2023 ASEAN

MONITORING
PROGRESS
FINANCIAL INCLUSION IN
SELECTED ASEAN COUNTRIES

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES i

ABOUT UNCDF

The UN Capital Development Fund assists developing countries in the develop-

ment of their economies by supplementing existing sources of capital assistance
by means of grants, loans and guarantees, first and foremost for the least devel-
oped among the developing countries.

As a Flagship Catalytic Blended Financing platform of the UN, UNCDF utilizes

its unique capability to crowd-in finance for the scaling of development impact
where the needs are greatest—a capability rooted in UNCDF’s unique invest-
ment mandate—to support the achievement of the 2030 Agenda for Sustainable
Development and the realization of the Doha Programme of Action for the least
developed countries, 2022–2031.

DISCLAIMER

The designations employed and the presentation of material on the maps and
graphs contained in this publication do not imply the expression of any opinion
whatsoever on the part of UNCDF or the Secretariat of the United Nations or any
of its affiliated organizations or its Member States concerning the legal status of
any country, territory, city or area or its authorities, or concerning the delimitation
of its frontiers or boundaries.

COPYRIGHT

The views expressed in this publication are those of the author(s) and do not nec-
essarily represent the views of UNCDF, the United Nations, any of its affiliated
organizations or its Member States.

Copyright @ United Nations Capital Development Fund 2024. All rights reserved.

2023 ASEAN MONITORING PROGRESS iii

ACKNOWLEDGEMENTS

The Association of Southeast Asian Nations (ASEAN) Secretariat acknowledges

the leadership and guidance of the current Chairs of the Working Committee
on Financial Inclusion (WC-FINC) Desired Outcome 1 Working Group (Bank of
the Lao People’s Democratic Republic and the Monetary Authority of Singapore),
as well as the contributions from past Co-Chairs (National Bank of Cambodia
and Bank Indonesia), in helping set up the monitoring and evaluation frame-
work across the countries, as well as the contribution and technical assistance
of the United Nations Capital Development Fund (UNCDF) in the coordination
of inputs and the development of this report. It also acknowledges the contribu-
tions of partner country governments in ASEAN—both financial and technical—as
the implementation of the ASEAN 2025 Blueprint progresses. Danielle Hopkins,
Financial Capability advisor, helped conduct research, define the new micro, small
and medium-sized enterprise finance indicators and develop the publication.

2023 ASEAN MONITORING PROGRESS iv

ACRONYMS AND
ABBREVIATIONS
ACCMSME ASEAN Coordinating Committee on MSMEs
ACW ASEAN Committee on Women
AFMGM ASEAN Finance Ministers and Central Bank Governors
AMS ASEAN Member States
ASEAN Association of Southeast Asian Nations
ATM Automated teller machine
BDCB Brunei Darussalam Central Bank
BND Brunei dollar
BNM Bank Negara Malaysia
BOL Bank of Lao PDR
BOT Bank of Thailand
BSP Bangko Sentral ng Pilipinas
COVID-19 Coronavirus disease 2019
DFI Development finance institutions
DFS Digital financial services
DITO Digital insurers and takaful operators
DNKI National Council for Financial Inclusion (Indonesia)
DO Desired outcome
DTI Department of Trade and Industry
e-KYC Electronic know your customer
FEN Financial Education Network
Fintech Financial technology provider
FLM Financial Literacy Month (Malaysia)
FSP Financial service provider
GDP Gross domestic product
ID Identification
IDR Indonesian rupiah
ILO International Labour Organization
INFE International Network on Financial Education
KHR Cambodian riel
KNLIK National Committee for Financial Literacy and Inclusion (Indonesia)
KPI Key performance indicator
KUR Kredit Usaha Rakyat (credit subsidy scheme)
KYC Know your customer
Lao PDR Lao People’s Democratic Republic
LCTF Low Carbon Transition Facility
LDC Least Developed Country
LAK Laotian kip

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES v

LPDB-KUMKM Lembaga Pengelola Dana Bergulir Koperasi dan UMKM (Revolving Fund
Management Institution for Cooperatives and MSMEs)
M&E Monitoring and evaluation
MFI Microfinance institution
MMO Mobile money operator
MSME Micro, small and medium-sized enterprise
MSMED MSME Development Council
MYR Malaysian ringgit
NBC National Bank of Cambodia
NFES National Financial Education Strategy
NFIS National Financial Inclusion Strategy
NFLC National Financial Literacy Council
NSFI National Strategy for Financial Inclusion (Philippines)
OECD Organisation for Economic Co-operation and Development
OJK Otoritas Jasa Keuangan (Financial Services Authority, Indonesia)
OSMEP Office of SME Promotion (Thailand)
P2P Peer to peer
PHP Philippine peso
PMF Performance Measurement Framework
POS Point of sale
QR Quick response
QRIS Quick Response Code Indonesian Standard
RCG Resilience Core Group
SAP SMED Strategic Action Plan for SME Development
SCU Savings and Credit Union
SDG Sustainable Development Goal
SIAPIK Sistem Informasi Aplikasi Pencatatan Informasi Keuangan (system of
digital tools for financial reporting)
SME Small and medium-sized enterprise
SNEKI National Strategy for Inclusive Economic and Financial (Indonesia)
Telco Telecommunications company
THB Thai baht
TPLIKD Regional Acceleration Team for Financial Literacy and Financial
Inclusion
Umi Ultra Micro Financing Programme (Ultra Mikro)
UNCDF United Nations Capital Development Fund
VND Viet Nam dong
WC-FINC Working Committee on Financial Inclusion

2023 ASEAN MONITORING PROGRESS vi

CONTENTS

O8 INTRODUCTION
09 ASEAN 2025 Enabling Environment: Financial Inclusion and MSME Finance
12 Enabling Environment: MSME Finance
16 Barriers to MSME Finance
19 Recommendations to Promote Financial Inclusion of MSMEs

22 A FRAMEWORK FOR DEEPENING THE MONITORING OF

MSME FINANCE
22 New Proposed Indicators
24 Financial Inclusion Rates Continue to Rise Across All AMS
25 Digitalization of the Financial Sector is Led by Digital Payments
26 AMS Continue to Make Progress in Financial and Digital Financial Capability

28 CURRENT STATE OF MSME FINANCE

28 Overview of MSME Finance
29 Access To and Usage of Finance for MSMEs
29 Policy Regulation to Promote Financial Inclusion of MSMEs
30 Public Support Programmes for MSMEs
31 Financial and Digital Financial Capabilities of MSMEs
32 Coordination of Stakeholders to Promote MSME Finance
33 Innovation Promotes Digitalization and Financial Inclusion of MSMEs
33 Partnerships Promote Financial Inclusion for Women-Led MSMEs
34 Challenges for MSME Finance Data

35 COUNTRY REPORTS
35 Brunei Darussalam
46 Cambodia
56 Indonesia
68 Lao PDR
77 Malaysia
91 Philippines
106 Thailand
119 Viet Nam

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES vii

01. INTRODUCTION
This report is the fourth in a series of annual reports produced by the United
Nations Capital Development Fund (UNCDF). It presents learning and reflection
on progress against the financial inclusion indicators included in the 2020 and
2021 reports, along with the introduction of new indicators for 2022. In 2020,
following the development of a guidance note by the Working Committee on
Financial Inclusion (WC-FINC) Desired Outcome (DO) 1 Working Group, the
Working Group identified that the Association of Southeast Asian Nations (ASEAN)
requires a regional monitoring and measurement system with standardized indi-
cators for financial inclusion. As a result, WC-FINC developed a regional frame-
work and report in close partnership with UNCDF and in collaboration with the
ASEAN Member States (AMS) during an iterative process of engagement and feed-
back. In 2021, UNCDF provided support in the drafting of a follow-on report to
assess the progress made by AMS towards the financial inclusion targets and
indicators agreed, particularly those added for the 2021 report around inclusive
growth. The reporting framework used for this series enabled an assessment of
market progress and the effectiveness of the implementation of the National
Financial Inclusion Strategies (NFISs) to achieve the desired outcome.

In 2022, WC-FINC and UNCDF hosted various meetings and workshops to

develop new financial capability indicators with AMS using a staged approach of
pre-formulation, formulation, and implementation. These meetings helped AMS
identify their current stages of financial capability, review examples and databases
of financial capability indicators based on global best practices and share chal-
lenges and opportunities with other AMS as they relate to advancing the financial
capabilities of the region’s citizens.

In 2023, AMS identified MSME finance as a key priority during the 15th meeting of
ASEAN WC-FINC held in Bali, Indonesia in February 2023. This aligns with one of
the key milestones of the ASEAN Blueprint 2025, which aims to “promote finan-
cial inclusion to deliver financial products and services to a wider community that
is underserved, including MSMEs” and to “enhance financing ecosystems in the
region to benefit MSMEs, including through cross-collaboration among various
working groups in ASEAN”. It also aligns with the ASEAN Strategic Action Plan
for SME Development (2016–2025), which aims to “create globally competitive,
resilient, and innovative SMEs who are integrated into the ASEAN community
and inclusive development in the region” by 2025. One of the four key pillars of
this action plan includes increasing access to finance for MSMEs. WC-FINC and
UNCDF followed this same co-creation process with AMS to identify new MSME
indicators and corresponding categories for this current report.

The objective of this report is to allow for the ongoing tracking of progress in
financial inclusion in the ASEAN region as a contribution to making the ASEAN

2023 ASEAN MONITORING PROGRESS 8

economic community a working reality. The intended audience for this report is
government, policymakers, and regulators, along with other key stakeholders in
the development community.

This report is based on the UNCDF methodology to support financial inclusion

in Africa and Asia through a process of evidence-based country diagnostics and
stakeholder dialogues, leading to the development of national financial inclu-
sion roadmaps that identify key drivers of financial inclusion and recommended
action. Through its design, UNCDF seeks to strengthen and focus the domestic
development dialogue on financial inclusion. For more information, please visit
Homepage - UN Capital Development Fund (UNCDF).

ASEAN 2025 ENABLING ENVIRONMENT: FINANCIAL INCLUSION

AND MSME FINANCE
National financial inclusion has been an important policy objective for country
governments in ASEAN. Each country is at a different stage of financial services
market growth and financial sector innovation and is thus adopting various mech-
anisms for achieving formal financial inclusion to drive inclusive economic growth.
The dynamic socio-economic and digitalization landscape in which the financial
sector operates necessitates country governments and regional platforms to keep
revising and updating their policies and market-based interventions to ensure that
no one is left behind, and to achieve the 2030 Sustainable Development Goals
(SDGs). The continued focus of the ASEAN Economic Community on the three
strategic levers of Recovery and Rebuilding, Digital Economy, and Sustainability
shows the importance of these themes in the recovery of ASEAN’s economy. This
showed a resurgence in growth as it returned to pre-pandemic levels, with eco-
nomic growth reaching 5.6 percent in 2022. ASEAN is forecasted to maintain its
growth at a level above the global average at 4.7 percent in 2023 and 5.0 percent
in 2024.1

These levers also show the importance of digitalization efforts and digital financial
services (DFS) in increasing financial inclusion and recovery efforts. WC-FINC has
set the following framework for achieving the region’s financial inclusion targets.
To achieve the vision set out in this framework, it will be imperative to track finan-
cial inclusion across ASEAN countries on a periodic basis. This will assist in mon-
itoring NFIS implementation and establishing whether targets are being met at
national and regional levels. With the addition of new financial capability indi-
cators in 2021, it is also important to track progress of the development, imple-
mentation, and monitoring of National Financial Education Strategies (NFES), as
increasing awareness on financial education and consumer protection is a key
outcome under this framework. Figure 1 illustrates the framework for achieving
ASEAN financial inclusion targets.

1 OECD (2023) Economic Outlook for Southeast Asia, China and India. Paris, France: Organisation for Economic Co-operation and
Development (https://www.oecd.org/dev/asia-pacific/economic-outlook/ accessed 17 April 2024).

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 9

The themes of this report and corresponding integration of new measurement
indicators, now in the fourth year, build towards the desired outcomes identified
in the ASEAN Financial Inclusion Framework:

• 2020: Access to and usage of financial inclusion

• 2021: Quality, impact, and inclusive growth of financial inclusion
• 2022: Financial capability as a key driver of financial inclusion
• 2023: MSME finance as a key driver of financial inclusion.

