United Bank for Africa (UBA) is celebrating its 75th anniversary. Among its hallmarks is an unwavering commitment to driving the growth of small and midsize enterprises (SMEs) in Africa.

For UBA—boasting $20 billion in assets, $454.2 million in pretax profits in 2023, and a presence in 20 markets on the continent and four global centers—empowering SMEs means fueling Africa’s economic development.

Its home market of Nigeria is a poster case. With a portfolio of over a million SME clients and a loan book of $90 million, the bank has been instrumental in ensuring that SMEs remain the engine of growth.

Last year, the bank set aside $6 billion to lend to SMEs in partnership with the Africa Continental Free Trade Area secretariat, a program to be implemented over three years. The partnership augments the bank’s defining strength: its ability to support intra-African trade and investments critical for SMEs’ growth.

To enhance convenience for SMEs, UBA has signed up to the Pan-African Payment and Settlement System. The bank also ensures easy transaction processing through its UBA Afritrade and UBA Connect.

UBA has also become a pacesetter in financing women-owned businesses, owing to its strong belief that women should not be left behind in Africa’s socioeconomic development. —John Njiraini

In making this award, the Global Finance team notes DBS’ close focus on the specialized needs of SMEs—from the clarity of the CEO’s mission statement to the detailed structure and effectiveness of the bank’s SME products.

Outgoing DBS Group Chief Executive Piyush Gupta, who will step down in March 2025, has acknowledged that banks worldwide underserve SMEs. Under his guidance, DBS has worked to rectify this failure.

Together with Enterprise Singapore, DBS launched the ESG Ready Programme, an end-to-end program that aims to help local businesses—especially SMEs—become future-ready by building capability and capacity in sustainability. Participating companies can access a panel of sustainability specialists to guide them on their respective sustainability journeys.

“Banks have not thought enough about the battleground of tomorrow,” said Gupta in a 2015 interview with the National University of Singapore’s Business School. “But it is changing—in the last two years, digitization has now become the No. 1 agenda for most banking CEOs.”

Before the pandemic, DBS had relentlessly leveraged emerging technologies to help SMEs, especially micro and small enterprises, streamline services and manage credit risk. Digital payments, online banking, and blockchain technology emerged and became established during Gupta’s tenure, emphasizing SMEs.

The judges noticed that DBS had developed algorithmic models powered by artificial intelligence (AI) and advanced data analytics to alert the bank to signs of potential trouble SME customers might face, substantially reducing insolvency risk.         —Simon Littlewood

In operation for over 80 years, Banreservas offers more than 315 physical service centers in the Dominican Republic—including traditional bank branches, mini branches, and mobile branches—along with roughly 1,900 ATMs. SMEs account for 16% of the bank’s business, or approximately $1.5 billion, giving Banreservas a 28% market share.

Banreservas offers its roughly 130,000 SME clients a broad array of financial services. Fomenta Pymes (“Promotes SMEs”) is a bank program providing small businesses access to financing products, credit cards, management services, payroll services, and other benefits. Special events include monthslong “loan fairs” through which SMEs shop for financing. In its 2024 iteration, the Banreservas loan-fair program disbursed 5,800 loans, totaling about $238.5 million. These were given to SMEs working in multiple sectors: tourism, construction, commerce, education, healthcare, social services, industry, agriculture, and livestock, among others.

Additional bank offerings include Programa Preserva, a workshop-based program that promotes economic security through saving. Programa Coopera, meanwhile, promotes the Dominican Republic’s socioeconomic development through financial support of businesses throughout the country, including those located in economically vulnerable areas.   —Laura Spinale

SMEs contribute 15% to Grupo Financiero Banorte’s loan portfolio. The financial institution works to better serve that market through an SME expansion plan instituted over the past year. As part of this program, Banorte has focused on increasing its SME offerings to include a full suite of tailored financial products and services. These include various loan types, business advisory services, tax advisory services, and strategic alliances with companies offering products and services of value to the SME market.

Credit is a significant part of the SME expansion plan; and the bank has instituted a new pricing structure, providing credit conditions more favorable to clients. SMEs qualify for these rates through an application process that provides a more holistic view of each SME applying. Available SME financing products include working capital loans, equipment financing, expansion loans, and lines of credit. One of these, Mujer PyME, is a credit facility targeted to women-led SMEs.

Additional advancements include the integration of biometric signatures in branches and a time-saver for account openings.          —LS

Located in Moldova, MAIB is this year’s regional winner for Central and Eastern Europe. As the country’s largest commercial bank and lender, MAIB has almost 37,000 active customers, an increase of about 13% year-over-year (YoY); and it captures approximately 43% of all newly registered companies in Moldova. MAIB has continued to consolidate its position within the SME sector—about 6,000 companies, primarily within IT, winemaking, and food industries—earning the bank an approximately 37% market share. Despite challenging economic conditions, various strategic efforts have helped the bank achieve record growth within its SME business unit

The bank leverages a customer-centric approach by using feedback to tailor products and services to SMEs. MAIB also emphasizes data-driven decisions, which have helped the bank maintain a profitable loan portfolio despite a declining demand for loans among SMEs, fluctuating grain prices resulting from regional conflicts and weather conditions, and falling interest rates.

To help attract SME customers, MAIB launched internet and mobile banking solutions. The bank created its Business Banking Customer Care Service, which has a dedicated line for SME support and specialists who can resolve customer issues. MAIB’s products and services include night and weekend payments, remote onboarding, factoring, and digital signatures on credit contracts.

The bank has partnered with over 150 companies that sell their products, such as agricultural machinery, photovoltaic panels, and cars, through loans that MAIB originates. The bank is also the first in Moldova to offer consulting services to its customers in accounting, business, and human resources.        —Andrea Murad

BTG Pactual Empresas’ SME lending portfolio reached 22.1 billion Brazilian reais (approximately $3.9 billion) in the first quarter of 2024, with its SME credit book growing 52% YoY. SME business now accounts for 12% of BTG Pactual’s total portfolio.

The bank attributes its SME growth in part to its digital capabilities. Its digital platform offers a complete, integrated portfolio of SME products and services—providing access to the bank’s credit, guarantees, insurance, investments, foreign exchange, and derivatives products. Associated services accessible via the platform include creation of invoices payable by QR code; online invoicing; instant electronic bank transfers; open banking; payments to suppliers, tax authorities, and utilities; budgeting and categorized spending services; digital receipts; and other capabilities. The platform offers more than 45 integrations, including Telegram and Google Workspace, along with an extensive range of productivity improvement products.

Speed is a crucial platform benefit. According to the bank, the platform enables the bank to disburse 95% of its loan funds in less than 10 minutes, 16 times faster than its competitors.

Agriculture is a big part of the Brazilian economy, and BTG Pactual Empresas offers services tailored to this sector. These include credit lines for agricultural products (fertilizers, pesticides, seeds); equipment financing; and infrastructure financing for the construction of silos, warehouses, and other facilities.

Activities addressing environmental, social, and governance (ESG) issues are also important to BTG Pactual. Of its loans to corporations and SMEs, 72% are subjected to social, environmental, and climate-risk analysis, in line with international best practices. R$8.9 billion of its lending portfolio aligns with the bank’s sustainable financing framework.          —LS

Founded in 1992 by the Bahraini government, Bahrain Development Bank (BDB) is part of that country’s efforts to diversify its economy into non-oil-producing sectors. SMEs are vital to those efforts. BDB strives to support entrepreneurs and SMEs through loans, financing, and advisory and mentorship programs and conferences tailored to the SME market.

The bank offers financial products for various types of SME businesses, including agriculture and fisheries, manufacturing, education, health-care, tourism, and transportation companies. It also provides financial services targeted to women. Over the last several years, the bank has invested in digital transformation. One result of that is tijara, BDB’s digital banking arm. This platform offers SMEs quick access to financing and efficient processing of business transactions, salary transfers, and other payment services.          —LS

In September, the Royal Bank of Canada (RBC) released its annual small-business poll. Results indicate that 51% of Canadians are considering starting a businesses. RBC wants to help them.

