How alternative financing solutions can help fuel the growth ambitions of Southeast Asian SMEs

The diversification of supply chains away from China has created “a once-in-a-generation opportunity for Southeast Asia,” as Liew Chin Tong, Malaysia’s Deputy Minister of Investment, Trade, and Industry, put it.[1]

Tapping into that opportunity will require funding, which small- and medium-sized enterprises (SMEs) in the region are having a hard time accessing. Without innovative funding solutions, this could create a bottleneck to achieving the region’s impressive growth prospects. Securities-backed financing from EquitiesFirst could provide the answer.

Securities-backed financing can sustain the bedrock of ASEAN’s economy

According to the Asian Development Bank (ADB), there are at least 71 million micro, small and medium-sized enterprises (MSMEs) in Southeast Asia. They account for 97% of all businesses in the region, employ 67% of the working population and contribute an estimated average 40.5% of GDP in each of the countries.[2] However, because many microenterprises operate informally, the true figures could well be even higher.

Excluding the microenterprises, which are usually focused domestically, SMEs also comprise a significant chunk of ASEAN’s exports. They play important roles in economic and social development, contributing to innovation and inclusive growth by creating jobs in both urban and rural areas. They are the backbone of the region’s economy, and fundamental to achieving long-term growth and development.

ASEAN’s SMEs have a pressing need for alternative funding

These businesses need financing to grow. However, about 60% of surveyed MSMEs requiring financing or credit in the region have expressed difficulty or inability to obtain loans from traditional financial institutions, says the ADB.[3] Fortunately, help is at hand, with awareness of and access to asset-backed lending spreading quickly.[4]

Highlighting the current challenges faced by the region’s SMEs in even getting off the ground, a new report reveals that 70% of them started their businesses with seed money raised from personal savings or from family and friends.[5]

A separate survey indicates that more than two-thirds of SMEs in Southeast Asia have struggled to secure funding on at least one occasion in the last five years. Of these businesses, 40% experienced cash flow issues, 38% were unable to launch new products or services, and 36% were unable to hire effectively.[6]

Even though consumer credit in ASEAN is becoming steadily easier to access, 39 million MSMEs in the region still face challenges to financing, according to the United Nations Capital Development Fund, with the gap estimated at as much as US$300 billion.[7]

Even though banks in Southeast Asia have been largely immune to the banking crisis afflicting their peers in the West, an uneven global economic outlook has raised bad debt concerns across ASEAN, making the region’s banks even more reluctant to lend to SMEs. High interest rates are also taking a toll: the ADB estimates that even a 1% hike in interest rates could lead to a 10% rise in the number of MSMEs going bankrupt.[8]

Solid fundamentals underpin ASEAN’s bright prospects

Still, the overall outlook for Southeast Asia’s economy is sanguine, thanks to the ongoing trend for multinationals to recalibrate and relocate parts of their supply chains to ASEAN countries, together with anticipated increased trade and investment from the US and China into the region, supported by a number of free trade agreements.[9]

The ASEAN opportunity is supported by a unique combination of competitive wages relative to China, Singapore’s strengths in financial services and high tech, and an impressively large population aged between 25 and 54 with a tertiary education. 

It also benefits from booming consumption among its population of 670 million. As ASEAN becomes more affluent, its consumer class will grow increasingly prominent. In fact, on average, one individual enters the middle-income bracket every two seconds in the region, buoying a variety of sectors ranging from e-commerce to fintech.[10]

The prognosis for the region’s digital economy is especially encouraging, with 125,000 new internet users coming online every day.[11] The latest e-Conomy SEA report released by Google, Temasek and Bain & Company predicts that the digital economy across ASEAN’s six biggest economies—Indonesia, Malaysia, the Philippines, Thailand, Vietnam and Singapore—alone could reach as much as $1 trillion by 2030, up five-fold from around $200 billion in 2022.[12]

Securities-backed financing can help close the SME financing gap

In order to exploit this opportunity, 31% of ASEAN SMEs surveyed by United Overseas Bank’s Business Outlook Study 2023 said they were pursuing digitalisation as a top priority.[13] In addition to paving the way for online sales, such investments can help them become more efficient and tackle the challenges of rising operating costs in a high-inflation environment.[14]

In the current climate, SMEs wishing to raise capital to pursue digitalization efforts or expand their operations in ASEAN can consider securities-backed financing from EquitiesFirst. By using their stocks or crypto as collateral, they can access competitively priced loans with no restrictions on use of funds.