Figure 1 | Framework for achieving ASEAN financial inclusion targets

VISION:
Advancing Financial Inclusion in ASEAN
Strategic outcome
Increased financial access, usage and quality of financial services to all

ASEAN FINANCIAL INCLUSION TARGETS

Quantifiable Targets • Reduce average financial exclusion in ASEAN from 44% to 30%.
(by 2025) • Enhance financial inclusion infrastructure readiness from 70% to 85%

FOUR DESIRED OUTCOMES (DOs) TO SUPPORT INCLUSIVENESS

Support national Elevate AMS Promote financial Increase awareness
Policy actions and financial capacity building to inclusion on financial
key focus areas inclusion strategy enhance financial innovation via education and
and inclusion ecosystem digital platforms consumer
implementation protection
Cooperation
Coordinate financial inclusion initiatives within WC-FINC and among WC's
framework
1. Research and assessments on financial inclusion in ASEAN

2. Knowledge sharing, capacity building and technical assistance by international

partners
Common
Milestones 3. Peer learning and sharing on financial inclusion initiatives among members

4. Guidance note for each DO as reference for national implementation

5. Reporting, periodic updates and monitoring of initiatives

ASEAN’s growth story has been supported by greater traction in recent years in
regional financial integration. This will expand sources of financing and invest-
ment for economic activities, deepen the region’s financial markets, and enhance
the competitiveness of ASEAN businesses through efficiency gains (e.g. through
lower costs of payments and settlements). Growth and development across the
region, however, do not guarantee equal opportunities for all to improve their
social and economic circumstances; one reason for this is a lack of financial and
literacy skills, particularly among the most vulnerable groups who are therefore
left behind. A key priority for ASEAN has been to ensure greater economic and
financial integration progress in step with greater financial inclusion, as well as a
focus on strengthening the financial skills of constituencies. The challenges are
pressing: 265 million or 44 percent of adults in ASEAN are still unbanked, and a
large proportion of people rely on informal finance. This has wide implications for
health, economic and social outcomes. Focusing on financial inclusion is a policy

2023 ASEAN MONITORING PROGRESS 10

imperative to better align financing for the SDGs, enable more systematic inclu-
sion of the low income in financial services and build better access to financial
services for growth of MSMEs. At the ASEAN level, a regional target of 30 percent
financial exclusion by 2025 was set, and the latest figures reported by AMS as of
March 2023 (see Figure 2) indicate that this goal was achieved in 2020. Progress is
monitored periodically to achieve the vision of regional financial inclusion.

AMS 2017 2019 2020 2021 2022

Brunei
14 14 21 21 14
Darussalam
Cambodia 82 41 41 41 33
Indonesia 51 44.3 23.8 18.6 14.9
Lao PDR 71 69 48 48 42
Malaysia 15 5 4 4 4
Philippines 66 71 71 44 44
Singapore 2 2 2 2 2
Thailand 18 16 12 5.7 5.6
Viet Nam 69 42 36.3 36.03 34.1
ASEAN total 46 36.3 30.15 29 22.62

AFMGM
AFMGM April SLC October SLC March
Data source Findex 2017 October
2019 2021 2023
2020

Figure 2 | Financial exclusion level as reported by AMS

AMS consider that enabling infrastructure to ensure everyone participates in the

financial system is a key driver of financial inclusion. Thus, they have set key per-
formance indicators (KPIs) to determine the enabling environment and national
infrastructure readiness for financial inclusion in the region, with an overall target
of 85 percent readiness by 2025. The identification of the necessary infrastruc-
ture has, as much as possible, considered commonalities across the region, but
when necessary has reflected unique country contexts (i.e. some countries are
not included in certain individual targets). In addition, financial infrastructure rel-
evant to DFS has been included in recognition of the importance of digital tech-
nology in driving financial inclusion. The latest figures reported by AMS are shown
in Table 1 and indicate that AMS are very close to achieving their regional target
of 85 percent.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 11

Table 1 | ASEAN national infrastructure/enabling environment readiness KPIs for financial inclusion
Readiness level
As of 31 December
FINC Infrastructure
2022
No. %
1 Credit registry or credit bureau 10/10 100
2 Credit guarantee for agri or SME financing 8/9 88.9
3 Debt resolution and redress mechanism 7/10 70.0
4 Financial inclusion monitoring framework 5/8 62.5
5 National Strategy for Financial Inclusion 8/8 100
6 National Strategy for Financial Education 5/10 50
7 Legislation, regulations, platforms supporting
financial inclusion (moveable assets collateral
10/10 100
registry, basic deposit account regulation,
e-money regulation, agent banking regulation)
8 Institution to support financial inclusion mandate 9/9 100
9 Consumer protection regulations/framework 9/10 90
10 National Digital ID 7/10 70
TOTAL 83.57%

To keep track and ensure that the KPIs set within the working groups are met,
there is a need for a coherent and harmonized regional monitoring system in
ASEAN. Additionally, as the levels of financial inclusion increase, the markets
become more sophisticated and, as such, underline the need to continue build-
ing the capacities of regulators in monitoring and evaluation (M&E) in financial
inclusion.

ENABLING ENVIRONMENT: MSME FINANCE

The focus of this year’s report on MSME finance is aligned with one of the key
milestones of the ASEAN Blueprint 2025: to “promote financial inclusion to
deliver financial products and services to a wider community that is underserved,
including MSMEs” and to “enhance financing ecosystems in the region to benefit
MSMEs, including through cross-collaboration among various working groups in
ASEAN”. It includes such initiatives as establishment of credit bureaus, credit guar-
antees, debt resolution agencies and other mechanisms to facilitate access to
finance and recovery for MSMEs. It is also aligned with the ASEAN Strategic Action
Plan for SME Development (2016–2025) (SAP SMED 2025), which aims to “create
globally competitive, resilient, and innovative SMEs who are integrated into the
ASEAN community and inclusive development in the region” by 2025. One of
the four key pillars of this action plan includes increasing access to finance for
MSMEs. It is also aligned with key regional KPIs for financial inclusion (see Figure
2), including credit guarantees for agro-enterprises and MSMEs, and credit regis-
tries or credit bureaus, which the majority of AMS have already put in place (8/9
and 10/10, respectively).

2023 ASEAN MONITORING PROGRESS 12

 GLOBALLY COMPETITIVE AND INNOVATIVE MSMES

By 2025, ASEAN shall create globally competitive, resilient, and

innovative MSMEs seamlessly integrated to ASEAN community and
inclusive development in the region.

A B C D E
Promote Increase Enhance Enhance Promote
productivity, access to market access policy and entreprenuer-
technology and finance and interna- regulatory ship and
innovation tionalization environment human capital
development

A1. Productivity will be enhanced.

A2. Industry clusters will be enhanced.

A3. Innovation will be promoted as a key competitive advantage.

B1. Institutional framewwork for access to finance will be developed and enhanced.

B2. Financial inclusion and literacy will be promoted, and the ability of MSMEs to
engage in the financial system will be enhanced.

C1. Support schemes for market access and integration into the global supply chain
will be further developed.

C2. Export capacity will be promoted.

D1. Inter and intra-governmental cooperation in terms of policy and regulation will
be enhanced.

D2. MSMEs interests will be promoted and involvement in the decision-making

processes will be enhanced.

D3. Obtaining of permits and business registration will be streamlined.

E1. Entrepreneurial education and learning programmes will be instituted.

E2. Human capital development for MSMEs will be enhanced, especially for women
and youth.

62 ACTION LINES

Figure 3 | Summary of the ASEAN Strategic Action Plan for SME Development (2016–2025) (SAP
SMED 2025)

2023 ASEAN MONITORING PROGRESS 13

SAP SMED 2025 outlines the vision, mission, strategic goals and desired out-
comes (see Figure 3). By 2025 it aims to create globally competitive, resilient and
innovative SMEs that are integrated into the ASEAN community and contribute
to inclusive development in the region. The five key pillars include promoting
productivity, technology and innovation; increasing access to finance; enhanc-
ing market access and internationalization; enhancing the policy and regulatory
environment; and promoting entrepreneurship and human capital development.
The ‘access to finance’ pillar aims to develop and enhance an institutional frame-
work for access to finance, and promote financial inclusion and financial literacy
to engage SMEs in the finance system. One KPI includes the percentage of busi-
ness loans to SMEs, for which figures were available as national data from six AMS.

Objectives and specific activities to achieve the institutional framework include:

• Improve understanding and strengthen conventional financing infrastructure.

• Conduct roundtable discussions between SMEs, regulatory agencies
and financing institutions to share current issues on access to finance,
such as credit rating, credit scoring, credit bureaus, secured transac-
tion law, microfinance, SME-focused lending, intercompany credits.
• Facilitate AMS to develop credit rating systems.
• Develop policy options in collaboration with relevant sectoral bodies
to enhance conventional financing, such as credit guarantee schemes
and trade finance.

• Improve the policy environment and measures to foster alternative financing

by increasing availability of diversified sources of private funding.
• Conduct a study on policy options and good practices for equity
finance and alternative financing for SMEs and start-ups, and organize
roundtables with various stakeholders in collaboration with relevant
sectoral bodies.
• Organize business-matching events among local SMEs and investors.
• Develop alternative financing frameworks and an online interactive
platform.

• Strengthen export financing facilities.

• Promote trade finance, such as trade credit, export-oriented loan insurance

and factoring by leading financial institutions.

2023 ASEAN MONITORING PROGRESS 14

Objectives and specific activities to achieve financial inclusion and financial liter-
acy include:

• Enhance outreach to promote financial inclusion and increase access to both

conventional and alternative financing.
• Share best practices to facilitate adoption of accounting rules, guide-
lines and schemes for MSMEs.
• Develop microfinancing programmes for micro-enterprises.
• Create an interactive online platform on the range of financial support
available to MSMEs to minimize information gaps.

Aside from existing policies, strategies and action plans, an enabling environment
encompasses existing infrastructure. This includes coordinating bodies at the
ASEAN level. There are several coordinating bodies that could be used to develop
and implement the new MSME finance indicators suggested in this report.

Cooperation on SME development in ASEAN began in 1995, when fostering SME

development became one of the priority policy areas. The ASEAN SME Agencies
Working Group (SMEWG), which consisted of representatives from SME agen-
cies in AMS, was formed to formulate policies, programmes, and activities on
SME development. In January 2016, the Working Group was renamed the ASEAN
Coordinating Committee on MSMEs (ACCMSME) to integrate micro-enterprises
and expand the composition of the committee to include representatives from
areas outside the MSME agencies. ACCMSME meets twice a year and reports to the
Senior Economic Officials Meeting under the mandate of the ASEAN Economic
Ministers. The ACCMSME chairmanship rotates on a yearly basis.

The ASEAN MSME Advisory Board (AMAB), comprising private sector representa-
tives nominated by ACCMSME, provides strategic policy inputs on MSME devel-
opment to the ministers, and guidance on high priority matters to ACCMSME.
It is co-chaired by the current Chair of ACCMSME and the private sector rep-
resentative of the AMS holding the ASEAN Chair of the current year. In addition,
ACCMSME holds regular consultation sessions with representatives of the ASEAN
Business Advisory Council. Other business councils such as the United States–
ASEAN Business Council have also contributed to the work of ACCMSME on spe-
cific initiatives.

The ASEAN SME Academy is an e-learning initiative targeting SMEs and MSMEs
developed in collaboration with the US–ASEAN Business Council (US-ABC) and
USAID. An upgraded version of the online learning platform was launched in April
2022. It aims to reach more MSMEs and accelerate their businesses recovery. It
has many new features, including courses available in local languages (Bahasa
Indonesia, Thai, and Vietnamese), a new, attractive visual design and self-certi-
fication opportunities. It provides access to the SME Community and Academy

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 15

Facilitators and integrates a seamless interface across both desktop and mobile
platforms. Overall, the Academy’s primary goal is to provide a platform for ASEAN
MSMEs to develop their digital skills.

The ASEAN Committee on Women (ACW), created in 2002, recently developed

the ASEAN Gender Mainstreaming Strategic Framework (2021–2025) to provide
guidelines for ASEAN sectoral bodies to incorporate gender issues into their work-
plans. ACW plans to work with ACCMSME to ensure that a gender lens is applied
to SAP SMED 2025 initiatives. ACW also created the ASEAN Women Entrepreneurs
Network (WEN) in 2014. This is a regional network of national women entrepre-
neurs’ associations and/or MSMEs, associations, clubs and/or other economic
entities owned or managed by women in all economic sectors in the ASEAN
region. It aims to improve the capacity of ASEAN women entrepreneurs and boost
their development and networking. A key objective of WEN is to improve access
to finance for women-led MSMEs.

BARRIERS TO MSME FINANCE IN ASEAN

MSMEs account for 90 percent of businesses, 60–70 percent of employment and
50 percent of GDP worldwide.2 There are at least 71 million MSMEs in Southeast
Asia.3 MSMEs, including cottage firms (small manufacturing and home busi-
nesses), account for 99.6 percent of all enterprises, 76.6 percent of the workforce
and 33.9 percent of South Asia’s GDP on average.4

MSMEs in Southeast Asia were greatly affected by the COVID-19 pandemic but
are slowly starting to recover. The crisis limited the supply of financing and has
hindered MSME growth, possibly for decades, while the demand still exists among
MSMEs.