The bank operates in more than 30 countries and serves more than 17 million clients worldwide. As of 2023, it had about CA$3.6 trillion (approximately $2.6 trillion) in assets and over 91,000 employees. To improve the customer experience, RBC has invested heavily in digital banking and AI technologies.

RBC strives to support SMEs at every stage. The bank offers various financing and loan options for SMEs, including unsecured and operating lines of credit. It also administers Canada Small Business Financing Loans. Special programs target Black entrepreneurs.

A knowledge base on the bank’s website instructs would-be entrepreneurs at the very earliest business stages. Guides for starting a business, validating ideas, creating business plans, determining startup costs, choosing a business structure, and exploring business financing are available.

Beyond typical banking, RBC also offers several business services, mostly digitized. In the field of payment processing, it offers medical billing software for hospitals and clinics, point-of-service systems, and services enabling merchants to offer buy now, pay later options to their clients. Marketing services help SMEs explore consumer spending patterns, find clients, and embark on global trade. The bank offers a host of payroll and HR solutions. Operations services help entrepreneurs register and incorporate online, protect businesses against cyber threats, automate accounts payable, and perform other tasks.       —LS

Headquartered in Spain and with operations throughout Western Europe, Santander is named as the best bank for SMEs in Western Europe for the third year in a row. The bank has a wide range of targeted products and services to meet the needs of its customers, which include 114,000 SMEs that make up over 91% of corporate customers and over 95% of digital customers in Portugal.

Through its platform, Santander X, the bank has helped over 7,000 SMEs scale their businesses through training, advice, and other resources. The platform’s training enables SMEs to create a digital presence, expand domestically and internationally, and grow and maintain their workforce. Companies can also participate in competitions for cash prizes and other awards. In addition, this platform creates a global networking community for SMEs to connect with other businesses, providing discounted third-party resources and services.

Through various initiatives, Santander supports SMEs looking to expand abroad. Through the Santander Trade platform, SMEs can analyze different international markets, find international business partners, and support shipments overseas; while the Santander Trade Club helps SMEs find new distributors and suppliers. The bank’s “One Europe” strategy helps identify good practices in other countries—practices that can then be implemented domestically.

The bank develops products and services with the customer in mind, through engagement and solicitation of feedback. The result is personalized products across digital channels and enhanced user experiences.  —AM

A constitutional monarchy of 800,000 people, Bhutan is nestled in a region that’s home to nearly 3 billion. Bordered by China to the north and India to the east, west and south, the Himalayan nation installed a new government in January under Prime Minister Tshering Tobgay, who returned to office after an earlier five-year stint that ended in 2018.

Tobgay takes over at a time when Bhutan is appealing to foreign investors on the strength of its nearly pristine environment and absence of pollution, a possible pointer to what a global economy could look like free of chemicals and driven by sustainable energy.

The message appears to be getting through. The Asian Development Bank forecasts GDP growth of 4.4% this year for the kingdom, driven mainly by services, and a dramatic acceleration to 7% in 2025, when a major hydroelectric plant is due to come onstream. The International Monetary Fund predicts that growth will accelerate over the medium term, boosted by large hydro projects, higher capital spending, and a slowdown in emigration.

Watson says, “The Bhutan model, properly adopted, may provide the world with a compelling example of how to skip from a medieval past to an ecologically balanced future, while avoiding a polluting industrial age and massive urban migration.”

Fine food could be one component of that formula, he adds, but “we need agricultural investors who believe in this space,” which could include exports like trout, caviar, berries, buckwheat, quinoa, turmeric, ginger, and dairy products.

“As a further incentive, there is no crime, no corruption, rapidly improving infrastructure, abundant clean energy, and English is widely spoken,” Watson notes.

David Mathews came to Bhutan five years ago after a career at Jardine Matheson and Robert Fleming that included a long stint in China.

“We have land at 4,000 feet in southern Bhutan to grow coffee at the same altitude it’s grown in Sikkim and India,” he says. “We want our beans to be as pure as possible and a unique Bhutan brand. After coffee, we see opportunities for scents and flavorings grown on the hills. Again, purity is a major selling point.”

The nation is learning from other, fully industrialized countries’ experience, Mathews says, “The Bhutanese have seen the ecological harm caused by industrial development elsewhere. Bhutan is a pristine and unpolluted place. Increasingly, this is attractive to discerning Western investors.”

Time will tell whether Bhutan’s model of Gross National Happiness, including clean and unpolluted food sourcing and zero carbon, will catch on. But Mathews is optimistic.

“We believe that increasingly, consumers will start to see Bhutan as a source of top-quality unpolluted foodstuffs, and our coffee will meet that market,” he predicts. “Worldwide, consumers increasingly want clean food, and Bhutan furnishes a compelling model.”

“ASEAN is a bright spot,” says Federico Burgoni, head of Group Strategy and Transformation at Singapore’s United Overseas Bank.

Founded as a five-nation political and economic community in 1967, the Association of South-East Asian Nations today counts 10 countries and 647 million people under its umbrella, boasting a 2023 GDP of $2.9 trillion. It is also the US’s fourth-largest trading partner; thanks in part to the cooling of economic relations between Washington and Beijing, foreign direct investment into ASEAN hit $224 billion in 2022, with the US being the largest investor.

There have been growing pains; plans to create an integrated, tariff-free common market by 2025 have been hampered by domestic protectionism and, more recently, the Covid-19 pandemic. But experienced Southeast Asia hands express optimism.

“ASEAN is backed by strong fundamentals, including a young population, a dynamic labor force and rising foreign direct investment,” says Burgoni. Total FDI for the region hit $228.9 billion in 2023, almost doubling the 2015 take of $118.7 billion.

Burgoni expects growth in the region to remain strong owing to a benign combination of domestic demand, moderating inflation, and increasing inward trade and investment flows.

“Yes, there are some geopolitical risks [US sanctions from Trump, a war in Taiwan, etc.], but in Asia we think Southeast Asia is the bright spot,” he says. “ASEAN is one of the fastest-growing trade blocs and is now seen as a production base and a growing consumer market to both the West and to China.” That stands in contrast to China and many Western economies.

By 2030, 65% of a projected population of 750 million is expected to be middle class, based in part on resilient internal demand. Crucially, countries like Malaysia and Indonesia are rich in oil and minerals of all kinds.

But tech investors are eyeing the region as well.

“There is no ASIA—but there is, increasingly, an ASEAN,” says Bill Padfield.

Padfield is a tech veteran and founding CEO of Salamander Advisory, a consultant to early-stage tech companies. A global technology and business leader in the region for over three decades, he was formerly global senior vice president of Transformation at NTT, and before that chairman and CEO of Dimension Data Asia Pacific and CEO of SGX-listed Datacraft Asia. He also helped lead Equant, now Orange Business Services, to a successful simultaneous IPO on the New York Stock Exchange and the Paris Bourse.

“Although it’s not one trading block, ASEAN is actively learning from Europe’s errors,” says Padfield. Pressing on too quickly with regulatory and economic integration creates political opposition—national sensibilities need to be respected.

Major tech players including Google, Amazon and NTT have set up operations in the region. Global Foundries last year completed a $4 billion expansion of its microchip facilities in Singapore, and Nvidia and AMD are eyeing the region’s artificial intelligence potential.

“Notably, investment in the electric vehicle sector soared to $18.1 billion in 2022,” Padfield adds, “marking a 570% increase from 2021’s $2.7 billion.”

In a sign of how the global investment community views Singapore as a financial and tech powerhouse, the London Stock Exchange now has 350 full time employees there.

“Amazingly, we calculate that there are more than 400 venture capital funds registered in Singapore with $8 billion in funds,” says Padfield, “and more than 4,000 tech startups already active.”

Collectively, Apple, Microsoft, and Invidia have committed billions of dollars in investment to the ASEAN economies, he adds, and their CEOs have all been “hobnobbing with heads of state from Indonesia to Malaysia,” he notes.