The loans we sign are non-recourse, meaning that in the event that the assets pledged do not perform, or if the borrower has problems paying the interest or repaying the loan, their losses are limited to the collateral.

Securities-backed financing is also a compelling option for investors seeking to expand their portfolios to encompass this fast-growing region. It provides investors liquidity to diversify their positions to other geographies and sectors or obtain currency hedges without sacrificing the upside potential of their underlying holdings.
















Past performance does not guarantee future returns, and individual returns are not guaranteed or warranted.

This Document is intended solely for accredited investors, sophisticated investors, professional investors, or otherwise qualified investors, as may be required by law or otherwise, and it is not intended for, and should not be used by, persons who do not meet the relevant requirements. The content provided herein is for informational purposes only and is general in nature and not targeted to any specific objective or financial need. The views and opinions expressed in this Document have been prepared by third parties and do not necessarily reflect the views and opinions of EquitiesFirst.  EquitiesFirst has not independently examined or verified the information provided herein, and no representation is made that it is accurate or complete.  Opinions and information herein are subject to change without notice.  The content provided does not constitute an offer to sell (or solicitation of an offer to purchase) any securities, investments, or any financial products (“Offer”). Any such Offer shall only be made through a relevant offering or other documentation which sets forth its material terms and conditions. Nothing contained in this Document shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product by First Holdings, LLC or its subsidiaries (collectively, “EquitiesFirst”), nor shall this Document be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by EquitiesFirst. You should seek independent financial advice prior to making an investment decision about a financial product.

This Document contains the intellectual property of EquitiesFirst in the United States and other countries, including, without limitation, their respective logos and other registered and unregistered trademarks and service marks. EquitiesFirst reserves all rights in and to their intellectual property contained in this Document.  The Document should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be distributed to persons in any country where such distribution may lead to a breach of any legal or regulatory requirement.

EquitiesFirst make no representation or warranty with respect to this Document and expressly disclaim any implied warranty under law. You acknowledge that EquitiesFirst is not liable under any circumstances for any direct, indirect, special, consequential, incidental, or punitive damages whatsoever, including, without limitation, any lost profits or lost opportunity, even if EquitiesFirst has been advised of the possibility of such damages.

EquitiesFirst makes the following further statements that may be applicable in the stated jurisdiction:

Australia: Equities First Holdings (Australia) Pty Ltd (ACN: 142 644 399) holds an Australian Financial Services Licence (AFSL Number: 387079). All rights reserved.

The information contained on this Document is intended for persons located in Australia only and classified as a Wholesale Client only as defined in Section 761G of the Corporations Act 2001. The distribution of information to persons outside this criteria may be restricted by law and persons who come into possession of it should seek advice and observe any such restriction.

The material contained in this Document is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.

The information contained in this Document is intended to be general in nature and is not personal financial product advice. Any advice contained in the Document is general advice only and has been prepared without considering your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product.

Hong Kong: Equities First Holdings Hong Kong Limited is licensed under the Money Lenders Ordinance (Money Lender’s Licence No. 1681/2023) and to carry on the business of dealing in securities (Type 1 licence) under the Securities and Futures Ordinance (“SFO”) (CE No. BFJ407).  This Document has not been reviewed by the Hong Kong Securities and Futures Commission. It is not intended as an offer to sell securities or a solicitation to buy any product managed or provided by Equities First Holdings Hong Kong Limited and is only intended for persons who qualify as Professional Investors under the SFO. This document is not directed to individuals or organizations for whom such offers or invitations would be unlawful or prohibited.

Korea: The foregoing is intended solely for sophisticated investors, professional investors or otherwise qualified investors who have sufficient knowledge and experience in entering into securities financing transactions.  It is not intended for, and should not be used by, persons who do not meet those criteria.  

United Kingdom: Equities First (London) Limited is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”).  In the UK, this Document is only being distributed and made available to persons of the kind described in Article 19(5) (investment professionals) and Article 49(2) (high net worth companies, unincorporated associations etc.) of Part IV of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘’FPO’’) and any investment activity to which this presentation relates is only available to, and will only be engaged in with, such persons. Persons who do not have professional experience in matters relating to investment or who are not persons to whom Article 49 of the FPO applies should not rely on this document. This Document is only prepared for and available to persons who qualify as Professional Investors under the Markets in Financial Instruments Directive.