BARRIERS AT THE REGULATORY LEVEL

Barriers at the regulatory level limit the financial and digital inclusion of MSMEs.
Stringent requirements such as KYC and e-KYC (e.g. ID or birth certificates),
credit scoring and traditional collateral limit access to formal financial services
for MSMEs, particularly for women-led MSMEs. The lack of national ID systems
and/or digital national ID systems in countries such as Lao PDR exacerbates this
barrier.5 Poor payment systems infrastructure and interoperability is still a chal-
lenge in many of the LDCs in the region,6 making it difficult for MSMEs to get paid,
make payments and access DFS to support their growth. Poor digital infrastruc-
ture, such as mobile network coverage, also limits access to DFS, particularly for

2 UNCTAD (2022) Resilience and Rebuilding: MSMEs for sustainable development at the forefront of building back better and stron-
ger from the impacts of the COVID-19 pandemic, climate crisis, and conflicts. MSME Day 2022. Geneva, Switzerland: United Nations
Conference on Trade and Development (https://unctad.org/meeting/msme-day-2022-0 accessed 17 April 2024).
3 ADB (2022) Realizing the potential of over 71 million MSMEs in Southeast Asia. Metro Manila, Philippines: Asian Development Bank
(https://seads.adb.org/solutions/realizing-potential-over-71-million-msmes-southeast-asia accessed 17 April 2024).
4 ADB (2021) More growth capital needed for micro, small and medium-sized businesses in Asia post-pandemic. Metro Manila,
Philippines (https://www.adb.org/news/more-growth-capital-needed-micro-small-and-medium-sized-businesses-south-asia-post-
pandemic accessed 17 April 2024).
5 ESCAP (2021) Enhancing Digital G2P Transfer Capacities in Asian LDCs. Bangkok, Thailand: United Nations Economic and Social
Commission for Asia and the Pacific (https://www.unescap.org/kp/2022/enhancing-digital-g2p-transfer-capacities-asian-ldcs
accessed 17 April 2024).
6 Ibid.

2023 ASEAN MONITORING PROGRESS 16

MSMEs in rural areas where the majority operate (72–85 percent).7 Furthermore,
a lack of sex-disaggregated data makes it difficult to achieve financial and digital
financial inclusion for women-led MSMEs at the regulatory level.

BARRIERS AT THE SUPPLY LEVEL

Barriers at the supply level also limit the financial and digital financial inclusion
of MSMEs. This includes products designed appropriately for MSMEs, including
adequate loan sizes that will facilitate enterprise growth. MSMEs are typically
too large to receive financing from MFIs due to loan ceilings, but also below the
radar for local commercial banks, venture capital or private equity, a problem
commonly referred to as the ‘missing middle’. Three key drivers contribute to
the missing middle challenge for MSMEs: high transaction costs, perception of
MSMEs as a risky market segment, and lack of investment readiness.8 Some prod-
ucts and services are inappropriate for women-led MSMEs, as they have limited
operating hours and access points. A lack of sex-disaggregated data at the supply
level also makes it difficult to achieve financial and digital financial inclusion for
women-led-MSMEs.

Many FSPs and fintechs have limited distribution channels, large transaction costs
and high agent fees, in addition to agents lacking the full range of transactions.
More vulnerable MSMEs, such as women and youth, are viewed as risky market
segments, particularly by traditional FSPs. In addition, the fintech ecosystems in
LDCs are nascent compared with the developing and developed countries in Asia,
and, importantly, more catalytic finance is needed to accelerate national fintech
solutions and offer a suite of inclusive DFS that serve all MSMEs.

BARRIERS AT THE DEMAND LEVEL

At the demand level, the low financial and digital capability of MSMEs limits their
ability to access and use financial services and DFS, particularly for women-led
MSMEs. Qualitative research conducted in seven ASEAN Plus Three (APT) coun-
tries9 revealed that a key barrier to finance for women-led MSMEs is low finan-
cial and digital literacy. This included limited understanding of bank processes
and available financing solutions, unclear future projections, and uncertainty on
how to approach the right type of capital for their businesses.10 The research also
revealed that women-led MSMEs were reluctant to adopt alternative financing
options such as P2P lending due to unfamiliarity with the regulations or limited
awareness.11 This can lead to a perceived lack of need or distrust of formal financial
services, often seen as risk aversion, causing women-led MSMEs to prefer infor-
mal loans or savings. Women-led MSMEs often prefer more accessible ‘Tong Tins’

7 ADB (2022) Realizing the potential of over 71 million MSMEs in Southeast Asia. Manila, the Philippines: Asian Development Bank.
8 UNCDF (2021) Addressing the ‘Missing Middle’ challenge in Least Developed Countries. New York, USA: United Nations Capital
Development Fund (https://www.uncdf.org/article/6520/addressing-the-missing-middle-challenge-in-least-developed-countries
accessed 17 April 2024).
9 ASEAN Plus Three (APT) consists of the 10 AMS, the People’s Republic of China, Japan and the Republic of Korea.
10 Konrad-Adenauer-Stiftung (2022) Access to Financing Through Digitalization: New opportunities for women-owned SMEs.
Foundation Office Japan/Regional Economic Programme Asia (https://www.kas.de/en/web/japan/single-title/-/content/access-to-fi-
nancing-through-digitalization-new-opportunities-for-women-owned-smes accessed 17 April 2024).
11 Ibid.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 17

in Cambodia, which are like rotating savings and credit associations (ROSCAs),
since banks usually require excessive collateral, but offer insubstantial interest.12
Other demand-side barriers such as lack of credit history and financial reporting
mechanisms or concerns about data privacy are often related to low digital and
financial capabilities.

BARRIERS FOR WOMEN-LED MSMES

Additional demand barriers affecting the growth of women--led MSMEs include
cumbersome business registration requirements, lower participation in deci-
sion-making processes and limited digital skills. In addition, the time gap between
invoicing and payment negatively affects the cash flow of all women-led MSMEs,
forcing them to find alternatives to maintain a stable cash flow.13

Access to finance is a more acute problem for women-microentrepreneurs in the

region, as they often operate in a more informal environment and are concen-
trated in sectors that have been heavily affected by the COVID-19 pandemic (i.e.
the garment and agriculture sectors). In addition, social and cultural norms limit
the ability of women-led MSMEs to own land or other assets that can be used as
collateral, to own a mobile phone and access the internet, and to open an account
independently of their spouse. They also face limits to their mobility (i.e. distance
to the bank, safety concerns), their business networks and their decision-making
power within the household. All these factors limit their ability to access and use
formal and digital financial services. More than half of the 2.4 billion women of
working age who do not have equal economic opportunities live in East Asia and
the Pacific, and South Asia has the second-lowest average score (63.7 out of 100)
on the World Bank Women, Business, and the Law 2023 index.14

RECOMMENDATIONS TO PROMOTE FINANCIAL INCLUSION OF

MSMEs
SAP SME 25 illustrates the lack of a standardized definition of MSMEs across AMS.
There are three main indicators: number of employees, sales/annual revenue, and
assets. The number of employees varies from less than 4 to less than 10. The
assets range from less than 50 million to 200 million, while sales range from less
than 300 million to 400 million. Annual revenue or capital in Viet Nam depends
on the sector (e.g. less than VND3 billion for the agriculture sector and less than
VND 10 billion for trade and services).

A mid-term evaluation of the action plan, conducted in 2019, revealed significant

progress, with more than 80 percent of the 62 planned actions completed or in
the process of implementation. However, some key informants indicated a lack
of awareness of the plan or its progress in benefiting MSMEs. Others indicated
challenges in achieving the outcomes due to resource constraints and limited

12 Ibid.
13 Ibid.
14 World Bank (2023) Women, Business, and the Law 2023. Washington, DC: World Bank (https://openknowledge.worldbank.org/bit-
streams/b60c615b-09e7-46e4-84c1-bd5f4ab88903/download accessed 17 April 2024).

2023 ASEAN MONITORING PROGRESS 18

capacities. Another key challenge is the limited digital skills of MSMEs to adopt
digital technology and e-commerce.

A key priority of digital transformation in all AMS emerged, including the following.
• Provide online services to support the ease of doing business and regulatory
compliance.
• Support fintech adoption for increased access to financing, debt financing,
P2P lending and equity crowdfunding.
• Provide regional initiatives for capacity-building for digital upskilling, new
skilling and reskilling.

Some key recommendations to further develop the MSME sector included the
following:
• Build strong collaboration and coordination between ACCMSME and other
implementation stakeholders (see chapter 3), including key ASEAN sectoral
bodies and the private sector, to share resources and expertise.
• Realign resources towards the top three priorities for the region in the next
five years: (i) access to markets such as the e-market space; (ii) access to both
finance and policies that encourage cross-border payments for digital inter-
actions; and (iii) access to mentorship and skills-building.
• Establish a more robust M&E system to measure short- and medium-term
outcomes.

There are several areas where AMS could concentrate their efforts to promote
the financial and digital financial inclusion of MSMEs based on global challenges
and best practices at the regulatory, supply and demand levels (Table 2). These
areas are related to some of the desired characteristics of financial services at the
demand level: access, flexibility, and affordability. They are also related to sys-
temic changes at the supply level, due mainly to inappropriate financial prod-
ucts tailored to different target segments (e.g. client centricity, innovation, seg-
mentation, standardization, and capacity-building), and at the policy level, due
mainly to prioritizing MSMEs as a key segment in national policies, systems and
programmes (e.g. prioritization, incentivization, innovation, access, cooperation,
capacity-building and interoperability). These recommendations form the basis of
the proposed set of new indicators for MSME finance (see chapter 2).

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 19

Table 2 | Recommendations to promote financial inclusion of MSMEs
CHALLENGES OPPORTUNITIES THEME
Lack of Propose national MSME policy Prioritization
prioritization
of MSMEs as Integrate MSMEs as a key target group in NFIS/NFES Incentivization
a key market
segment for Review lending quotas for MSME sector
national policies,
programmes, and Lower provisioning ratio of unclassified loans to
systems MSMEs and liquidity requirements

Introduce tax incentives for MSMEs

Lack of access to Promote tiered KYC for MSMEs Access

financial services
Introduce universal ID and universal digital/biometric
ID

Promote the use of credit guarantee scheme

Inappropriate Introduce regulations to simplify loan processes, Client-centricity

product design turnaround and documentation

Promote guidelines on appropriate lending

thresholds to MSMEs

Lack of credit Propose regulatory framework for alternative Cooperation

history financing models (i.e. invoice financing/factoring)
Innovation
Unstable cash flow Create partnerships with FSPs and fintechs, telcos,
e-commerce platforms, digital payment providers Flexibility
Lack of collateral (in-platform loans)

Introduce MSME invoice discounting platform

Promote alternative credit assessments i.e. digital

data streams (payments, social media, e-commerce
purchases)

Introduce collateral registry for moveable and

intangible assets (e.g. livestock, accounts receivable
equipment and intellectual property) to secure loans

Propose leasing policy: access finance by leasing or

hiring an asset

Propose warehouse receipt policy to secure loans for

MSMEs

Introduce regulatory sandboxes to test alternative

financing models

Inability to make/ Propose national payment system legal framework Interoperability

receive payments adheres to principles of interoperability and
affordability of retail payments Affordability
High costs to
make/receive Promote credit reporting across borders
payments
Leverage regulatory sandboxes to test innovative
payment solutions

High costs of Promote usage of pre-shipment export finance Affordability

cross-border trade guarantee scheme to reduce transaction costs to
export-based MSMEs through guaranteed fees

2023 ASEAN MONITORING PROGRESS 20

CHALLENGES OPPORTUNITIES THEME
Lack of consensus Create working group for MSME sector, governance Coordination
and coordination structure with leadership/champions, cross-agency
among MSME oversight or monitoring structure Capacity-building
stakeholders
Build capacity of regulators and FSPs in MSME sector

Lack of consistent Standardize definition of MSMEs Standardization

MSME policies
Enhance MSME finance policies by considering Segmentation
business size, maturity, business model and cash flow
cycles

Propose dedicated MSME law

Low digital and Integrate MSMEs as key target group in NFES Financial and digital
financial literacy of financial capability
MSMEs Develop digital financial programmes through
touchpoints and existing platforms/groups (e.g.
social media channels, e-commerce; WhatsApp
groups, Facebook groups for business associations)

Lack of gender- Standardize definition of women-led MSMEs Segmentation

transformative
MSME policies Promote collection and use of sex-disaggregated Gender equality
data

Promote usage of gender-focused financing/

guarantee schemes

Mainstream gender equality policies across all major

SME policymaking agencies

Introduce regulations that encourage target-based

lending

Promote development of female agents

Malaysia and Singapore created fintech ‘sandboxes’ as early as 2016, and Brunei
Darussalam, Indonesia and Thailand followed suit in 2017. Meanwhile, the
Philippines started with a ‘test and learn’ approach in the early 2000s to support
the formation of an enabling environment that is strongly conducive to the growth
of mobile money, in cooperation with non-bank entities (e.g. telcos). This strat-
egy led to guidelines on the issuance of e-money and the operations of e-money
issuers in the Philippines in 2009 and provided transparency on the regulatory
framework for mobile money. The Philippines institutionalized its Regulatory
Sandbox Framework with the Bangko Sentral ng Pilipinas (BSP) issuance of BSP
Circular No. 1153 in 2022. These regulatory sandboxes should be leveraged to test
innovative payment solutions and alternative financing models.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 21

02. A FRAMEWORK
FOR DEEPENING THE
MONITORING OF MSME
FINANCE
NEW PROPOSED INDICATORS
The regional financial inclusion framework expands on the frameworks estab-
lished in 2020 and 2021. In 2020, the indicators focused on measuring access
(e.g. points of service, access points and connectivity), usage (e.g. adults with
an account, savings, credit, payments and insurance), quality (e.g. appropriate-
ness, value, affordability, financial literacy, consumer protection, indebtedness
and choice) and impact indicators (e.g. segmental, national and global) of finan-
cial inclusion. In 2021, this framework was expanded to measure inclusive growth
indicators (e.g. macroeconomic context, education, access to basic services,
health care, entrepreneurship, redistribution, financial sector development and
unemployment).