Singapore was in the spotlight last month when Amazon took over a giant venue in the city-state to unfurl a fresh $9 billion investment plan. In Malaysia’s Johor Bahru, which adjoins Singapore, Nvidia teamed up with a local operator last year to build a $4.3 billion AI data-center park. CEO Jensen Huang was been seen in Vietnam enjoying street food and is rumored to be reviewing Hanoi and Da Nang as possible centers for future investment.

Hoping to build on Big Tech’s interest, ASEAN is currently hammering out an ASEAN Digital Economic Framework Agreement (DEFA), the first of its kind worldwide, which is projected to triple the region’s digital economy from $300 billion today to almost $1 trillion by 2030. Progressive rules (like the greater deregulation, the faster the growth) in the DEFA would double this value contribution, unlocking $2 trillion to the region’s digital economy.

 “I think you can honestly say that the days of playing second fiddle to China are well and truly over,” Padfield concludes.

AI will play a big role in that shift, says consultant Kearney, which estimates that AI adoption could add $1 trillion to the ASEAN economy by 2030. A specific catalyst will be generative AI, adds Tony Nash, a long-term resident of the region and a former adviser to the Chinese government on its global Belt and Road Initiative who founded Complete Intelligence, which provides AI-driven forecasting to major companies in Asia and worldwide.

Much will depend, however, on the region’s ability to further integrate.

“ASEAN consists of about a dozen politically, culturally, and geographically disparate countries,” Nash notes. “While progress has been made, stubborn protectionist tendencies and conflicting national interests continue to impede the full realization of this ambition.”

That said, “there are continuing indications that ASEAN is benefiting from the cracks in China’s economic armor,” he adds. As tensions with the West persist and concerns over supply chain dependencies grow, multinational corporations continue to diversify their operations into Southeast Asia.

“Vietnam, in particular, has emerged as a manufacturing hub,” says Nash, “luring investments that might have previously favored the Middle Kingdom. And the tech majors are embracing the region’s low-cost but technically savvy workforce.”

Acutely exposed to climate change, ASEAN has also been forward-looking in its efforts to decarbonize its economy.

Initiatives such as the ASEAN Strategy for Carbon Neutrality, the Framework for Circular Economy, and the ASEAN Blue Economy Framework aim to help the region transition to a green economy while creating significant economic value-add. Malaysia and Thailand are pulling in renewable investments, often in partnership with leading Chinese tech suppliers seeking to escape onerous US tariffs on exports from the mainland.

From a US investor’s perspective, ASEAN’s selling points are manifold. “The region boasts a burgeoning middle class, abundant natural resources and a strategic geographic position astride vital trade routes,” says Nash. Its relative political stability and pro-business policies could prove alluring, especially as the world grapples with an increasingly fragmented economic order.

Close observers also generally agree that Singapore’s status as Southeast Asia’s preeminent financial hub is assured, at least for the foreseeable future.

“The city-state’s impressive economic dynamism, robust legal framework and business-friendly policies have solidified its position as a gateway to the region,” says Nash. But it has equally savvy neighbors.

“Upstart challengers like Jakarta and Kuala Lumpur are keen to emulate Singapore’s success,” Nash adds, “capitalizing on their own strategic advantages, which include a scale that Singapore lacks and the insatiable appetite for capital across ASEAN’s economies. Prudent due diligence, selective local partnerships and a long-term outlook are prerequisites for success in this complex yet immensely promising region.”

This was his third presidential run.

Prabowo holds the dubious distinction of having been banned from entering the US due to allegations of atrocities in East Timor, a ban only lifted in 2020.

He will assume the presidency at what would otherwise be a propitious time. With 274 million people and a 2022 GDP of $1.2 trillion, Indonesia became an attractive target for foreign investors during current president Joko Widodo’s two terms. But he brings a mixed legacy to the post.

“Prabowo is a product of the Suharto era,” says Maria Monica Wihadja, visiting fellow at the ISEAS-Yusof Ishak Institute and professor at the National University of Singapore.

Despite being Suharto’s son-in-law, he was rumored to have engineered the 1998 riots that ousted the long-time dictator. Wihadja is concerned whether Prabowo will stick with the reform model that has made Indonesia attractive to investors.

“Continued investment relies on institutions and institutional continuity” she says. “Prabowo has in the past campaigned for an end to term limits, for example.”

Southeast Asia’s largest economy has seen strong growth since the Covid pandemic, particularly as investment in its nickel processing industry booms.

GDP grew 5.3% in 2022, supported by domestic consumption and further bolstered by the commodity exports as global prices of coal, palm oil, and iron have rallied. Indonesia also captured $43 billion in FDI in 2022, the highest total in the country’s history.

Leadership questions are especially timely given that OECD accession is on the agenda.

“Indonesia’s application is the first from Southeast Asia, one of the most dynamic growth regions of the world,” notes OECD Secretary-General Mathias Cormann. “As the largest economy in Southeast Asia and the world’s third largest democracy, Indonesia is a significant global player, providing important leadership across the region and beyond.”

Lack of access to finance has typically been the key challenge facing African SMEs. However, limited access to markets is emerging as a much bigger problem.

For a majority, operations are constrained in their home markets. Due to factors like different regulatory frameworks, tariff and nontariff barriers and multiple taxation regimes, among others, only some venture beyond their borders.

The African Continental Free Trade Area (AfCFTA) promises to be a game changer for SMEs. The agreement is expected to increase intra-African exports by more than 80%.

Ecobank, the winner as Best SME Bank in Africa, is positioning itself as the ideal partner for SMEs to exploit AfCFTA opportunities through access to new markets, negotiation of logistical hurdles and scaling of operations. The bank’s Pan-African footprint makes it a natural fit for intra-African trade.

This year, Ecobank has launched the Single Market Trade Hub. “The hub will help SMEs access new markets,” says Carol Oyedeji, Ecobank’s acting group executive for Commercial Banking.

She adds that besides being an information repository about AfCFTA, the hub is a marketplace for businesses offering access to a full range of financial products and solutions such as trade finance, cash management, working capital and advisory.

The hub and the bank’s RapidCollect regional collection offering eliminate obstacles to cross-border operations. In 2022, when it was launched, RapidCollect achieved transaction volumes amounting to $431 million in its first year.

These interventions and offerings put the bank that operates across 33 markets at the heart of SMEs’ success in Africa.          —John Njiraini

Singapore-headquartered Oversea-Chinese Banking Corporation (OCBC) has won accolades as 2024’s Best SME Bank in the Asia-Pacific region for its creative and enthusiastic support of SME clients during torrid times and for impressive digital innovation.

The bank works with 130,000 SMEs in Singapore alone—an estimated 50% of all SMEs.

OCBC also has been successful in accelerating sustainability efforts—achieving carbon neutrality on operations during 2022, with $10 billion in new sustainable finance investment in energy-efficient technology across Singapore, Malaysia and Greater China as part of an industry-leading target of $50 billion by 2025.

The bank scored very highly on its aggressive digitization of core operations with an investment of $250 million as the first part of the “digital core roadmap,” refreshing key channel systems across markets to enable faster rollout of digital features. These include client personalization capabilities driven by innovative artificial intelligence (AI) and machine learning.

Personal portfolios in Southeast Asia are far more likely to include nonfungible tokens (NFTs) than in Europe or the US, mainly due to the young demographic of the newly wealthy. In the fast-growing world of digital assets, and in conjunction with the bank’s 90th anniversary, OCBC minted its first NFT for staff  in late 2022 on the bank’s in-house blockchain platform. This was given to staff to commemorate the special occasion.

The bank increased total income by $11.7 billion in 2022 and grew shareholder returns by an eye-watering 18% during this torrid period—a nearly 60% increase in 2020.     —Simon Littlewood

Banreservas, in operation since 1941, strives to serve the SME  segment and won this year’s Best SME Bank in the Caribbean. It has a 23% share of the SME market, which represents 14% of the bank’s total business—contributing $1.23 billion to the bank’s $8.54 billion portfolio. From April 2022 to March 2023, the bank issued 21,091 loans to 15,066 SMEs, totaling $648.5 million.

