ASEAN Sets Benchmark on Credit Rating

Jakarta – ASEAN unveiled a benchmark for SME Credit Rating Methodology in ASEAN to the representatives from central banks, credit rating agencies, small and medium enterprise (SME) development agencies and commercial banks from ASEAN Member States (AMS).

A socialisation workshop, held by the Bank Indonesia and Ministry of Cooperative and SMEs of the Republic of Indonesia on December 5 in Jakarta, was part of the ASEAN SME Agencies Working Group (SMEWG)’s initiative to develop an ASEAN benchmark for SME credit rating methodology for reducing asymmetric credit information thus enhancing access to finance for SME. The workshop aims to (i) socialise the outcomes of the study and (ii) create awareness on the benefits of credit rating system among key stakeholders.

Compared and contrasted to the variation of SME definitions and their contribution to the economies in each ASEAN Member State, the Consultant from the Institute for Economic and Social Research, University of Indonesia (LPEM FEUI), proposed the guiding principles, infrastructure and criteria for SME credit rating, to serve those un-bankable, formal and established SME in particular. Minimum criteria in the credit rating model will include both common and industry- and country-specific. Challenges ahead include: (i) availability and integrity of credit data, both financial and non-financials; and (ii) acceptance by relevant stakeholder to utilise and trust the credit rating assigned by credit rating agencies, among others.

In his keynote address, Koichi Aiboshi, Ambassador of Japan to ASEAN, reiterated the three pillars of ASEAN-Japan cooperation which include (i) enhancing connectivity and awareness; (ii) narrowing development gap between ASEAN-6 and the CLMV countries (Cambodia, Lao PDR, Myanmar and Viet Nam); and (iii) developing economic and FTA partnership.  Best practices and knowledge on SME finance had also been shared by Prof. Naoyuki Yoshino, Dean of Asian Development Bank Institute and the Specialist from the World Bank Group in Indonesia.

The Developing an ASEAN Benchmark for SME Credit Rating Methodology is one of flagship deliverables under Myanmar’s chairmanship 2014. This project is supported by Japan-ASEAN Integration Fund (JAIF). Source: ASEAN Secretariat