Euromoney forum to focus on SME sector

Updated 15 May 2012

Euromoney forum to focus on SME sector

During last year's Euromoney Saudi Arabia Conference, former Minister of Economy and Planning Khaled Al-Gosaibi announced that the Kingdom aims to achieve an annual average growth rate in the nonoil producing sectors of seven percent. All indicators were set for the SME sector to be an engine of growth for the private sector.
"Saudi Arabia is actually among the most competitive countries in the G20 group of nations and the most competitive rapid-growth market in the G20," said Richard Banks, director of Euromoney Saudi Arabia Conference. "As if on cue, the Purchasing Managers' Index (PMI) unveiled that growth in business activity in Saudi Arabia's nonoil private sector rose to a nine-month high in April 2012. Nonetheless SMEs are not playing their perceived role and are still facing many challenges, despite them having the most positive outlook in terms of local economic growth, capital investment plans and recruitment."
During this year's Euromoney Saudi Arabia Conference which will be held in Riyadh on May 22-23 in partnership with the Ministry of Finance, key figures from the public and private sector will discuss what policy developments are needed to stimulate growth of the SME sector in order to improve the employment situation in Saudi Arabia, and equally what is the role of multilaterals, private equity and venture capital in aiding growth of SMEs.
The government has undertaken many steps to boost the SME sector including cutting down on the cost and time to set up a business. Further the plans to establish a General Authority for SMEs is currently under study by the Shoura Council.
Banks added: "Access to liquidity has been a key issue for SMEs and is one of the main impediments for this segment to flourish. The volume of loans by Saudi banks to the SME sector is less than 4 percent of the GDP and represents 2 percent of total loans. The government tried to tackle that issue by establishing the Kafalah program in association with local banks in order to grant SMEs access to private loans by means of a government guarantee. The program, however, has only reached a penetration that is less than 1.5 percent."
The government has set a clear goal to reach 10,000 SMEs through the Kafalah system over the next 10 years. In the period 2006-2010 only 1,113 SMEs have received loans worth $247 million from Saudi banks. It is expected that more than half of the SME firms will require additional loans ranging from $50,000 to $150,000.
Banks concluded his comments by stating: "Saudi Banks could play a vital role in absorbing this demand. With many sectors highly consolidated and most of the largest companies already fully leveraged, banks are left sitting on excess lending capacity that remains underutilized. This in turn depresses profits. Banks are expected to gradually move down the credit ladder to make their money work harder, creating new products aimed specifically at SMEs.
The SME sector and its role in the overall economy will be under close scrutiny at Euromoney Saudi Arabia Conference 2012. Key entities from the public and private sectors such as lead sponsors Bank Albilad, Albilad Investment Co., BNP Paribas, Gulf International Bank, HSBC, Mobily, NCB, Samba, SambaCapital and Saudi Fransi Capital and Banque Saudi Fransi will be participating at Euromoney Saudi Arabia Conference 2012, which is now firmly established as the most influential financial conference in Saudi Arabia.
Another key debate at the 2012 conference will be on the importance of investor relations in the Saudi equity market and this is an area of important focus for Mobily. Khaled Al-Kaf, CEO & MD for Mobily, said: "Since its listing on the Tadawul, Mobily, the fastest growing telecommunications' company in the region, has achieved a noteworthy record of significantly enhancing shareholder value - a direct result of the company's impressive product offering and an extensive, countrywide, state-of-the-art stable network infrastructure backed by a talented management team dedicated to driving the company's solidly based Saudi focused growth program." Mobily is proud to be an exclusive Telecommunications Partner for the Euromoney Saudi Arabia Conference for the last three years.

Japan to roll out huge stimulus plan as pandemic pain deepens

Updated 4 min 22 sec ago

Japan to roll out huge stimulus plan as pandemic pain deepens

  • The government is set to approve a supplementary budget on Tuesday to fund the package

TOKYO: Japanese Prime Minister Shinzo Abe said on Friday a stimulus package to combat the coronavirus pandemic will be rolled out next week, and target small firms and households hardest hit by social distancing policies that are affecting consumption.

The package will include spending on medical supplies, as well as cash payouts to small firms and households facing sharp falls in income, Abe said.

The government will also urge private financial institutions to join government-affiliated lenders in offering zero-interest rate loans to cash-strapped small and midsized firms, he said.

“We’ll compile the package next week,” Abe told Parliament.

“We’ll deliver in a short period of time a targeted, bold package” that will help the economy achieve a V-shaped recovery, he said.

A senior ruling party official said on Friday he has agreed with Abe to offer 300,000 yen ($2,800) in cash payments per household that suffers a certain degree of income falls from the pandemic.

The government is set to approve a supplementary budget on Tuesday to fund the package.

Supply chain disruptions, travel bans and social distancing policies triggered by the pandemic have hit Japan’s economy, which was already on the brink of recession.

Economy Minister Yasutoshi Nishimura said the government’s stimulus measures will be delivered in two stages.

The first package will focus on immediate steps to ease corporate funding strains and protect jobs. The second batch will focus on boosting demand, particularly for industries currently hit by social distancing policies such as tourism and event organizers, he told a news conference.

Abe has pledged to lay out a huge stimulus plan to combat the virus that will exceed the 57-trillion-yen ($525 billion) package compiled after the collapse of Lehman Brothers in 2008.

Sources said Japan will fund the package by boosting government bond issuance by $149 billion, adding to what is already the industrial world’s heaviest debt burden at more than twice the size of Japan’s $5 trillion economy.

Rating agency S&P affirmed Japan’s sovereign debt credit rating and kept the outlook positive on Friday, despite the government’s plan to boost spending to battle the economic fallout from the virus.

Analysts expect Japan’s economy, which shrank in the final quarter of last year, to suffer two more quarters of contraction as the pain from the pandemic deepens.

Hiroshi Ugai, chief economist at JPMorgan Securities Japan, expects the world’s third-largest economy to contract 3.1 percent this year. “The government’s planned economic stimulus package would help address immediate problems that could lead to declines in household and corporate income,” he said. “But it would not be enough to change the big picture for Japan’s economy.”