In 2022, the framework was expanded further to measure financial capabilities

based on a staged approach. The new proposed MSME finance indicators (Table
3) are based on the previously cited recommendations aligned with global best
practices and existing indicators proposed by the Alliance for Financial Inclusion
and the Organisation for Economic Co-operation and Development (OECD) (see
Table 3).15 It is also closely aligned with OECD’s ASEAN SME Policy Index 2018.16
The indicators are divided into the following categories, which are key drivers of
financial inclusion for MSMEs:

• Access to finance
• Usage
• Public support for MSMEs
• Digital finance/alternative finance (innovation)
• Coordination
• Collaboration
• Financial capabilities
• Gender.

15 AFI (2022) SME Finance Guideline Note (V.2). Kuala Lumpur, Malaysia: Alliance for Financial Inclusion (https://www.afi-global.
org/publications/sme-finance-guideline-note/ accessed 17 April 2024); AFI (2021) Policy Model for MSME Finance. Kuala Lumpur,
Malaysia: Alliance for Financial Inclusion (https://www.afi-global.org/publications/policy-model-for-msme-finance/ accessed 17
April 2024); AFI (2021) A Policy Framework for Women-led MSME Access to Finance. Kuala Lumpur, Malaysia: Alliance for Financial
Inclusion (https://www.afi-global.org/publications/a-policy-framework-for-women-led-msme-access-to-finance/ accessed 17 April
2024); OECD (2022) Financing SMEs and Entrepreneurs: An OECD scoreboard. Paris, France: Organisation for Economic Co-operation
and Development (https://www.oecd.org/cfe/financing-smes-and-entrepreneurs-23065265.htm accessed 17 April 2024).
16 OECD’s ASEAN SME Policy Index has eight policy areas or dimensions: (1) productivity, technology and innovation; (2) environmen-
tal policies and SMEs; (3) access to finance; (4) access to market and internationalization; (5) institutional framework (SME definition,
coordination, policy design); (6) legislation regulation and tax; (7) entrepreneurial education and skills; and (8) social enterprises and
inclusive SMEs (https://www.oecd.org/investment/sme-policy-index-asean-2018-9789264305328-en.htm). UNCDF’s MSME finance
framework is aligned most closely with dimensions 1, 3, 5 and 8.

2023 ASEAN MONITORING PROGRESS 22

Table 3 | New proposed MSME finance indicators
STATUS OF
THEME INDICATOR
INDICATOR
Number of standardized definitions of MSMEs New
Percentage of MSME loans in total banking system loans Existing
Percentage of MSMEs with account at financial institution Existing
Access to finance

Share of new MSME lending as a percentage of total loans New

Percentage of MSME borrowers with collateral New
Interest rate spread between small and large enterprises New
Number of SMEs with deposit accounts New
Number of moveable collateral registries New
SME financing gap New
Number of QR systems New
Percentage of MSMEs that report using an account at a financial
New
institution
Percentage of MSMEs that report using a mobile account New
Usage

Number of MSME loans Existing

Percentage of MSMEs with outstanding loan or credit New
Value of MSME loans Existing
Volume of digital payments for MSMEs New
Number of policies/strategies that prioritize MSMEs as a key
Public support for MSME

New
target group (NFIS/NFES)
MSME loan guarantee as a percentage of MSME loans Existing
finance

MSME loan guarantees (value) New

MSME direct government loans/loan funds (value) New
Number of tax incentives for MSMEs New
Number of pre-shipment export guarantee funds for export-
New
based MSMEs
P2P lending (volume, percentage share of total loans) New
alternative finance

Venture and growth capital investments (volume, percentage of

Digital finance/

New
total financing)
Leasing and hire purchases (volume, percentage of total
New
financing)
Factoring and invoice discounting (volume, percentage of total
New
financing)
Number of regulatory sandboxes for MSME finance New
Number of working groups for MSMEs New
Coordination

Number of regulatory meetings focused on MSMEs annually New

Number of capacity-building sessions for regulators/FSPs on
New
MSME finance
Number of ministries working together to promote financial
New
inclusion of MSMEs
Number of policy dialogues, roundtables, forums on MSME
New
Collaboration

topics17
Number of partnerships with MSME-focused organizations/
New
business associations
Number of partnerships with fintechs, MMOs, telcos,
New
e-commerce platforms, digital payment providers

17 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 23

 STATUS OF
THEME INDICATOR
INDICATOR
Percentage of MSMEs with nonperforming loans (i.e. 90 days) New

capabilities
Financial
Percentage of MSMEs that have at least one formal financial
New
service
Number of government programmes to promote financial and
New
digital financial capabilities of MSMEs
Number of loans to women-owned MSMEs New
Percentage of women MSMEs that have at least one formal
Existing/Revised
financial service18
Value of loans to women-owned MSMEs New
Percentage of women-owned MSME loans in total banking
New
Gender

system
Number of partnerships with female-focused organizations/
New
women’s business associations
Percentage of nonperforming loans from women-owned
New
MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs New

Table 4 presents the limited MSME finance data from 2021 that were reported by
AMS for the 2022 Measuring Progress report. Five of the eight countries reported
two to four data points on MSMEs.

Table 4 | MSME finance data 2021

MSME loan Proportion
Percentage of
guarantees as of MSMEs/
Number of Value of MSME loans in
Country a percentage farmers enabled
MSME loans MSME loans total banking
of MSME loans through financial
system loans
(value) inclusion
Brunei BND 332
2,131
Darussalam million

IDR
Indonesia 33.46 million 1,223,433
billion
Malaysia 61.12%
PHP 470.1
Philippines 4.57 0.04% (2020)
billion

VND
Viet Nam 992,335 1,852,411 45.27%
billion

Source: Measuring Progress Report 2022

FINANCIAL INCLUSION RATES CONTINUE TO RISE ACROSS ALL

AMS
Financial inclusion rates continued to rise across most AMS in 2022, as mea-
sured by the number of adults with an account at a financial institution. The
exceptions were Brunei Darussalam, where there was a slight decrease (85 to
83 percent), and Cambodia, where there was a more significant decrease (20.6
to 14.73 percent). The financial inclusion rates range from 14.73 (Cambodia) to
96.8 percent (Malaysia). Lao PDR showed a significant 65 percent increase in its

18 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

2023 ASEAN MONITORING PROGRESS 24

financial inclusion rate (from 45 to 74 percent). In the Philippines, account own-
ership among adults stood at 56 percent in 2021, and interim figures from the
Consumer Expectation Survey (CES) reveal account ownership among house-
holds reached 65 percent in 2022.19 There was an increase in financial inclusion
rates in both Thailand (from 87.2 to 89.6 percent), Indonesia (from 83.6 to 85.1)
and Viet Nam (from 74.63 to 77.41 percent). In the case of Brunei Darussalam, the
decrease in financial inclusion rate can be attributed to an increase in the adult
population.

The growth of financial inclusion can be attributed to growth in digital access

points, such as ATMs, debit cards, mobile money agents and mobile banking.
For example, in Brunei Darussalam, the number of debit cards per 1,000 adults
increased by 22 percent year on year. This was attributed primarily to one depos-
it-taking institution, which began offering debit card facilities to its customers in
2022. It is also interesting to note a decrease in the number of physical access
points across many of the AMS as more priority is given to digital access.

In the Philippines, growth can be attributed to a nearly doubling of the number

of basic deposit accounts20 (from 7.9 million to 15.3 million in 2022). The BSP
has simplified documentary requirements for account opening and capped the
minimum opening deposit at PHP 100 (approximately US$1.75), with no maintain-
ing balance and no dormancy charges.

In Indonesia, the growth in 2022 can be attributed to the 31 percent increase of

bank accounts, 68 percent increase in credit account, and 14 percent increase in
the student account compared to 2021.

DIGITALIZATION OF THE FINANCIAL SECTOR IS LED BY DIGITAL

PAYMENTS
As mentioned previously, there has been an increase in the number of digital
access points such as ATMs, POS terminals, mobile agents, and mobile money
accounts across most AMS. This has mainly been due to prioritizing the interop-
erability of the payment systems in most AMS, including the development and
advancement of national QR code systems through, for example, Bakong in
Cambodia and Quick Response Code Indonesian Standard (QRIS) in Indonesia.
More than 90 percent of QRIS merchants are MSMEs. The annual growth rate of
payments via mobile channels, internet channels and QR codes increased sig-
nificantly in Viet Nam. In 2022, the number of transactions via mobile channels,
internet channels and QR codes increased by 139, 98 and 225 percent, respec-
tively, and the value of transactions by 107, 50 and 244 percent, respectively,
compared with 2021.

19 The survey on financial inclusion among Filipino adults is conducted biennially. The latest available data is from 2021 and 2022 is
not a designated survey year. The next survey results for 2023 is targeted to be released in 2025.
20 The basic deposit account is an affordable and easy-to-open account designed for the unbanked.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 25

In the Philippines, the electronic fund transfer service InstaPay reported an
increase in the volume of digital payments of 21 percent in 2022, attributed partly
to cheaper InstaPay fees.

This will help the Philippines advance further towards the BSP Digital Payments
Transformation Roadmap (DPTR) target of converting 50 percent of all retail pay-
ments to digital form by the end of 2023.

Another key digitalization lever is the growth in the number of mobile money
accounts, which leads to a growth in mobile money transactions. In Lao PDR,
the number of registered mobile money accounts increased almost six-fold from
2022, while the number of mobile money transactions nearly doubled in Lao PDR
and Thailand (up to 40 million per 100,000 adults) and more than doubled in the
Philippines. In the Philippines, the number of registered mobile money accounts
per 100,000 adults jumped by 48 percent in 2022 (from 221,866 accounts in 2021
to 328,192 accounts in 2022), while the number of mobile money transactions
per 100,000 adults more than doubled in 2022. The growth in the number of
mobile money accounts and transactions was facilitated by an increase in access
to the internet and mobile phone penetration across most AMS and far surpassed
the growth in the number of traditional financial accounts.

In Indonesia, the number QRIS merchants has increased significantly about 62

percents from 2021 to almost 24 million merchants, while the number of regis-
tered e-money has increased 35 percents to 135.4 millions users in 2022.

AMS CONTINUE TO MAKE PROGRESS IN FINANCIAL AND

DIGITAL FINANCIAL CAPABILITY
AMS continue to make progress in financial capability according to their national
strategies, roadmaps, and plans. Cambodia’s Digital Financial Literacy Roadmap
(2023–2028) targets youth and women with a focus on sex- and age-disaggre-
gated data and was developed in collaboration with the Alliance for Financial
Inclusion (AFI). Cambodia has also developed a first draft of the Financial
Education framework which is currently under review by the working group and
is in the process of integrating financial education into the national curriculum.
Thailand has also developed a financial literacy competency framework for each
target group.

Most AMS continue to target marginalized groups with financial education.

These groups include youth and vocational students (Thailand), low-income
families and micro businesses (Indonesia), women, people in rural areas, casual
workers, and garment workers (Cambodia), MSMEs, market vendors and trans-
port associations (Philippines), and farmers and people with disabilities (Thailand).
They are also targeting government employees (Thailand) and overseas workers
(Philippines). Financial education is delivered to these target groups through a
range of channels to raise awareness and provide direct training through social

2023 ASEAN MONITORING PROGRESS 26

media, websites, campaigns, radio, face-to-face training, mentors/trainers, road-
shows, videos, comic strips, and sign language video clips (Thailand). National
campaigns are often promoted during National Savings Day, World Investor Week
and ASEAN Savings Day.

