Unlocking Inclusive Growth: A Comparative Analysis of MSME Financing Policies in East Asia

Micro, small, and medium-sized enterprises (MSMEs) play a central role in socio-economic development across East Asia, contributing significantly to employment, innovation, and inclusive growth. Despite their importance, many MSMEs continue to face structural constraints, notably limited access to finance and fragmented regulatory frameworks, which hinder their growth and competitiveness. This report assesses key policy responses adopted in selected East Asian economies, including fiscal support instruments, initiatives to expand financial access, and integrated MSME development strategies.

The analysis draws on comparative case studies from Indonesia, Japan, the Philippines, Malaysia, and Thailand. These include Indonesia’s large-scale direct lending programme through Kredit Usaha Rakyat (KUR), Japan’s credit guarantee system, the Philippines’ mandatory credit allocation for MSMEs, Malaysia’s ecosystem-based reforms under the SME Masterplan, and Thailand’s efforts to promote digital lending. While these policies have contributed to widening financing channels and alleviating certain structural barriers, persistent gaps remain in implementation, targeting, and alignment with firm-level needs.

The report argues for moving beyond a predominantly credit-centric approach toward more integrated, evidence-based policy frameworks that reflect the heterogeneity of MSMEs. Such approaches are essential to strengthening MSME viability, enhancing competitiveness, and improving resilience in an evolving economic environment.