Significant SME programs include Fomenta Pymes Banreservas and subofferings such as Programa Preserva, Programa Coopera and Programa Prospera.

Fomenta Pymes (“Promotes SMEs”) is a comprehensive suite of financial offerings designed to meet SMEs’ growth needs. It provides financing facilities, credit cards and free management and payroll services. It also sponsors programs to promote financial education, entrepreneurship and economic development.

Programa Preserva promotes a savings culture for sustainable economic well-being, providing financial education workshops. Programa Coopera promotes social projects to produce goods and services in economically vulnerable communities. During 2022, this program assisted 457 groups in starting business co-ops. Programa Prospera works to provide technical advice, financial services, and risk management to organizations that strive to facilitate new business development. —Laura Spinale

Headquartered in Costa Rica, BAC Credomatic brings SME services throughout Central America, including Costa Rica, Honduras, Guatemala and Panama. Founded in 1952, the bank now serves 4.2 million clients, 1.9 million of whom use the company’s digital banking platform. Its SME client base consists of about 260,000 businesses. Its digital offerings include payroll services, supplier payment services, tax help, exporting help and international payment capabilities.

Financing for SMEs runs from standard business loans to more-specific offerings. The bank also provides development financing for technically and financially viable business projects.   — LS

The winner as Best SME Bank in Central and Eastern Europe is Československá obchodní banka (ČSOB), which has successfully grown its SME portfolio and customer base despite the high interest-rate environment. The bank has about 140,000 SME clients, and SME loans compose about 11% of its portfolio. Customer growth resulted partly from the bank’s new digital onboarding services, a vital part of the customer-centric business model.

ČSOB has focused on developing deep relationships with SMEs and broad product portfolios while becoming a leader in sustainability practices. The bank’s portfolio of digitized products includes solutions for lending, banking, financial markets and trade finance that SMEs can access through various apps.

The bank also strongly focuses on digitization and has created a virtual branch in its mobile app to help SMEs easily access its products and services. With the bank’s digitization effort, SMEs can use data for peer benchmarking, market analysis and industrial insights.

In 2020, ČSOB introduced a digital assistant, “Kate,” which uses artificial intelligence (AI) and data to help SMEs self-service in the bank’s digital channels so customers can better address their needs. More than 90% of customers are eligible to use the digital branch. ČSOB has recently introduced functionality that calculates and offsets an SME’s carbon footprint.

To help SMEs transition toward sustainability, ČSOB partnered with Green0meter, an environmental, social and governance (ESG) data platform that assists in reporting. This partnership will help SMEs meet the EU’s changing ESG requirements more efficiently while providing an ESG marketplace.          —Andrea Murad

BTG Pactual Empresas marches toward the future bit by bit and byte by byte. It metamorphosed into a fully digital bank in late 2021, designed to serve business customers better. As a result, it now provides SMEs with a “variety of quality products and services with low service cost and less bureaucracy.” Businesses have responded favorably. The bank’s business loan portfolio has increased an astonishing 227% from 2019, to 143 billion Brazilian reais (about $29 billion). SME loans represent about 10% of that total, including lending solutions for rural credit needs and solar financing. BTG Pactual Empresas also provides client advisory services for ESG agendas.

The digital bank’s platform, which is available online and from app stores for iOS and Android, enables speedy service. For example, more than 99% of new customers have fully functional accounts within an hour of signing up.

The platform also offers digitized services that have been developed to support SMEs and other businesses. These include open banking (enabling users to manage all accounts, regardless of bank, in one place), multiuser accounts, online invoicing, payroll processing, collection management, foreign currency exchange, and a host of other services. All told, SMEs can choose from more than 30 business automations—including those available through Google Workspace. Live customer support is available 24/7 via the user’s channel of choice (chat, WhatsApp, email or phone). When users need actual paper money, bank partnerships enable fee-free withdrawals from a broad network of ATMs. —LS

At Arab Bank in Jordan, SME business accounts for nearly 12% of the total portfolio. As of June, the bank had a total SME loan value of $824 million, including $165 million in loans issued between the first quarter of 2022 and the first quarter of 2023. A staff of 35 dedicated employees serves more than 12,000 SME customers—representing a 12.6% share of the SME market in Jordan—through 21 dedicated SME centers. Other support channels include a 24/7 customer care center and digital platforms.

While the bank serves an extensive range of SMEs, it mainly targets businesses in the medical, professional, training and recreation, beauty and wellness, and retail sectors—along with home-based businesses led by female entrepreneurs. These and other SMEs turn to Arab Bank for a broad array of financing capabilities, including financing against point-of-sale proceeds, medical loans, vehicle loans, revolving lines of credit and trade finance products.

Arab Bank is also active on the digital front. Its Arabi Next mobile application, launched in 2022, was developed specifically to meet the needs of Jordanian SMEs. Its features include self-registration, a dashboard displaying company accounts, bill management capabilities, funds transfer services, document retrieval, salary management and cardless ATM withdrawals. A payment gateway enables SMEs to accept credit and debit cards and Apple Pay and Android Pay payments. The Arabi E-Mart platform enables SMEs to sell products and services online, while Arabi Shopix helps SMEs build their websites. Another significant digital offering is the bank’s supply chain financing platform. It helps SMEs optimize cash flow by empowering them to pay their suppliers early with Arab Bank financing.          —LS

With more than 17 million customers and employing more than 89,000 people, the Royal Bank of Canada is a multinational financial services organization with more than 1,200 branches—one of Canada’s largest banks. It offers SMEs a broad range of “lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services,” along with digital cross-border banking solutions, according to the bank.

In 2022, it granted more than $12.6 billion Canadian dollars (about $8.8 billion) in small-business loans. Its digital platform includes SME services for marketing, payments, payroll and business operations. Among these services is Ownr, a platform that helps entrepreneurs start, manage and grow their businesses. RBC Insight Edge, meanwhile, is a business dashboard offering data-driven insights to help businesses make more informed decisions about their customers and markets. It employs anonymized credit and debit card information, combined with demographic and location data, to offer business owners improved insight into the markets in which they operate.

—LS

For the second year in a row, Santander was chosen as the top SME bank for Western Europe. With offices in Spain, the UK and Portugal, it provides financial products and services to more than 4 million SMEs worldwide. SMEs are one of the bank’s largest customer segments, composing over 90% of the bank’s corporate customers in Portugal. The bank focuses on international trade, green finance and education to help SMEs prosper.

The bank has established platforms and programs to enable SMEs to develop an international presence. Santander Trade provides information on global markets for trade finance, and Santander Trade Club matches companies with an import or export counterpart. The bank replicates best practices across its European footprint through its One Europe strategy.

Santander provides green-finance and sustainability offerings  as clients transition to a low-carbon economy. These include financial products for purchasing, constructing and renovating green buildings and developing sustainable and protected agriculture. The bank also assists companies with renewable energy initiatives by financing renewable-power and low-carbon infrastructures.

With Santander X, the bank provides resources and training so that SMEs can scale and help communities prosper. Santander has specific tools to assist SMEs, like Santander X Explorer, a preincubation program that works with SMEs as they transform ideas into value propositions and sustainable businesses; and Santander X Launch, which helps SMEs bring that project to market and raise capital.    —AM

As the global economy continues to limp along, small and midsize enterprises (SMEs) will keep facing an uphill climb in 2024—whatever corner of the world they happen to occupy. The International Monetary Fund forecasts that GDP growth in emerging and developing economies will fall to 4% in 2023 from 4.1% in 2022 and remain at 4% in 2024, while GDP in advanced economies will drop to 1.5% this year from 2022’s 2.6% and to 1.4% in 2024.