Several AMS continue to focus on such traditional financial capability topics as

financial and debt management, financial planning and investments, while many
have recently begun to focus on consumer protection and digital financial literacy
topics (e.g. digital payments, cybersecurity and financial scams such as phishing,
get-rich-quick schemes and unlicensed moneylending).

In Malaysia, during Financial Literacy Month (FLM) held annually in October, the
Financial Education Network (FEN) has successfully engaged more than 20,000
people through nationwide roadshows. During the roadshows, FEN’s mobile
coach travelled to various locations across the country, providing free and inde-
pendent financial education resources, including advisory services on personal
financial management, digital financial literacy and debt management targeting
rural youth from higher learning institutions including TVETs. FLM raised aware-
ness on cyber-hygiene and digital financial literacy, in addition to showcasing
the benefits and responsible usage of digital payments via the ‘e-Duit’ campaign.
Bank Negara Malaysia (BNM) shared valuable experiences and insights during
workshops with the Bank of Lao PDR and Bank Indonesia, as well as at the Alliance
for Financial Inclusion Global Policy Forum in Jordan, showing the importance of
P2P learning to advance financial capabilities among the AMS.

Financial literacy rates have increased in Indonesia (from 38 in 2019 to 50 percent

in 2022) and Malaysia (from 59.7 percent to 61 percent in 2022). The Bank of
Thailand (BOT), in collaboration with the National Statistical Office, conducted a
survey of the financial literacy levels of Thais in accordance with the OECD frame-
work. This consisted of three components: financial behaviour, financial knowl-
edge, and financial attitudes. The results of the 2022 survey indicate a continuous
improvement in the financial literacy levels of Thais, with an average score of 71.4
percent, up from 67.4 in 2020 and higher than the average OECD score of 60.5
percent.

In the Philippines, 10 of the 12 target government partners21 have committed to

formally incorporate financial education into their systems through a memoran-
dum of agreement. Seven of them have issued separate official directives man-
dating the inclusion of financial education in curriculums, career courses, training
and orientation sessions for their employees or beneficiaries. Meanwhile, 6 of the
10 partners have already achieved at least 50 percent of the commitments out-
lined in their respective memoranda of agreement.

21 Department of Education Commission on Higher Education, Technical Education and Skills Development; Department of
Agriculture Bureau of Fisheries and Aquatic Resources; Department of Agriculture Agricultural Credit Council; Department of
Social Welfare and Development; Department of Trade and Industry; Overseas Workers and Welfare Administration; Civil Service
Commission; Armed Forces of the Philippines; Bureau of Fire Protection; and Philippine National Police.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 27

03. CURRENT STATE OF
MSME FINANCE
OVERVIEW OF MSME FINANCE
Most AMS define MSMEs as having fewer than five employees, except for the
Philippines (1 to 9) and Viet Nam (1 to 10). They are also defined based on total
assets and/or annual sales or turnover (Table 5).

Table 5 | Defining MSMEs in AMS

MICRO SMALL MEDIUM

Annual Annual Annual

Number of Total Number of Total Number of Total
Sales/ sales/ sales/
employees assets employees assets employees assets
turnover turnover turnover

Brunei <BND <BND <BND <BND 1 <BND 3 <BND 5

0–4 5–19 20–99
Darussalam 60,000 100,000 600,000 million million million

KHR KHR
<KHR
Cambodia 1–222 3–49 50,000– 50–499 500,000 –
50,000
500,000 1 million

IDR
<IDR 1 <IDR 2 IDR 1–5 IDR 5–10 IDR 15–50
Indonesia 1–523 6-1924 2–15 20 - 9925
billion billion billion billion billion
billion

<LAK <LAK
<LAK 1.2 <LAK 3 <LAK 4.8 <LAK 6
Lao PDR 1–5 120–240 400 6–50 51–99
million million million million
million26 million

MYR
MYR 3
300,000
30-7531, million-20
-3
75-20032 million33,
<MYR 5-29 ,27
million29,
Malaysia <5 MYR 3
300,000 5-7428 MYR
million
300,000
- 50
- 15
million34
million30

Not PHP PHP

more 3,000,001 15,000,001
Philippines 1–9 10–99 100–199
than PHP - 15 - 100
3 million million million

THB 50
<THB 1.8 <THB 50 million
Thailand 1–5 <50 51–200
million million - 200
million

<VND
<VND 3 <VND 20 50 <VND 200
<VND 3 billion; million; million; <VND 100 billion;
Viet Nam 1–10 11–100 101–200
billion <VND 10 <VND 50 <VND billion <VND 300
billion35 million36 100 billion38
million37

Note: See Table 4 for currency codes, plus KHR = Cambodian riel; LAK = Laotian kip;
MYR = Malaysian ringgit; THB = Thai baht.

22 This pertains to the manufacturing; agriculture, forestry and fishing and the wholesale and retail trade sectors. For other sectors it is
defined as 1–4 or 1–9 employees. This is the definition after 2020.
23 Source: Indonesia Statistics Bureau (BPS)
24 Source: Indonesia Statistics Bureau (BPS)
25 Source: Indonesia Statistics Bureau (BPS)
26 LAK 120 million is for the manufacturing sector, LAK 180 million is for the trade sector, and LAK 240 million is for the service sector.
27 For services and other sectors.
28 For the manufacturing sector.
29 For services and other sectors.
30 For the manufacturing sector.
31 For services and other sectors.
32 For the manufacturing sector.
33 For services and other sectors.
34 For the manufacturing sector.
35 For the commerce and services sector.
36 For the commerce and services sector.
37 For the commerce and services sector.
38 For the commerce and services sector.

2023 ASEAN MONITORING PROGRESS 28

ACCESS TO AND USAGE OF FINANCE FOR MSMEs
In terms of access to finance, the proportion of MSMEs in the total loan port-
folio for AMS ranges from 5 to 22 percent. In Thailand, MSME loans constitute
22 percent of the overall loan portfolio in the banking system, with 21 percent
in Indonesia, 19 percent in Vietnam, 16 percent in Malaysia, 12 percent in Lao
PDR and 4 percent in the Philippines. The value of MSME loans as a proportion
of the total loan portfolio in the banking system is relatively low across most
AMS, ranging from the lower end of 4–5 percent (Brunei Darussalam and the
Philippines) to the middle range of 12–16 percent (Lao PDR and Malaysia) and the
upper range of 19–22 percent (Viet Nam and Thailand). More than half of MSMEs
in Malaysia have collateral (50.24 percent). National QR systems in Malaysia, the
Philippines and Thailand also help promote the financial inclusion of MSMEs in
these countries.

There are still barriers to financial access for MSMEs to accessing finance such
as higher interest rates. The interest rate spread is relatively lower in Thailand
(1.2 percent) and in the higher range in other AMS (6.5–11.5 percent). In terms of
usage of financial services by MSMEs, data are more limited. In the Philippines, 52
percent of MSMEs are using an account at a financial institution, while 30 percent
use merchant and business chequing accounts. In Malaysia, 90 percent of MSMEs
report using an account at a financial institution, while 65 percent report using a
mobile account.

In terms of credit usage, in Thailand, 41 percent of MSMEs have active loans or

credit with formal financial institutions, while in Malaysia this figure is 29 percent.
The proportion of new lending to MSMEs is 2.6 percent of the entire loan portfo-
lio in Brunei Darussalam, 8.7 percent in Thailand, and much higher in Malaysia at
20.7 percent.

Sex-disaggregated MSME finance data are limited. In the Philippines, 84.8 percent
of women-led MSMEs had an outstanding loan or line of credit in financial insti-
tutions. More than half (52.2 percent) of surveyed women-led MSMEs indicated
that they have access to at least one formal financial service/product. However,
the survey also revealed that fewer women-led MSMEs (50.8 percent) than men
MSMEs (73.3 percent) frequently used any form of banking services and digital
tools for their business.

POLICY REGULATIONS TO PROMOTE FINANCIAL INCLUSION OF

MSMEs
Recent regulations at the policy level in AMS promote financial inclusion of
MSMEs. These include the Small and Medium Enterprise Development Policy and
Five-year Implementation Plan (2020–2024) in Cambodia that aims to: enhance
the MSME policy and regulatory environment; promote productivity, technol-
ogy, and innovation; promote entrepreneurship and human capital development;

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 29

enhance foreign market access and internalization; and increase access to
finance. The MSME Development Plan in Lao PDR (2021–2025) aims to improve
the enabling environment for MSMEs, enhance their competitiveness and sus-
tainable growth, and enable their integration into regional and international
markets. The MSME Development Plan in the Philippines (2017–2022) has three
focus areas: business environment, business capacity and business opportunities.
It has five strategic goals: (i) improved business climate; (ii) improved access to
finance; (iii) enhanced management and labour capacities; (iv) improved access
to technology and innovation; and (v) improved access to markets. In Indonesia,
besides a chapter regarding financial inclusion and financial literacy, the Law No.4
of 2023 also regulated ease of access to financing for MSMEs.

PUBLIC SUPPORT PROGRAMMES FOR MSMEs

There are public support programmes in place for MSMEs in some countries,
which include loan guarantees and tax incentives. The proportion of MSME loans
with guarantees in Thailand is 17 percent. Indonesia has a credit subsidy scheme
known as Kredit Usaha Rakyat (KUR). This reached 97 percent of the target in 2022,
with a 30 percent increase from 2021. Lao PDR is in the process of establishing
a credit guarantee facility for MSMEs. In the Philippines, the Credit Surety Fund is
a credit enhancement scheme providing a maximum guarantee of 80 percent to
loans granted by banks to MSMEs. Malaysia has six loan funds and schemes tar-
geting women-led MSMEs within the financial institutions.39 The Vietnamese gov-
ernment established a credit guarantee scheme in 2001, managed by local gov-
ernments, to back the loans taken out by SMEs and facilitate their access to credit.
It also established the SME Development Fund in 2013, with an initial capitalization
of VND 2 trillion from the state budget. The Fund provides 80 percent of the loan
amount through partner banks, with interest rates capped below market rates.
Thailand provides credit guarantees for banks and non-banks through the Thai
Credit Guarantee Corporation. It was established in 1991, and in 2017 an amend-
ment added guarantees for non-banks and factoring and hire-purchase leasing
used for business purposes, for which the banks hold more than 51 percent of the
shares.

In Lao PDR, MSMEs with incomes of less than LAK 50 million are exempt from
income tax. In the Philippines, tax incentives are provided to MSMEs through:
(i) the National Income Revenue Code of 1997; (ii) corporate recovery and tax
incentives for enterprises; (iii) the Barangay Micro Business Enterprises Act of
2022; and (iv) the Bayanihan to Heal as One Act. Cambodia also has tax incen-
tives for MSMES that include zero percent tax on income for three years on newly
established enterprises or from the date of a tax registration update for existing
enterprises and milled rice exporting businesses.

39 This number may not be exhaustive, there are additional schemes and programmes under overall national initiatives

2023 ASEAN MONITORING PROGRESS 30

In the Philippines, BSP is implementing several interventions to strengthen the
credit infrastructure (e.g. credit risk database, credit surety fund),40 promote inno-
vative financing approaches (e.g. movable asset financing) and address informa-
tion gaps (e.g. standard business loan application form)41 to enhance financial
inclusion for MSMEs and enable financial institutions to better understand the
broader needs of MSMEs.

In addition to the credit subsidy scheme offered through KUR, the Indonesian
government promotes access to financial services for MSMEs through various
programmes, including the Ultra Micro Financing Programme (Ultra Mikro or UMi)
and the Revolving Fund Management Institution for Cooperatives and MSMEs
(Lembaga Pengelola Dana Bergulir Koperasi dan UMKM or LPDB-KUMKM). The
government launched UMi as one of its national priority programmes to facili-
tate the growth and development of ultra-micro enterprises, enabling them to
become bankable and make a more significant contribution to the Indonesian
economy. LPDB-KUMKM manages revolving funds for MSME financing and acts
as an integrator to accelerate the development of microfinance industries in dif-
ferent regions.

In Malaysia, BNM realigned the focus of its fund for SMEs in complementing banks’
provision of finance to MSMEs, particularly to provide more support to future
MSME growth in strategic areas and move them up the economic value chain.
The Low Carbon Transition Facility (LCTF) introduced in 2022 provides financing
to SMEs for the purposes of improving energy efficiency, increasing use of sus-
tainable materials for production, and obtaining sustainability certification. The
total allocation for the LCTF is MYR 2 billion, comprising MYR 1 billion from BNM
and another MYR 1 billion matched by participating banks from their own funds.
Under the LCTF, BNM has also established the Greening Value Chain Programme,
which combines funding with technical training, on-site assessments, and access
to measurement software. The High Tech and Green Facility was introduced at
the end of 2020 and incentivizes businesses to invest in digital technology, green
technology, and biotechnology.

