ADB mulls funds for SMEs in BIMP-EAGA sub-region

DAVAO CITY – The Asian Development Bank (ADB) is considering the provision of an economic development fund for the small and medium enterprise (SME) sector in the BIMP-EAGA (Brunei, Indonesia, Malaysia and Philippines - East ASEAN Growth Area) sub-region.

Jacques Ferreira, ADB’s senior programs officer in the governance, finance and trade division of the Southeast Asia department, said the bank is still in the preliminary stages of conceptualization. All decisions are subject to a confirmed request from the participating countries and the approval of ADB management.

Ferreira added that a feasibility study has yet to determine the shape of the fund and its coverage – either, Mindanao and Palawan, or the BIMP-EAGA subregion.

"ADB would consider financing a feasibility for the fund to cover either Mindanao or BIMP-EAGA. We still have to determine which region and the size of the fund," said Ferreira in an interview at the sidelines of a recent investment forum in Davao City.

There are indications, however, that the fund for Mindanao could be about $20 million.

The ADB was invited to be the regional development advisor for the BIMP-EAGA sub-region. The EAGA was established in 1994 to increase trade, investments and tourism among the member-territories.

Ferreira said ADB might approve the conduct of a feasibility study on the proposed fund later this year. The feasibility study would determine the size and type of the fund to be set up, its terms, and the type of business for which it would be granted.

The study would also determine whether the financial support would be in the form of loan equity. Should ADB consider a regional development fund for BIMP-EAGA, "a key point would be to determine how to tackle foreign exchange risks," said Ferreira.

Should the participating countries confirm their request for assistance, ADB could consider making the fund available by the end of next year.