Microfinance demand will grow in South-east Asia

Subject

Microfinance in South-east Asia.

Significance

Microfinance lending in Cambodia rose 45% last year, while the number of borrowers has doubled since 2010, a national summit on the industry was told in Phnom Penh last month. Other emerging South-east Asian economies will seek to emulate Cambodia's success as intra-regional financial ties heighten credit gaps, especially for small business. Most funding will come from abroad, but foreign investors are worried about regulatory shortcomings and high borrowing costs in some markets.

Impacts

• Cambodia will see the fastest microfinance industry growth among South-east Asian countries.
• However, larger markets such as Indonesia have greater long-term potential microfinance demand.
• Microfinance could increase SMEs' viability by paying for efficiencies and boost their presence in exports and supply chains.