FINANCIAL AND DIGITAL FINANCIAL CAPABILITIES OF MSMEs

There is a definite need to build the financial and digital financial capabilities of
MSMEs in AMS. The proportion of MSMEs with nonperforming loans ranges from
4 percent in Malaysia to the middle range of 7–9 percent (7 percent in Thailand,
9 percent in the Philippines) and the upper range of more than 10 percent (13
percent in Brunei Darussalam).

40 BSP, in partnership with the Japan International Cooperation Agency, rolled out the Credit Risk Database Project in April 2022,
which aims to improve access to finance for SMEs by lessening banks’ dependence on collateral and promoting risk-based lending.
41 The Standard Business Loan Application Form is designed to make the loan application process simple and borrower-friendly, and
provide much-needed granular and sex-disaggregated MSME data.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 31

Some AMS measure the percentage of MSMEs with digital payment capabilities.
This is high in Malaysia at 92 percent,42 but much lower in the Philippines at 35
percent. The Philippines has 38 government programmes promoting the finan-
cial inclusion and digital financial capabilities of MSMEs. These priority initiatives
are geared towards achieving the following strategic objectives of the National
Strategy for Financial Inclusion (NSFI) 2022–2028:

• Promoting inclusive digital finance through promotion of PhilSys and insurtech

adoption, an industry sandbox for digital finance innovations, a shared agent
network framework, alternative data for credit evaluation, and development
of interoperable ‘offline’ digital payment solutions, among others.
• Strengthening financial education and consumer protection by developing a
common framework for various financial literacy programmes, strengthen-
ing prudential regulation and supervision and market conduct capabilities of
financial regulators, and developing innovative platforms for financial literacy
training.
• Enhancing access to risk protection and social safety nets by adopting digital
solutions for social safety net programmes, promoting the development of
micro-insurance products, and scaling up delivery of social housing finance,
among others.
• Enhancing the agriculture and MSME financing ecosystem by expanding
guarantee and insurance programmes for priority market segments, including
women-owned and women-led enterprises, strengthening credit infrastruc-
ture (e.g. credit registries and databases, credit surety fund), and promoting
innovative lending approaches such as the agriculture value chain and supply
chain financing for MSMEs.

COORDINATION OF STAKEHOLDERS TO PROMOTE MSME

FINANCE
Some AMS have coordinated efforts to promote the financial inclusion of MSMEs.
In the Philippines, there are three working groups for MSMEs that meet three
times per year, with 21 ministries collectively known as the Financial Inclusion
Steering Committee working together to promote the financial inclusion of vul-
nerable sectors, including MSMEs. The three working groups include the National
and Regional MSME Development (MSMED) Councils43 and the National MSME
Resilience Core Group (RCG),44 with the Department of Trade and Industry (DTI)
acting as Chair and Co-Chair, respectively. The DTI remains an active member
and contributes significantly to the realization of one of the priority initiatives of

42 | Of 1,000 surveyed MSMEs, this proportion represents those who report using some form of digital payments.
43 The National MSMED Council was tasked with spurring the growth and development of the MSME sector in the country. In support
of this mandate, in 2016 the Council approved the organization and institutionalization of the Regional MSMED Councils. Members of
these working groups include representatives from the public sector (e.g. DTI, Department of Agriculture, Department of Interior and
Local Government, Department of Science and Technology, Department of Tourism, Small Business Corporation) and from the MSME
and labour sectors and the banking industry.
44 The National MSME RCG is a public–private consortium established in 2016 to strengthen the disaster resilience of MSMEs in
the country. Co-chaired by the DTI and the Philippine Chamber of Commerce and Industry, the RCG builds cooperation on pro-
moting MSME disaster resilience, capacity-building for business continuity and implementing the Sendai Framework for Disaster
Risk Reduction. Other members of the MSME RCG include the Philippine Disaster Resilience Foundation, Philippine Exporters
Confederation Inc., Department of Science and Technology, Office of Civil Defense, Employers Confederation of the Philippines, Asia
Pacific Alliance for Disaster Management, and Asian Disaster Preparedness Center.

2023 ASEAN MONITORING PROGRESS 32

the Financial Inclusion Steering Committee (FISC) to enhance the MSME financ-
ing ecosystem. In Indonesia there are two working groups for MSMEs.

INNOVATION PROMOTES DIGITALIZATION AND FINANCIAL

INCLUSION OF MSMEs
In Brunei, the Brunei Darussalam Central Bank (BDCB) has issued formal Fintech
Regulatory Sandbox Guidelines to promote the development of fintech com-
panies through a fintech regulatory sandbox. In 2022, two fintech companies
were actively testing the system. One focused on a P2P crowdfunding platform,
while the other explored digital money remittance services. Both initiatives target
finance-related challenges encountered by MSMEs. In Thailand, eight MSME
products are being tested in the regulatory sandbox. These include international
money transfer (blockchain), letters of guarantee private nodes (blockchain BCI),
biometrics (biometrics), national digital ID (NDID) (biometrics), QR payments via
PromptPay (standardized QR code payment), payment by credit/debit card (stan-
dardized QR code payments) and a P2P lending platform.

In the Philippines, BSP continues to increase the outreach and depth of penetra-
tion of agents and services through its reg-tech solution, the Agent Registration
System. The agent network will expand access of low-cost touchpoints to reach
the unbanked segments by targeting ubiquitous retail outlets and other estab-
lishments as service points for financial institutions. In Malaysia, BNM facilitated
regular engagements between development finance institutions (DFIs) and fintech
companies, aiming to encourage exploration of non-debt solutions for MSMEs
such as equity financing, and enhance credit assessment methods for ‘thin-file’45
customers using artificial intelligence/machine learning or other credit scoring
methods (e.g. psychometric analysis).

PARTNERSHIPS PROMOTE FINANCIAL INCLUSION FOR WOMEN-

LED MSMEs
The relevant ministries and institutions in Indonesia are working in collaboration
with international organizations, namely Women’s World Banking (WWB), Asian
Development Bank (ADB) and Islamic Development Bank (IsDB), to carry out a
digital financial inclusion programme specifically targeting women. The pro-
gramme is called Women’s Digital Financial Inclusion (IKDP) and aims to enhance
women’s access to technology, digital and financial skills, and DFS. Additionally,
the Women Entrepreneur Finance Code (We-Fi Code) programme is carried out
to increase financing for women-led SMEs.

In the Philippines, the government has partnerships with female-focused orga-

nizations such as the Women’s Business Council of the Philippines and capac-
ity-building programmes born out of a collaboration between the International
Labour Organization (ILO) and the DTI Negosyo Centers. ILO and DTI conducted

45 A person with little or no credit history.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 33

a series of capacity-building (financial and non-financial services) webinars tar-
geted at women entrepreneurs (ILO-DTI Online Women Entrepreneur [WE] Hour).

CHALLENGES FOR MSME FINANCE DATA

Most of the data on MSME finance had never been collected by the regulators
and were not easily accessible. As a result, only some of the indicators on MSME
finance could be collected. The ADB had compiled some data on SME finance
that was a useful source for collecting some of these data. In addition, sex-disag-
gregated MSME finance data, similar to other types of financial inclusion data, are
limited across most AMS.

2023 ASEAN MONITORING PROGRESS 34

 BRUNEI DARUSSALAM
COUNTRY REPORT

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 35

Embracing the core principles of financial inclusion, Brunei Darussalam acknowl-
edges the pivotal role of financial empowerment in bridging the gap between
financial services and its people. This ensures that every segment of society
gains access to the benefits of a robust financial ecosystem, aligning with Brunei
Darussalam’s national vision, Wawasan Brunei 2035, in which the country aspires
to be widely recognized for its highly skilled and accomplished people, with a
good quality of life and a sustainable economy.

As strides in technology and policy converge, exemplified by initiatives such as

the Digital Economy Masterplan (2025) and the Financial Sector Blueprint (2016–
2025), Brunei Darussalam finds itself in a position of opportunity, where innova-
tive financial services can further propel the nation forward for every individual
and business.

PROGRESS IN FINANCIAL INCLUSION

As of 30 June 2022, the percentage of the adult population using at least one
formal financial service remained high, with 88.9 percent of consumers having an
account with a bank, trust fund, life insurance company, family takaful46 operator
or finance company.

The percentage of the adult population holding accounts with banks stood at
82.9 percent, with 293,535 unique accounts recorded. This represents a slight
decline of 1.8 percent compared to the previous year, due mainly to an increase
in the adult population. Conversely, the number of debit cards per 1,000 adults
increased by 22.0 percent year on year. This was attributed primarily to one
deposit-taking institution, which began offering debit card facilities to its cus-
tomers in 2022.

The geographical distribution of bank facilities remained concentrated in the

Brunei-Muara district, which is the most populated district and the centre of eco-
nomic and financial activities, but other districts also have good access to finance.
Brunei Darussalam boasts a total of 47 bank branches, including head offices,
accompanied by 188 single-function machines catering to supplying cash, cash
deposit and cheque deposit services, as well as 59 multi-function machines. In
addition to these physical banking channels, the finance sector has embraced
various digital channels to ensure widespread access to essential financial ser-
vices, such as internet and mobile banking.

In 2022, Brunei Darussalam saw a decrease of 11.4 percent in the total number
of loan accounts held with commercial banks. The predominant category among
these loan accounts was motor vehicle financing/loans, followed by personal
financing/loans and then credit cards.

46 A type of Islamic insurance.

2023 ASEAN MONITORING PROGRESS 36

To facilitate access and empower consumers to make more informed financial
decisions, the Credit Bureau of Brunei Darussalam Central Bank (BDCB) launched
an online self-enquiry and dispute resolution (SIDR) service in January 2022. This
service allows individuals to instantly request their credit reports at their own con-
venience without needing to physically visit the Credit Bureau Office.

ADVANCEMENT IN DIGITAL FINANCE

BDCB has issued formal Fintech Regulatory Sandbox Guidelines with the objec-
tive of promoting the development of fintech companies. The regulatory sandbox
enables the testing of fintech products and services through a framework that
enables qualified companies or businesses to experiment with innovative solu-
tions in a relaxed regulatory environment for a limited period and within specific
boundaries. In 2022, two fintech companies were actively testing the guidelines.
One focused on a P2P crowdfunding platform, while the other explored digital
money remittance services. Both initiatives target finance-related challenges
encountered by MSMEs in the country.

Recognizing the transformative role of fintech in advancing financial inclusion,

Brunei Darussalam has collaborated proactively with industry players and stake-
holders. BDCB has been working closely with fintech players and relevant stake-
holders to establish the Brunei Darussalam Fintech Association. Outlined in the
White Paper: The State of FinTech in Brunei Darussalam (2020), this association
aims to facilitate collaboration and partnerships among fintech stakeholders and
drive fintech-related activities in the country. In tandem with this initiative, BDCB
is laying the groundwork for the establishment of a fintech innovation centre. The
objective of the centre is to cultivate an innovative environment and foster fintech
growth by providing a centralized platform for fintech matters. It will provide
co-working space facilities and capacity- and community-building activities, and
act as one-stop centre facilitating seamless business services related to fintech.

IMPROVEMENTS IN CONSUMER PROTECTION

As the development of DFS continues to grow, strengthening the regulatory frame-
work remains one of BDCB’s top priorities. In further support of digital advance-
ment and to combat and mitigate illegal activities, BDCB issued the Notice on
Reporting of Fraud Incidents. Financial institutions in banking, finance companies
and takaful/insurance industries are required to report certain categories of fraud
incidents to the Authority within a fixed timeline. This reporting enables BDCB to
effectively monitor fraud incidents within the financial sector and intervene when
necessary.

Furthermore, ensuring transparency and quality in financial products and services

through a consistent and comprehensive product disclosure regime remains
crucial, particularly with digital financial products and services. In complementing
BDCB’s previous guidelines on product transparency and disclosure for financial

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 37

institutions, an additional document has been issued (Guidelines on Product
Development and Pricing for Takaful Operators). These guidelines mandate that
new products take into consideration the takaful operators’ risks and strategies,
encompassing an understanding of customers’ needs.

BDCB gave approval for two financial institutions to use e-KYC in the provision
of its services, aligned with the Notice and Guidelines on Measures for Non-
Face-to-Face Customer Onboarding and Ongoing Customer Due Diligence. The
onboarding of such services facilitates wider customer participation in the finan-
cial services offered.

Effective risk management is important for ensuring the stability of financial insti-
tutions, as it helps in mitigating risks that could cause harm to a company’s busi-
ness operations. BDCB has issued the Notice on Technology Risk Management
to incorporate technology risks into the overall risk framework of the financial
institutions. This requires financial institutions to integrate IT risks within the ‘three
lines of defence’ functions; identify and review critical systems; report system
acquisitions, developments and integrations; conduct testing on new systems
leveraging artificial intelligence; manage third-party arrangements; and perform
self-assessments on IT risk management.

