpose funds for innovative SMEs or venture firms Government equity program Equity Financing Contents Sub-element Element
    9. 9. Equity financing <ul><li>Government equity program </li></ul><ul><ul><li>Korea established the fund of funds program in 2005 </li></ul></ul><ul><ul><li>Chinese Taipei initiated the ‘SME Incubation Investment Trust Accounts’ in 2003 </li></ul></ul><ul><ul><li>Japan invests into limited partnership for venture capital investment </li></ul></ul><ul><ul><li>Malaysia established two venture capital funds in 2000 </li></ul></ul><ul><ul><li>Australia started the Innovation Investment Fund program in 1997 </li></ul></ul><ul><ul><li>Thailand raised the OSMEP Venture Capital Fund in 2003 </li></ul></ul><ul><li>Indirect equity investment: role of investment networks through BANs </li></ul><ul><ul><li>Canada and China build networks with angel investors and venture capitalists for high tech SMEs and start-up firms in incubators </li></ul></ul><ul><ul><li>Mexico installed the SMEs Investor Club </li></ul></ul><ul><li>No equity investment </li></ul><ul><ul><li>Philippines </li></ul></ul>
    10. 10. Debt financing <ul><li>Direct loan program </li></ul><ul><ul><li>Japan provides direct loan through 1) the Japan Finance Corporation for Small Business, 2) National Life Finance Corporation, and 3) the Shoko Chukin bank; Japan ’s Credit Guarantee Corporations and JASME </li></ul></ul><ul><ul><li>Korea provides policy loans to SMEs; Korea ’s Credit Guarantee Fund (1976) and Technology Credit Guarantee Fund (1989) </li></ul></ul><ul><ul><li>Malaysia created SME bank in 2005 for financing and credit guarantee </li></ul></ul><ul><ul><li>China provide direct loans from the Innovation Fund (1999) and from the Funds for SME Development (2004) </li></ul></ul><ul><ul><li>Philippines established Small Business Corporation (1991) </li></ul></ul><ul><ul><li>Mexico operates the National SME Guarantee Program (2001) and Seed Capital Program (2005) </li></ul></ul><ul><li>Credit guarantee program </li></ul><ul><ul><li>Chinese Taipei does not provide direct loan programs, but established SME Credit Guarantee Fund (1974) </li></ul></ul><ul><li>No direct loan program </li></ul><ul><ul><li>Australia and Canada have market-oriented financial systems </li></ul></ul><ul><ul><li>Thailand has no direct loan programs unlike other developing member economies and most of Asian member economies </li></ul></ul>
    11. 11. Financial System Stage <ul><li>Stock Market Capitalization </li></ul><ul><li>Stock Market Survey </li></ul><ul><ul><li>Whether stock markets provide adequate financing to companies. Max is 10. </li></ul></ul><ul><li>Venture Capital Survey </li></ul><ul><ul><li>Whether venture capital easily available for business development. Max is 10. </li></ul></ul><ul><ul><li>Source: IMD World Competitiveness yearbook </li></ul></ul>
    12. 12. Stock Market Capitalization (Y2004) Source: IMD World Competitiveness yearbook
    13. 13. Stock Market Survey (Y2004) Whether stock markets provide adequate financing to companies. Max is 10.
    14. 14. Venture Capital Survey (Y2004) Whether venture capital easily available for business development. Max is 10.
    15. 15. Comparison of Financing Policy <ul><li>Japan </li></ul><ul><li>Canada </li></ul><ul><li>Australia </li></ul>High Financial System Stage Loan-focused Investment-focused Loan + VC Loan Only BANs-centered Government equity program <ul><li>Philippines </li></ul><ul><li>Mexico </li></ul><ul><li>China </li></ul>Low <ul><li>Korea </li></ul><ul><li>Chinese Taipei </li></ul><ul><li>Malaysia </li></ul><ul><li>Thailand </li></ul>Med
    16. 16. Summary <ul><li>Summary </li></ul>
    17. 17. Summary <ul><li>Economies in investment-focused group </li></ul><ul><ul><li>They provide only small proportion for systematic direct loan facilities </li></ul></ul><ul><ul><li>These economies do not have special banks nor credit guarantee institutions </li></ul></ul><ul><ul><li>They directly involve in creating venture capital funds or actively participate in the network formation of venture capitalists </li></ul></ul><ul><li>Economies in loan-focused group </li></ul><ul><ul><li>Their financing programs are centered on special banks or guarantee institutions </li></ul></ul><ul><ul><li>Recent years, these economies (except the Philippines) have created equity investment programs targeting high-tech innovative SMEs. </li></ul></ul><ul><ul><li>Japan, Korea, and Chinese Taipei have the longest history of governmental loan programs </li></ul></ul><ul><ul><li>Malaysia and the Philippines have relatively newly established the public loan systems after the Asian crisis </li></ul></ul>
    18. 18. Thank you! Find details at the site: , or e-mail to Joo-Yong KIM at [email_address]