SMEs can expect to face stronger headwinds in a sluggish economy than their larger brethren. Large corporations tend to have balance sheets that can weather the knock-on effects of such challenges as the Russia-Ukraine war, the current Middle East conflict, rising energy prices, tighter monetary policies, and governments’ cessation of pandemic support measures. For SMEs, stingier capital markets and the breakdown of open trade in favor of national self-reliance in many economies are making growth even more difficult.

This does not bode well for the global economy. Approximately 99% of businesses worldwide are SMEs, representing 60% of the business value-add, according to the OECD October 2023 SME and Entrepreneurship Outlook Polixy report. Small and midsize businesses are critical “to drive a resilient, inclusive and sustainable recovery,” the report’s authors warn.

One of the most important lessons the pandemic has taught businesses is the necessity of digitalization: from improving online and mobile access for clients to virtualizing their organization’s infrastructure. Social media and cloud computing have become mainstream for most SMEs, the OECD report’s authors note, with use of the latter doubling in the past six years.

Unlocking the value hidden in the data will be critical. A World Economic Forum survey of 111 SMEs in 42 countries and 21 sectors found that “74% struggle to maximize the value of their company’s data investments.” More than half of those polled (55%) experienced difficulty finding data, and slightly fewer (54%) had difficulty maintaining their data.

“The greatest acceleration in digital diffusion in recent years has been in the conduct of big data analysis—albeit from low levels—and the purchase of cloud computing services,” says Sandrine Kergroach, head of SME and Entrepreneurship Performance, Policies and Mainstreaming at the OECD Centre for Entrepreneurship in a 2021 OECD report. “The adoption of business intelligence and supply chain management software have progressed little, especially among the smallest firms.”

Yet, the development of open banking standards, the sharing of application programming interfaces (APIs), and the rise of the sharing economy have begun to increase the value of SMEs’ internal data. That makes selecting the proper banking partner more critical than ever.

Firms need to balance access to the cheapest capital against the value-add of the technologies and other services banks can provide. This year’s World’s Best SME Bank Awards recognize those financial institutions that stand head and shoulders above their competitors in serving their SME client base.      —Robert Daly

The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the winners of the World’s Best SME Banks 2024 based on a mix of objective and subjective factors. Editors consulted entries submitted by the banks and the results of independent research. Entries were not required.

Judges considered performance from April 1, 2022, to March 31, 2023. Global Finance then applied a proprietary algorithm to shorten the list of contenders and arrive at a numerical score of up to 100. The algorithm weights a range of criteria for relative importance, including knowledge of SME markets and their needs, breadth of products and services, market standing and innovation.

Once the judges narrowed the field, they applied the final criteria, including scope of global coverage, size and experience of staff, customer service, risk management, range of products and services, execution skills and use of technology. In the case of a tie, the judges lean toward local providers rather than global institutions. The panel also tends to favor private-sector banks over government-owned institutions. The winners are those banks and providers that best serve the specialized needs of SMEs.

For the second year running, the Brazilian digital bank BTG Pactual Empresas has swept the Best SME Bank awards for Brazil, Latin America, and the world. The bank has eased access to capital for micro, small, and midsize enterprises (MSMEs), representing approximately 90% of Brazilian companies.

Clients get a low-touch digital channel, available 24/7, that nevertheless provides a high-touch experience using open banking standards and Brazil’s PIX instant payment system. For example, BTG Pactual Empresas has shortened the time needed to obtain credit to about 30 minutes for clients participating in rural credit programs, solar-power and green financing, and women-owned businesses. Newly opened SME accounts are operable within an hour.

Once an SME account is open, account owners can export their banking data to standard spreadsheets, Microsoft Excel and Google Sheets, and enterprise resource planning (ERP) applications, instantly reconciling accounts in their ERP systems.

BTG Pactual Empresas provides such additional services as single-sign-on multiuser and multibusiness accounts, online invoicing, collection management, budgeting capabilities, foreign currency exchange and digital receipts, along with payroll, insurance, and tax and investment services. Clients can reach expert support any time via chat, email, WhatsApp and toll-free calling.       —RD

Vietnam enjoys a wealth of the features that foreign capital has come to love. In an aging world, it boasts almost uniquely favourable demographics, as 40% of its population of 100 million are under 25. It has a 1,300-kilometer land border with China, and therefore direct access to that market of 1.2 billion consumers; low wage costs; and a large, well-educated labor force. Its manufacturing base, meanwhile, benefits from the problems of its neighbor to the north, and through its membership in ASEAN, it has tariff-free access to 800 million more people across Southeast Asia.

Outside investors are getting the message.

“The 2023 outlook for the business environment in Vietnam shows promising signs of improvement,” says Thierry Mermet, CEO of Source Of Asia (SOA), a consultant to companies looking for business opportunities in Vietnam and ASEAN. “The capital from foreign direct investments reached around $10 billion [over Q1 of 2023], showing a rise of 0.5% compared to the same period last year.” SOA projects the pattern to continue. “Our projections for the next quarter are looking just as positive. Companies are actually expecting similar levels of foreign direct investment to keep coming in.”

Longer term, he says, “Vietnam is really cementing its position as one of the top three places where European business leaders want to invest.” According to the Business Confidence Index report from EuroCham, he notes, “3% more leaders have picked Vietnam as one of their top three investment choices. It’s a solid indicator that we’re on the right track.”

Ninety countries have invested in Vietnam in the first half of this year; the top five are Asian countries, with South Korea in first place, accounting for $81 billion and Singapore second with $72 billion. Japan follows in third position with nearly $70 billion committed. Notably, while the US trails in seventh position with investment capital of $USBN, it is also Vietnam’s first key export partner, accounting for almost $110 billion in 2022.

“Thomson Medical Group is one of the largest Singaporean private providers of health care services for women and children, and is  set to buy FV Hospital [in Ho Chi Minh City] in what’s being called the biggest health care deal in Vietnam,” says Mermet. Valued at $381 million, the deal not only opens up a market presence in Vietnam for Thomson but positions the country “to leverage growing medical tourism opportunities from our neighboring countries.”

Another indicator of Vietnam’s pull is homegrown electric vehicle manufacturer VinFast, which recently became the world’s third-largest automaker by market capitalization, behind Tesla and Toyota.

“With shares surging 20%, VinFast’s valuation hit an impressive $191.2 billion,” notes Barry Elliott, vice president of Tomkins Ventures and a supply chain guru long active in Vietnam. “This not only signals a promising future for the EV industry in Southeast Asia in general, but also exemplifies Vietnam’s emerging prowess in manufacturing.” VinFast now has plans to establish a plant in North Carolina.

Vietnam is also benefiting from the fallout of the US-China trade war, as higher US tariffs on a wide range of Chinese exports drive companies to switch their manufacture of exports away from China toward alternative hubs in Asia.

“This trend has been further reinforced by the Covid-19 pandemic,” says Elliott, “as protracted disruptions created turmoil in global supply chains for many industries, including automobiles and electronics.” The Japanese government nudged the trend along in 2020 by introducing a subsidy program for Japanese companies relocating production out of China, either back to Japan or to certain other designated countries.

“Since 2020, Vietnam has been one of the preferred destinations for Japanese firms choosing to shift their production to the ASEAN region in the first round of subsidy allocations,” Elliott notes. “This trend continues.”

The US, meanwhile, is boosting its economic and technical ties with Vietnam as Beijing grows more assertive in the region.

The recently disclosed establishment of a “comprehensive strategic partnership” give the US a diplomatic status that Vietnam has so far reserved for only a handful of other countries: China, Russia, India, and South Korea. The move was confirmed by a senior Biden administration official and two people in Hanoi familiar with the matter.

The deal, expected to be announced officially during President Biden’s state visit to Vietnam in September, is the latest step by his administration to deepen relations in Asia. For Hanoi, the closer relationship with Washington provides a critical counterweight to Beijing’s influence.

“This shows that Hanoi is willing to risk angering Beijing but sees the move toward Washington as necessary, given how aggressively China is flexing its military muscle in the region,” says Derek Grossman, senior defense analyst at the Rand Corporation. “If you have the US on the same pedestal as China, that is saying a lot to Beijing, but also to the rest of the region and to the world. That’s saying the US-Vietnam relationship has come a long way since 1995,” when the two countries normalized relations.