Having a robust complaints handling function is essential for ensuring consumer

protection. The Notice for the Establishment of a Complaints Handling Function
within Financial Institutions provides an avenue for consumers to lodge com-
plaints against licensed financial institutions. As for unlicensed financial activities,
the BDCB Alert List features a list of persons (companies and individuals) and web-
sites that are neither authorized nor approved under the relevant laws and reg-
ulations administered by BDCB, or whose activities raise suspicions of illegality.
As of 31 December 2022, a total of 183 unauthorized persons had been added to
the alert list since 2016, with 44 additions made in 2022. The main financial activ-
ities added in 2022 pertain to investment-related services and money-lending
activities. BDCB continues to disseminate this information to the public through
reminders, awareness campaigns and promotional materials.

PROMOTION OF FINANCIAL LITERACY

The National Financial Literacy Council (NFLC) continues to oversee financial lit-
eracy efforts in Brunei Darussalam, ensuring its people achieve the highest level
of financial well-being. Under the guidance of NFLC, BDCB conducts financial
literacy programmes both virtually and physically, with the goal of raising the
overall level of financial literacy of the population and empowering consumers
with essential financial knowledge.

BDCB’s financial literacy initiatives cover a wide range of topics, from the national
currency, digital payments, financial consumer rights and financial planning to

2023 ASEAN MONITORING PROGRESS 38

emergency funds, takaful/insurance, investments, cybersecurity, and financial
scams. These programmes cater to various segments of the population, includ-
ing the public and private sectors, newcomers to the workforce, and individu-
als approaching retirement. Topics of financial literacy programmes are tailored
specifically to the types of audience. For instance, sessions at the Civil Service
Institute focus on central banking, debt and financial management, and financial
consumer protection, while public outreach primarily aims to raise awareness
about prevalent financial scams.

BDCB consistently strives to ensure financial literacy information is easily available

to all segments of the population. Through social media platforms, BDCB shares
easily digestible infographics and financial comic strips related to various financial
topics on its Instagram platform (@centralbank.brunei). Collaboration with micro
social media influencers further helps promote financial awareness to a wider
audience. Television tickers on national broadcasting channels are also promoted
throughout the year to raise awareness on financial management. This approach
was taken to promote different campaigns in 2022, such as National Savings Day,
World Investor Week and ASEAN Savings Day.

During National Savings Day, BDCB collaborated with the members of NFLC to
issue celebratory posts collectively. Materials were disseminated by BDCB to
commemorate the event, and it held a Friday sermon on digital financial scams
and organized a coin-saving challenge.

Similarly, during World Investor Week, BDCB launched a digital campaign focus-
ing on financial consumer protection through its social media platforms and
influencers, covering such topics as love scams, get-rich-quick schemes, phish-
ing, and unlicensed moneylending.

In conjunction with ASEAN Savings Day 2022, BDCB launched the Smart Money
Habits booklet, which serves as a comprehensive guide to financial management.
It covers key information on central banking, financial planning, debt manage-
ment, takaful/insurance, investments, digital payments, financial consumer rights
and protection.

OVERVIEW OF MSME FINANCE

There are several regulations in Brunei Darussalam that support MSME finance.
These include the Secured Transactions Order of 2016 that sets out the legal
requirements for a moveable asset collateral registry, the previously mentioned
Guidelines on Fintech Regulatory Sandbox (2017), the Notice on Equity-Based
Crowdfunding Platform (2017) and the Notice on Peer-to-Peer Financing Platform
Operators (2019).

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 39

Several policies support MSME digital finance. These include the Digital Payment
Roadmap (2019–2025) and the Cybersecurity Strategy (2017–2020). The
Economic Blueprint, a national strategy to achieve a dynamic and sustainable
economy, underlines the importance of re-invigorating MSMEs to foster entre-
preneurship, facilitate export orientation and seize larger benefits from FDI and
Government-Linked Company. The Ministry of Finance and Economy, mainly
through Darussalam Enterprise, an implementing agency, has promoted several
initiatives to enhance financing, capacity-building, work and production facilities,
market access and digitalization. Brunei Darussalam also has a national MSME
task force to coordinate MSME policy formulation.

Bank Usahawan, an SME bank, was established by the government in 2017. It has
provided cash flow-based loans, which are more flexible than collateral-based
loans offered by commercial banks. It currently offers asset-based financing spe-
cifically targeting MSMEs.

The total value of MSME loans as of 2022 was BND 335.8 million, with nearly 90
percent of secured MSME loans to total outstanding MSME loans. The share of
new MSME lending is nearly 2.6 percent of total loans. Thirteen percent of MSMEs
have nonperforming loans, indicating the need for improved financial capabilities.

WAY FORWARD
In conclusion, Brunei Darussalam has made significant strides in promoting finan-
cial inclusion and empowering its citizens through innovative financial services.
BDCB’s commitment to financial literacy, digital finance and fostering a sup-
portive regulatory environment will continue to drive financial inclusion forward,
ensuring a sustainable and prosperous future for all.

List of quantitative
Indicators 2018 2019 2020 2021 2022
observations

ACCESS INDICATORS
1. Number of branches
15 15 14 14 13
per 100,000 adults
Points of 2. Number of ATMs per
service 69 68 70 74 70
100,000 adults
3. Number of POS
terminals per 100,000 NA 10,574 NA NA NA
adults
Number of access points
Access
per 100,000 adults at a NA NA NA 89 83
points
national level
1. Access to the internet
(percentage of adults
95% 95% NA 95% 95%
aged 18+ with internet
access anywhere)
Connectivity
2. Mobile phone
penetration (number of
120,796 129,119 125,000 132,139 128,491
active mobile phones per
100,000 population)

2023 ASEAN MONITORING PROGRESS 40

 List of quantitative
Indicators 2018 2019 2020 2021 2022
observations

USAGE INDICATORS
1. Percentage of adults
who report having an
81.8% 78.6% 81.0% 85.0% 82.9%
account at a commercial
bank (age 15+)47
Adults
with an 2. Percentage of adults
who report having an 83.6% 89.9%
account
account with a formal
86.3% NA M: 55.0% M: 48.9% 88.9%
financial institution or
mobile money provider F: 30.5% F: 40.9%
(age 15+)48
Number of deposit
accounts with commercial
Savings banks or deposit-taking 146,332 159,181 181,282 211,213 204,687
institutions per 100,000
adults
Number of loan accounts
Credit with commercial banks per 119,761 112,456 108,515 80,684 69,979
100,000 adults
Number of debit cards per
Payments 1,197 1,394 1,590 1,661 2,027
1,000 adults
Number of insurance
policy holders per 100,000
adults (coverage of this
insurance usage indicator
Insurance 34,784 29,542 28,576 28,563 28,001
includes only term,
whole-life, endowment
and investment-linked
insurance policies)
QUALITY INDICATORS
Remittance costs as a proportion of the
NA 4% 4% NA
amount remitted49
1. Existence of third-party complaint
NA 70 70 72
handling entity (persons)50
2. Number of complaints per 100,000
NA 350 369 77 722
bank accounts
3. Percentage of resolved complaints 99%
Percentage of borrowers who are more
3.6% 3.8% 5.2% 3.7% 3.9%
than 30 days late with a loan repayment
INCLUSIVE GROWTH INDICATORS
Proportion of population living below
NA NA 3.6% NA NA
national poverty line
Annual growth rate of real GDP per
2.8% 0.2% 3.8% NA
capita
Number of student/educational loans 44 30 24 24
Proportion of population living in
100% 100%
households with access to basic services
Proportion of population with access to
99.9% 99.9% 99.9% 100%
electricity
Proportion of population with primary
100% 100%
reliance on clean fuels and technology
Number of MSME loans from banks 2,131 2,132
332 332
Value of MSME loans from banks (BND)
million million

47 Based on supply-side financial inclusion data.

48 Based on demand-side financial inclusion data using the World Bank Findex methodology.
49 Within the range of BND 250 to BND 300.
50 The number of complaint-handling officers from all licensed financial institutions – i.e. banks, finance companies, takaful opera-
tors, insurance companies, money changers and remittance companies.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 41

 List of quantitative
Indicators 2018 2019 2020 2021 2022
observations

Proportion of population covered by

36.9% 36.9%
social protection floors/systems
6.9%

Unemployment rate F: 8.3% 8.4%

M: 6.0%
Remittance costs as proportion of
4% 4% 3.5%
amount remitted
OUTCOME AND IMPACT INDICATORS
Percentage of adults using at least one
86% 89.9% 88.9%
formal financial service
Number of legal, policy or de facto
barriers to financial inclusion removed 25 22 23
or addressed
Percentage of women using at least one
92% 87%
formal financial service
Percentage of youth with an account 84%
Average national growth rate 2% 2.6% –0.70% –1.6% –1.6%

FINANCIAL CAPABILITY INDICATORS

Indicator
Stage of country Indicator definitions 2021 2022
category

Number of stakeholders/key
Pre-formulation 12/4 12/4
priority target groups identified
Formation of a financial
Formulation 1 1
capability working group
Number of quarterly meetings
Formulation held by the financial capability 1 0
Governance/ working group
coordination
Percentage of stakeholders at
regulatory level that develop an
Formulation 83% 83%
action or implementation plan
for financial education
Number of stakeholders at
regulatory level that execute the
Implementation NA 66.7%
action or implementation plan
for financial education
Number of draft policies to
Pre-formulation 2 2
promote financial capability
Number of policies developed
to promote financial capability
(e.g. NFIS, consumer protection
Formulation 13 14
frameworks/policies, policies
promoting inclusion of specific
Enabling marginalized segments)
environment Number of meetings with
the Ministry of Education to
Formulation promote the integration of 2 0
financial education into the
national curriculum
Number of schools that
Implementation integrate financial education 100% 100%
into the curriculum
Number of key terms defined
Policy at national level (e.g. financial
Pre-formulation 2 2
alignment capability, financial education,
financial literacy)

2023 ASEAN MONITORING PROGRESS 42

 Indicator
Stage of country Indicator definitions 2021 2022
category

Establishment of policy priority

Formulation to develop an NFES or prioritize 4 4
financial education in an NFIS
Number of quarterly meetings
held by the financial capability
Implementation 1 2
working group to discuss NFES
target/outcomes
Number of virtual workshops to
Pre-formulation/ learn from countries at a more
9 2
formulation advanced stage of developing or
implementing an NFES
Regional
collaboration Number of virtual workshops
to share lessons learned with
Implementation countries at a less advanced 4 1
stage of developing or
implementing an NFES
Number of existing initiatives
Pre-formulation identified that promote financial 12 12
capability
Number of government
Pre-formulation programmes identified to reach NA 13
Supply-side
each target group (touch points)
mapping
Number of stakeholders
identified during the supply-
Formulation side mapping that form part of NA 4
the financial capability working
group
Number of secondary sources
Pre-formulation that measure levels of financial NA
capability within the country
Number of key target groups
Pre-formulation identified that have low financial NA
Demand- capabilities
side Number of proposals reviewed
diagnostic Pre-formulation to conduct a national financial NA
capability survey
Number of policies and
programmes developed from
Formulation NA
national financial capability
survey results
Arithmetic score as per national
definitions; percentage of adults
who know definition of basic
financial terms (i.e. importance
Financial
All stages of saving in a bank account, NA
knowledge
has a bank account, borrows
responsibly, plans ahead, knows
how to access and use the best
financial services, etc.)
Percentage of adults who are
Financial able to use an account at a bank
All stages51 NA
skills or financial institution without
help if opened
Percentage of adults coming up
with emergency funding in 30
days, possible and not difficult NA
at all (disaggregated by sex, age
Financial and geographic location)
All stages
behaviour
Female, male NA
15–24 years (youth), 25+ years
NA
(adults)

51 No data available from the Global Findex Database (World Bank) for Brunei Darussalam for the financial skills and financial
behaviour indicators.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 43

Indicator
Stage of country Indicator definitions 2021 2022
category

Poorest 40%, richest 60% NA

Rural, urban NA
Out of labour force, in labour
NA
force
Main source of emergency
NA
funding (%)
Family or friends NA
Loan from bank, employer or
NA
private lender
All stages
Sale of assets NA
Savings NA
Work NA
Other NA
Percentage of adults who save
for old age (disaggregated
NA
by sex, age and geographic
location)
Female, male NA

All stages 15–24 years (youth), 25+ years

NA
(adults)
Poorest 40%, richest 60% NA
Rural, urban NA
Out of labour force, in labour
NA
force
Percentage of stakeholders
Implementation integrating financial education NA
at the programme level
Programme Percentage of stakeholders
level Implementation using digital channels for NA
financial education
Percentage of outcomes
Implementation NA
achieved at programme level

MSME INDICATORS

Indicator Indicator
2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 5.3%
Percentage of MSMEs with account at financial institution 3.8%
Access to finance