On a recent trip to Ho Chi Minh City, Jacqueline Poh, managing director of Singapore’s Economic Development Board (ED,B) met with startups in financial services, robotics, and renewables. She noted the great influence of a returning diaspora with deep experience abroad, tagged approvingly by the Vietnamese as “sea turtles.”

“All have a can-do spirit, support for each other, and gumption,” says Poh. ”This heady mix has created a conducive local startup ecosystem.”

Poh also cited the growth of the Vietnam-Singapore Industrial Parks (VSIPs), the first of which were established in 1996 and now number 17 across 10 locations “The existing 14 VSIPs have garnered $18.7 billion in investment so far and have created 300,000 jobs in Vietnam,” she notes.

Incentives driving the rise in foreign direct investing, says Carsten Ley, founder and managing director of Asia PMO, which advises companies on operations in Vietnam, is a “China plus one” risk mitigation model aimed at forestalling on China by building redundancy in at least one other regional center. As a case in point, Ley cites Apple, which recently moved iPod production from China to Ho Chi Minh City, where most manufacturing is located. “Many Korean companies are also investing,” he says: “Samsung, LG on the IT side. Lego just opened a huge factory outside Ho Chi Minh.”

As this suggests, Vietnam is now moving up the value chain from shoes and garments toward high tech, including Vietnamese fintechs such as payment providers Momo, ZaloPay, and VNPay, and foreign startups.

“As a consequence of this and other factors,” says Ley, “a rapid growth in capital expenditure is expected, reflecting continued strong foreign direct investment by multinationals as well as domestic infrastructure spending.”Given the volume of large-investor interest, it’s no surprise that venture capital is becoming a presence in Vietnam as well. My Tran, principal of local VC investor Jungle Ventures, previously spent a year and a half at VinaCapital Ventures, which is the country’s largest local VC firm and now focuses on pre-A and A-stage investments.

Now based in Ho Chi Minh City—her firm “it’s called Jungle Ventures because we invest very diversely in emerging markets”—My focuses on industries including technology in Southeast Asia and India. Jungle Ventures’ five current investments in Vietnam include Kiotviet, a maker of POS/store management software; Edupia, the country’s largest on-line education company with over 500,000 student subscribers; Medici, an insurance and health care provider; Timo, a digital bank; and Dat Bike, the biggest electric bike manufacturer in South Asia.

VC funds in Vietnam are sourced from all over the world, My notes, with a growing interest from the west, including the US. Yet she acknowledges two main challenges.

“The regulatory framework, especially for financial services, is complex,” she says. “There are foreign ownership limits. But it is possible to invest in insurance, for example, up to limits.”

The second challenge is language and communication; Vietnamese over age 40 did not learn English in school, although it is now taught to all.

These issues notwithstanding, My remains confident. “The best is yet to come,” she says.

As investors scratch their heads over China’s increasingly cautious attitude toward foreign capital—with no near-term expectation of clarity—many are taking a fresh look at another economy with close ties to the East Asian behemoth: Thailand. With its population of 69 million and a high-speed rail link into China due to open to travelers in 2028, Thailand’s economy is already projected to grow 3.6% in 2023, up from 2.6% last year, on stronger private consumption.

The World Bank bases that projection in part on a rapid recovery in the tourism sector and strong pent-up demand following China’s reopening. Thailand’s newly revamped Board of Investment (BOI), meanwhile, is offering incentives for inward investment in key areas, along with a chain of special economic zones.

“We handle FDI [foreign direct investment] projects and have seen a distinct increase in investment activity over the past few years,” says Aime Pinyapa Somphong, managing partner at TWLS Law Group in Bangkok. “The uptick was evident even before Covid-19, but from mid-2022 it has been especially strong.” The biggest source of interest is from China, Aime notes.

Although Thai voters recently chose reformers over the country’s longstanding military-political leadership, it remains to be seen how much change can be wrought through parliamentary wrangling.

The BOI is eager to encourage the trend. In 2021, it unveiled the Bio-Circular-Green Economic Model, a strategic plan that aims to boost Thailand to its next level of development by focusing on four industries: agriculture and food; medical and wellness; bioenergy, biomaterial, and biochemical; and tourism and the creative sector. The BCG includes tax incentives for foreign investors in Thailand that can help achieve BCG’s goal of net-zero emissions.

While the Bank of Thailand has trimmed its growth forecast for 2023, citing external risks and an expected global slowdown, Piti Disyatat, director of economic research in the bank’s Monetary Policy Group, said recently that he expects growing strength in the tourism sector to lessen the impact of any global softening.

“The economy has good momentum, while inflation, albeit easing, remains higher than that in the past,” Piti says, “so [rate] normalization will have to continue. Our task going forward is to ensure that the economic recovery is stable.” He still projects Thai GDP to grow close to 4% in 2023, ahead of the World Bank’s projection, and for the baht to continue to strengthen against the US dollar.

While China and India are much larger economies, Thailand is not perceived as posing as many problems for outside investors, according to Chris Cracknell, chairman of Grant Thornton in Thailand.

“There is a sense that Southeast Asia—and specifically ASEAN member countries with mutual free trade agreements already in place—are the place to land if you can’t do China due to supply uncertainty and political risk,” he says. Thais refer to China as “big brother,” he notes, pointing out that Thailand is well positioned within ASEAN to offer a base for manufacturing and distribution with direct and improving logistical links to China to the north as well as the rest of Asia. The special economic zones on its eastern seaboard have attracted much inward interest, he adds. 

The profile and direction of future economic growth were issues in last month’s national elections. “After the bruising impacts of Covid-19, there is an awareness on all sides that the economic base needs to be broadened away from agriculture and tourism, which between them comprise 60% of GDP,” says Peter Hone, an energy industry expert with 30 years of experience in Thailand and the region. “Both the incumbent prime minister [Prayut Chan-o-cha, who had served since seizing power in a military coup in 2014] and campaigning opposition leaders have emphasized the importance of new FDI,” promising to continue investment in the Eastern Economic Corridor (EEC) and focus more on the neglected southern provinces bordering Malaysia.

The EEC, a special economic zone in eastern Thailand straddling the three provinces of Chachoengsao, Chonburi and Rayong, was established in 2017 and enjoys significant tax and capital advantages. “The concessions in this zone, and the growing infrastructure, have been major factors in attracting investment,” says Aime. The area boasts new ports and other infrastructure, and new projects including a semiconductor wafer fabrication plant to be built by Chinese investors.

Hat Yai, the largest city in the southern region, could be the next economic powerhouse in the region,” Niphon Bunyamanee, deputy leader of the Thai Democrat party, said recently, given the political tension in Hong Kong and land scarcity issues in Singapore.”

What sectors are likely to see the most growth? “Medical and health tourism,” says Hone, “and a strong move towards sustainability via the BCG, which stresses the development not merely of renewable energy but also of alternative sources of protein in the food chain. One Chinese waste management company already collects waste and plastic scrap and converts it to electricity or to new plastic pallets (PDPA).”

Thai leaders and planners are sensitive to how their country stacks up in comparison with Singapore, which is seen as the benchmark for governance and stability in the region, says Cracknell, and is now offering “inter alia regional operating headquarters tax concessions” to lure multinationals out of the high-cost island state. Along with these are import/export tax exemptions on approved projects. “Significantly, Thailand is now allowing foreign [corporate] ownership of land for the first time. For a long time, a local partner was required.”

US investors and businesses have long had favored access to the Thai market. The Treaty of Amity and Economic Relations Between the Kingdom of Thailand and the US, inked in 1966, allows—uniquely—for American citizens and businesses incorporated in the US or in Thailand to maintain a majority shareholding or to wholly own a company in Thailand and thereby engage in business on the same basis as would a Thai national. Under the treaty, these companies are also exempt from most of the restrictions on foreign investment imposed by the Thai Foreign Business Act of 1999.

Nevertheless, the UK-based Lucy Group has made a major commitment to the Thai EEC.

“When we started to seriously diversify around 2010, we decided we needed another manufacturing base,” says Carl Sellick, regional CEO of Lucy Group, which supplies electrical distribution systems and switch gear across the world. “We chose Thailand because, under the rules, we didn’t need a local partner—unlike Malaysia. We decided to invest in the EEC. Unlike our competitors ABB, Siemens and Schneider, we manufacture in Thailand, and as long as we re-export our products, are free of local tax.”

Lucy Group benefits from a seven-year tax holiday on profits, with taxes limited to 50% of the normal rate for the next 10 years. Thailand provides a base for the company in ASEAN as well as points north to China.

“We have been delighted by our success in Thailand,” says Sellick. “Nearly 20% of our product is now sold here, 40% in ASEAN under the terms of the regional free trade agreement and the rest across APAC.”

The Made in Thailand label “is very important to our hosts,” Sellick points out, “and at this point many government bodies choose to buy our products; 75% of the 20% sold locally goes to government-related companies via the MEA [Metropolitan Electricity Authority], which are generally easy to deal with. We made the right decision.”

Early signs this year suggest that other foreign companies and investors see Thailand the same way, says Aime. “We expect FDI to increase this year and are getting many more enquiries. Many investors are seeing that Thailand enjoys both domestic scale and increasing connectivity with the key markets of the PRC—to the north—and the ASEAN free-trade area with its 800 million people.”

Cross-party political consensus on the need to develop a southern economic zone and a new growth- and infrastructure-oriented government in Malaysia also augur well for regional rail and road infrastructure.

The change in Malaysian leadership following the 2022 election may signal a historic shift in the country’s economic fortunes. The postcolonial coalition political structure, which endured for 61 years from independence until 2018, has given way to less paternalistic and more-inclusive politics.

As caution over China grows, Malaysia—with its common law heritage, educated English-speaking workforce and significantly lower costs than its smaller neighbor Singapore—offers investors an alternative.

The progress made in early 2023 by Prime Minister Anwar bin Ibrahim’s incoming administration in critical areas of economic and political reform will send a clear signal to investors looking away from China.

“For the past 12 months, we have seen significant inward investment activity in three main sectors: renewable energy, manufacturing and technology,” says Cassandra Thomazios, a Kuala Lumpur-based partner who heads the corporate and investment team at MahWengKwai & Associates. She adds that the new government has set attraction of foreign direct investment (FDI) as one of its main goals, providing abundant tax and other initiatives.

Investments from companies in Canada, China and Japan have been increasing. The FDI from China alone amounted to more than $180 billion in 2022. Renewables are big, as the country’s “Go Green” initiative has seen increased investment in solar power generation.

“Malaysian property companies are providing land and infrastructure and outsourcing solar investment to Chinese companies,” says Thomazios. “We are also seeing Malaysian coal plants retrofitting to other natural feedstock using imported technology.”

Export tariffs imposed on Chinese semiconductors also have created an opportunity to use Malaysia as an alternative route into the global market. “They create a regional HQ here, benefit from major tax exemptions, and then sell Chinese semiconductors worldwide,” Thomazios notes.

These sentiments are echoed by Thean L. Soo, a banker who had left Malaysia for Australia and worked for National Australia Bank, Westpac and ANZ before returning to Southeast Asia and becoming the managing director and head of relationship management South Asia Pacific at German lender HypoVereinsbank, a subsidiary of UniCredit.

Soo was closely involved in bringing business into Malaysia from China after the introduction of the China-Asean Free Trade Agreement in 2010, especially in high tech and green technology. He now takes a close interest in Malaysian FDI from nearby Singapore.

“After four prime ministers over five turbulent years, the investment climate in Malaysia is improving; and the new government should help,” says Soo. “There was a hiatus under [Prime Minister Mahathir bin Mohamad] and his successors … but now it will pick up again.”

He notes that platforms for inbound investments are in place, with highly structured processes: “Anybody who wants to invest will get support and guidance from the Ministry of International Trade and Industry under the finance ministry.”

Anwar’s Coalition

Prime Minister Anwar’s new unity government won power in November 2022 and, on December 16, signed a cross-party coalition agreement that gives it a two-thirds majority based on a manifesto of reform. As a result, investors will watch developments over the next year with interest.

Anwar is a former Deputy Prime Minister and Finance Minister who has signaled his intention to rewarm Malaysia’s relationships with global institutions such as the International Monetary Fund. Prime Minister Mahathir had ruled out borrowing from the IMF during the 1997 Asian financial crisis, citing its “onerous” conditions—and indeed, Malaysia recovered better than some neighbors who did accept IMF loans.

Other signs expected to be positive for business interests include a firm move to reduce social subsidies and a renewed commitment to a lagging infrastructure—especially the relaunch of the high-speed rail link between Kuala Lumpur and Singapore.

“This project is a must, and will signal that we are investing in infrastructure and enabling rapid movement between development zones in Malaysia and our prosperous neighbor Singapore,” says Mohd Nur Ismal bin Mohamed Kamal, CEO of MyHSR, the state-owned project-delivery vehicle. He is optimistic that the project, on hold since 2019, will be relaunched by Anwar’s government.

Diminished Expectations

Maybank Investment Bank estimates only moderate growth for the Malaysian economy in 2023, given challenging global conditions and slowing domestic demand. The bank cut its expectation of Malaysia’s full-year 2023 growth to a moderate 4%, down from its 2022 forecast of 8%.

Yet leaders at the central bank, Bank Negara Malaysia (BNM), are confident that the Southeast Asian nation will not enter a recession this year. “For 2023, we see some challenges to growth, especially from the external front with global growth slowing,” BNM’s governor, Nor Shamsiah Mohd Yunus, told the Malaysian National News Agency in November. “But I would like to stress again that we are not expecting a recession.”

Maybank estimates Malaysia will continue to do well with commodity exports, particularly palm oil, petroleum and liquefied natural gas. The average price of crude palm oil is expected to stay at 3,500 ringgit (about $825) per tonne (1.1 US tons). Brent crude oil is expected to stay around $96 per barrel for the following year.

China remains Malaysia’s largest foreign investor in the manufacturing sector, in addition to being Malaysia’s largest trading partner and also a significant source of tourism. Bilateral trade with China reached $176.8 billion, accounting for 18.9% of Malaysia’s total. Malaysian exports to China rose 21% to a new high in 2021,  according to the Department of Statistics Malaysia, based largely on liquified natural gas and electrical and electronic products.

Malaysia has a substantial energy sector led by state-owned Petroliam Nasional (Petronas), which manages, explores, produces, refines and markets energy resources. In late 2022, Malaysia published its National Energy Policy 2022-2040 (NEP), setting government priorities for the energy sector and announcing a shift away from hydrocarbons.

The NEP targets a 2040 energy mix of 4% bioenergy, 4% solar, 9% hydropower, 27% petroleum products, 39% natural gas and 17% coal compared to 2018 numbers of 1% bioenergy, 0% solar, 6% hydropower, 30% petroleum products, 41% natural gas and 22% coal. This modest vision has created major opportunities for inward investment in green technology.

“Malaysia has land and sunshine in abundance,” says Robert Liu. He advises on and invests in green projects in Malaysia and the region through his investment vehicle, OceanPixel, one of many local players competing with Chinese, Canadian and other inbound FDI. “We have been working with state governments to take large areas—[that are] unattractive for other investors due to the toxic legacy of tin mining and other extraction industries—and create large solar farms using imported technology.”

With the winds of change blow fresh opportunities. With neighboring rival Singapore notching new cost-of-living highs, Malaysians see a chance to build a new regional center. “Right now, there is a deliberate policy to encourage foreign investors to set up regional hubs here,” says Thomazios, also pointing to the strong legal frameworik, tax incentives and a strategic location at the heart of Asean. “We see early signs of increased FDI, and expect things will get better as we see greater political stability over 2023.”

SMEs are significant drivers of job creation and economic growth. Yet, unlike in the developed world, where they are treated as the goose that lays the golden egg, it is survival of the fittest in Africa.

African Development Bank data shows that SMEs account for up to 90% of businesses and almost 70% of employment in Africa. However, they are grappling with a $421 billion financing gap. The inability to access credit and other challenges have meant a high mortality rate for SMEs.

Frédéric Oudéa, CEO of Societe Generale, contends that for a continent full of opportunities undergoing profound changes, SMEs should not suffer a lot. “We are convinced that growth in Africa will come primarily from the private sector,” he says, adding that for this to happen, SMEs are essential.

Societe Generale wants to help Africa’s SMEs grow and prosper. With SMEs representing two-thirds of its corporate clientele, the bank has adopted multidimensional support as a critical focus of its strategy. This, coupled with its Grow with Africa initiative and the Women in Africa project, has seen the bank raise over $100 million that can be loaned to SMEs.

Over the next three years, the bank intends to double its loan book to SMEs. This stems from the understanding that these businesses represent Africa’s future in responding to the continent’s long-term challenges, particularly regarding job creation and innovation.

OCBC Bank has been recognized as the Best SME Bank in the Asia-Pacific region by Global Finance, acknowledging the bank’s outstanding support of the SME ecosystem.

It has fostered digital and sustainable financing in the region amid an increasingly challenging business environment.

The bank succeeded in opening 98% of SME accounts digitally and performed 86% of SME banking transactions digitally, and it continues to help SMEs unlock the value of their data to obtain better business outcomes.

In Singapore, OCBC has integrated business financial-management capabilities into its digital business banking platform. It allows SMEs access to a 360-degree view of their sales, expenses and cash flow trends, enabling them to identify patterns and obtain insights key to better business planning.

The bank has also launched the OCBC SME Sustainable Finance Framework to simplify access to less costly green loans to help SMEs shift toward sustainability.

It also rolled out the framework to its core markets in Malaysia, Indonesia and Hong Kong, adapting it to the relevant local certifications and standards.

Meanwhile, the bank launched the OCBC SME Index in Singapore to consistently track the pulse and performance of SMEs. Available as a quarterly report, the index helps the bank keep a laser focus on areas of growth for SMEs and know where support for them is needed.

In operation since 1941, Banreservas is the largest bank in the Dominican Republic and is the only bank with physical branches in all of the nation’s provinces. Roughly 15% of all Banreservas’ business comes from SMEs, representing $1.02 billion of the bank’s $6.95 billion portfolio.

When a government survey found that 74% of SMEs in the Dominican Republic had to cease operations during the Covid-19 pandemic, and the rest had to reduce operations, Banreservas was tapped by the Dominican government as its partner in implementing a series of emergency financial measures. In addition to issuing and administering pandemic-related loans and lines of credit. Banreservas has created a program called Fomenta Pymes (“Promote SMEs”) to integrate products, services, service channels and other benefits into this vital sector. Products and services offered include electronic payroll services, and insurance policies to protect against fire, accidents, machinery breakdowns, civil liabilities and other catastrophes. Emergency road service and towing are available for corporate vehicles. A pocket point-of-sale solution enables even the smallest businesses to accept credit and debit purchases through any iOS or Android mobile phone.  

Based in Georgia, TBC Bank won the Best SME Bank in Central and Eastern Europe award for supporting the growth and development of SMEs and for its innovation and presence in the agriculture, trade, hospitality and leisure sectors. Its efforts captured a 65% market share of newly registered Georgian businesses.

The bank’s strategy includes increased digitization, automation and distance services. In 2021, it shortened the approval process with fully automated approvals on smaller loans. For larger loans, it is automatically generating financial statements for the SME.

Digital services continue to be in high demand, with about 90% of the bank’s active legal customers using business internet or mobile banking, along with open banking so that they can check all accounts from various Georgian banks in one place. TBC implemented innovative features on its business app for automatic payments and transfers in any foreign currency. Its new Payments Space platform helps SMEs manage daily transactions and other payments.

Agriculture accounts for about 7% to 8% of Georgia’s GDP, and TBC has launched various products to support this industry. These include loans available to SMEs that produce, store, process or sell agriculture commodities, as well as working capital to startups looking to develop a farm, and payment cards to SMEs that earn income from agriculture activities. TBC also offers loans cofinanced with the Georgian Ministry of Agriculture to improve farming processes.

BTG Pactual Empresas has seen the future of banking for SMEs, and that future is digital. The Brazilian bank, formerly known as BTG+ business, now conducts virtually all its business in the digital world. Its intensive technology enables low-touch online processes, ranging from SME account applications and onboarding to disbursements and collections. These innovations have been designed to provide SMEs with a wide variety of low-cost products and services. For example, SME customers incur no monthly account fees or setup costs. Ease-of-access is also a significant SME draw: In 2022, 99% of new SME accounts were fully functional within an hour of application.

The importance of accommodating the SME market in Brazil cannot be overestimated. BTG Pactual Empresas estimates that MSMEs represent about 90% of the country’s companies and are the biggest source of job creation in the nation.

SMEs have taken note of BTG Pactual Empresas’ offerings. The bank’s SME portfolio grew 82% year-over-year from 2021 to 2022, with SME loans reaching 18.9 billion reals (about $3.6 billion), 17% of the bank’s total business for the first quarter of 2022. Special programs for rural credit, solar power and green financing, and financing for women-owned businesses make obtaining credit easier for SMEs involved in these sectors. Typical time-to-credit is only about 30 minutes. Additional offerings include insurance services, investment services, and foreign exchange services.            

With the largest network of ATMs and branches in the nation, Qatar National Bank (QNB) provides the coverage that Qatari SMEs need. It also offers a dedicated SME center in Doha that meets the requirements of small and midsize businesses. The bank currently serves more than 22,000 of the roughly 60,000 SMEs that operate in the country.

QNB offers these customers a broad array of products and services. These include working capital and trade products, commercial loans and credit cards. Working with the Qatar Development Bank, it also offers programs to finance startups that would otherwise not qualify for loans. Online and mobile capabilities enable invoice payment and other business-management tasks. Notable among these digital services is a trade portal, helping importers and exporters with QNB accounts to complete trade transactions. For retailers, QNB offers a wide range of point-of-sale solutions that can be customized to meet business requirements.

Royal Bank of Canada (RBC) has more than 1,000 branches nationwide, but traditional banking capabilities are only the start of the broad array of services offered to businesses, including SMEs. Business registration, legal help, digital transformation services, analytical insights, marketing help, e-commerce help and international trade services are all offered. So is a small-business navigator designed to help people at the earliest stages of business ownership. Ownr, an RBC Venture, is an online platform that has helped more than 55,000 entrepreneurs launch their businesses. RBC Insight Edge enables companies to leverage aggregated data to gain relevant insights into their markets, helping them attract new clients.

With offices in Spain, Portugal and the UK, Santander wins the award for Best SME Bank in Western Europe. SME clients make up over 90% of the bank’s total active corporate clients, with approximately 80% of their SME customers being digital.

In Portugal, Santander focuses on the entire value chain for SMEs with a specialized and proximity-based commercial approach. It has 22 corporate centers with over 90 corporate managers and about 300 business managers in nearly 340 branches who focus on SMEs, as well as an increasing focus on digital channels. The bank has created an ecosystem of portals, financial products, services and tools for an omnichannel experience that helps SMEs operate in an increasingly digital world.

Santander is focused on developing partnerships and offerings that meet SMEs changing needs and the challenges presented by environmental, social and governance concerns, as well as increased digitalization and globalization. The bank offers continued support to SMEs by ensuring liquidity with state aid credit facilities and providing economic support lines for Portuguese companies.

Its digitized solutions, including marketplace Santander Trade, customer-care service International Desk and global payments platform PagoNxt, have made operating across international borders easier for SMEs. Santander also offers tailored solutions to help SMEs become more efficient and sustainable by reducing energy costs.