Share of new MSME lending as a percentage of total loans 2.6%

Percentage of secured MSME bank loans to total MSME bank loans
89.9%
outstanding
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no]
Percentage of MSMEs that report using an account at a financial
Usage

institution
Percentage of MSMEs that report using a mobile account

2023 ASEAN MONITORING PROGRESS 44

 Indicator Indicator
2022
category
Number of MSME loans/MSME borrowers
Percentage of MSMEs with outstanding loan or credit
Value of MSME loans (BND) 336.7m
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target
Public support for MSME

group (NFIS/NFES)
MSME loan guarantee as a percentage of MSME loans
finance

MSME loan guarantees (value)

MSME direct government loans/loan funds (BND billions)
Number of tax incentives for MSMEs
Number of pre-shipment export guarantee funds for export-based
MSMEs
P2P lending (volume, percentage of share of total loans)
alternative finance

Venture and growth capital investments (volume, percentage of

Digital finance/

total financing)
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in
2
regulatory sandbox
Number of working groups for MSMEs
Coordination

Number of regulatory meetings focused on MSMEs annually

Number of capacity-building sessions for regulators/FSPs on MSME
finance
Number of ministries working together to promote financial
inclusion of MSMEs

Number of policy dialogues, roundtables, forums on MSME topics52

Collaboration

Number of partnerships with MSME-focused organizations/business

associations
Number of partnerships with fintechs, MMOs, telcos, e-commerce
platforms, digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days) 13.3%
capabilities
Financial

Percentage of MSMEs that have at least one formal financial service

Number of government programmes to promote financial and
digital financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal financial Existing/
service53 Revised
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/
women’s business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs

52 These can serve as platforms for sharing best practices, guidelines and frameworks in such areas as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
53 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 45

 CAMBODIA
COUNTRY REPORT

2023 ASEAN MONITORING PROGRESS 46

OVERVIEW OF KEY ACHIEVEMENTS IN FINANCIAL INCLUSION
Financial inclusion plays a leading role in reducing poverty because wise usage
of financial services contributes to increased household income, especially for
families led by financially literate women,54 resulting in further economic growth.
Aligned with the National Financial Inclusion Strategy (2019–2025) (NFIS), the
National Bank of Cambodia (NBC) has made good progress in enhancing finan-
cial inclusion by expanding the operations and development of new products in
accordance with market needs, promoting financial literacy through different ini-
tiatives and strengthening transparency in providing financial services. NBC has
also developed favourable financial infrastructure to enable the public to access
and use formal financial services in a timely manner at affordable cost and with
legal protection. Further, NBC has conducted a workshop on the implementa-
tion of the NFIS to disseminate to stakeholders for effective cooperation and
implementation of the action plans. Finally, NBC has worked closely with rel-
evant national and international stakeholders to promote financial inclusion in
Cambodia.

PROGRESS IN ACCESS, USAGE, AND QUALITY OF FINANCIAL

INCLUSION
There was steady growth in access from the base year of 2017. This applies to
branches, ATMs, POS devices, mobile money agents and overall access points
combined. The number of ATMs showed the largest increase, followed by mobile
money agents.55 Further, while the number of branches remained the same, the
number of ATMs per 100,000 adults has risen. As a result, the overall number of
access points increased from 445 in 2017 to 797 in 2022.

All usage indicators showed an expansion in 2022. The most noticeable growth
was in the number of registered mobile money accounts and transactions, indi-
cating the rising popularity of mobile payments, especially with the newly intro-
duced backbone payment platform ‘Bakong’. It is worth noting that life and non-
life insurance penetration showed noticeable increases from the base period.

The quality benchmark has shown an upward trend in the number of customers
who are late 30 days repaying their loans. This is due to the NBC regulatory con-
cession to permit loan restructuring within a set timeframe to sectors affected
by the COVID-19 pandemic, which extended to June 2022. While most custom-
ers have been affected by COVID-19, the number of customer complaints has
remained manageable.

54 Seng, K. (2020) The Poverty-reducing Effects of Financial Inclusion: Evidence from Cambodia (ERIA Discussion Paper Series No.
343). Jakarta, Indonesia: Economic Research Institute for ASEAN and East Asia (https://www.eria.org/uploads/media/discussion-pa-
pers/4-The-Poverty-Reducing-Effects-of-Financial-Inclusion_Cambodia.pdf accessed 18 April 2024).
55 POS devices include POS devices used by agents and merchants – for instance, some banks process money transfers through a
POS device placed with merchants and agents.

2023 ASEAN MONITORING PROGRESS 47

There has been a noticeable improvement since 2017 in inclusive growth.
Particularly, the annual growth rate of GDP increased by 2.91 percent in 2022.
Access to basic services such as electricity has increased nationally, and the level
of educational completion is also expected to increase. Health insurance is also
gaining in popularity among the middle-class and wealthy adults.

PROGRESS IN FINANCIAL CAPABILITY

Initiatives relating to financial inclusion and literacy include the following:
• Providing workshops on the topic of the microfinance sector.
• Cooperation with the Ministry of Education, Youth and Sport on integrating
financial literacy into the national curriculum.
• Cooperation with the Ministry of Women’s Affairs (MoWA) on the Financial
Literacy for Women and Women Entrepreneurship project, which provides
female trainers in schools and equips them with financial knowledge to share
with their communities.
• Partnership with the Alliance for Financial Inclusion on initiatives to develop a
financial literacy roadmap and sex-disaggregated data collection framework.
The approved projects focused on consumer protection and market conduct,
DFS, financial inclusion data and sex-disaggregated financial inclusion.

NBC has made progress in enhancing financial capability, especially relating to

consumer protection, financial literacy, and financial education. In 2022, there
were three main projects to promote financial literacy. First, a project with the
Ministry of Education, Youth and Sports targeted students from grades 1 to 12 to
embed financial topics into the national curriculum. Second, a project with the
Ministry of Women’s Affairs targeted women entrepreneurs and university stu-
dents with a series of financial literacy training, including two panel discussions on
financial literacy and digital financial literacy for economic empowerment. Third,
a project with Good Return targeted adults, rural women and women entrepre-
neurs. NBC worked with Good Return on a campaign titled ‘Let’s talk money: little
by little’ to promote financial literacy through a series of short educational videos,
radio shows and face-to-face training with garment workers and women entre-
preneurs. The second phase of this campaign was launched in December 2021
and focused on the importance of intensive thinking, selection of financial prod-
ucts and services, awareness of rights and obligations, and joint decision-making
between men and women in the family. The campaign was conducted via three
main channels, including social media broadcasting of four short educational
videos, radio broadcasting with participation from the audience and experienced
speakers on financial education, and face-to-face training with female garment
workers, especially those who are working in the capital city.

In addition, NBC is developing the first draft of a financial education framework.

This aims to improve the levels of financial capability of the general population,
to give individuals more confidence in making optimal choices in managing their
personal finances. It is still under review by the working group.

2023 ASEAN MONITORING PROGRESS 48

PROGRESS IN CONSUMER PROTECTION
NBC has continued to enhance its complaints-handling mechanism, which aims
to resolve complaints in a timely and consistent manner from the clients of banks
and financial institutions through the NBC’s hotline phone numbers. In 2022,
there were 306 complaints and enquiries (a significant decrease from 2021), with
296 cases solved and the rest in progress towards resolution. The NBC hotline
officers have made efforts to resolve complaints and enquiries immediately;
however, in some cases, it has required multiple attempts to coordinate between
consumers and financial institutions. In addition, NBC has continued to improve
the capability of the hotline officers through knowledge-sharing sessions on the
progress of the banking and finance sector. It has also prepared a document titled
Supportive Materials for Hotline Officers to build knowledge on correct and con-
sistent answers to complaints. NBC has strengthened its mechanism for man-
aging and resolving complaints from banks and financial institutions to ensure
effectiveness and equality of market conduct.

NBC has also promoted the microfinance sector, aiming to raise awareness of
the sector, including its benefits, share knowledge about financial services and
the role of NBC in relation to the sector, and communicate the obligations and
responsibilities of local authorities. An MFI awareness campaign aims to protect
the public against over-indebtedness and plans to reach targeted districts and
provinces seven times throughout 2022.

PROGRESS IN DIGITAL FINANCIAL SERVICES

In addition, as financial infrastructure plays an important role in contributing to
national economic development, the payment system in Cambodia has improved
significantly and evolved into a digital platform in response to changing consumer
attitudes towards innovative, convenient, safe and affordable payment services.
These achievements have created a conducive environment and promoted the
development and usage of financial technology to support the innovation in
payment systems, including the development of payment infrastructure, a regu-
latory framework, and cooperation with relevant stakeholders. One key accom-
plishment is the Bakong system, the backbone payment system in Cambodia,
which aims to complete interoperability for the payment system, either domes-
tically or regionally, particularly as the demand in digital payments has increased
since the COVID-19 pandemic.

Although financial technology offers many innovative opportunities for payment

systems and payment services, there are many challenges, especially as they
relate to the level of digital financial literacy and technological risks that require
careful management from the authorities and stakeholders to ensure sustainable
development. In this regard, the development of a regulatory framework to min-
imize risk and protect customer interests is crucial, by promoting digital financial
literacy and enhancing the security of digital payment services.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 49

MSME FINANCE
It is widely acknowledged that MSMEs play a vital role in Cambodia’s economy,
as they account for 70 percent of job creation in the country.56 According to
the Open Development Cambodia report, in 2020, Cambodian MSMEs can be
divided into three key sectors: the production sector (agricultural processing,
manufacturing, and mining), the service sector and the trading sector (wholesale
and retail).

Recognizing this importance, the government has taken significant steps to diver-
sify the economy by boosting MSMEs as a pillar of economic growth and thereby
reducing reliance on FDI. Initiatives include new MSME tax and customs incen-
tives,57 a dedicated bank for SMEs,58 support for entrepreneurs through the Techno
Start-up Centre, Khmer Enterprise and Skills Development Fund to empower
human resources. At the end of 2022, SME Bank had financed 231 SMEs through
direct financing, including 62 women entrepreneurs and 169 male entrepre-
neurs, with a total loan of approximately $53.4 million, and through co-financ-
ing with participating financial institutions supporting a total of 3,037 enter-
prises, equivalent to a total amount of approximately $380 million. The SME
Development Policy and Five-year Implementation Plan (2020–2024) aims to
enhance the MSME policy and regulatory environment; promote productivity,
technology, and innovation; promote entrepreneurship and human capital devel-
opment; enhance foreign market access and internalization; and increase access
to finance.

Despite the many initiatives introduced for boosting MSME sectors, challenges
remain and require further effort and commitment from relevant stakeholders.
These obstacles include concerns about financial access, technical skills and
knowledge, insufficient facilitation and support, competition in national and
global markets, and the informality of MSMEs.

WAY FORWARD
Cambodia will continue to work with the private sector market players and devel-
opment partners and cooperate closely with relevant stakeholders on improving
the financing agenda to drive implementation of the current M&E framework and
NFIS (2019–2025) in a timely and efficient manner. Given the rapid development
of technology, it is important to make best use of fintech, especially in payment
services, to realize new opportunities in expanding access to financial services to
underserved populations in rural areas. Further, in supporting inclusive growth as
well as the digital economy, the payment system could be developed in accor-
dance with innovative technologies to promote financial inclusion and facilitate
trade operations and investments. Digital payments and transfers are considered

56 MISTI. Science, technology & innovation [Annual Report 2018]. Phnom Penh, Cambodia: Ministry of Industry, Science, Technology
& Innovation.
57 Zero percent on tax on income for three years on newly established enterprises or from the date of tax registration update for
existing enterprises and milled rice exporting businesses.
58 Small and Medium Enterprise Bank of Cambodia Plc. (SME Bank) was officially licensed on 27 February 2020. It is supervised by
NBC and guided by the Ministry of Economy and Finance.

2023 ASEAN MONITORING PROGRESS 50

the foundations of a digital economy and are key factors to bring people living
in remote areas and migrant workers with low incomes into the formal financial
sector, where they can have convenient, affordable, and safe access to finan-
cial services. In this digital era, as the pandemic has pushed individual and firm
behaviour towards digitalization, NBC will continue to underpin the digital infra-
structure development in the banking system, promoting trade and investments.

Indicators 201859 2019 2020 2021 2022

ACCESS
Number of branches per 100,000
22 23 24 24 24
adults60
Number of ATMs per 100,000 adults 18 25 28 34 37
Number of POS terminals per
149 478 537 449 268
100,000 adults
Number of mobile money agents or
similar financial services agents per 255 387 428 421 468
100,000 adults
Number of access points per
100,000 adults at a national level 445 913 1017 928 797

Mobile phone penetration (active

1.18 1.33 1.28 1.31 1.29
mobile phones/total population)
USAGE
Percentage of adults who report
having an account at a bank 9.7% 12.7% 17.4% 20.6% 14.73%

Percentage of adults who report

having an account at other formal
17.4% 27.3% 26.3% 25.8% 22.38%
financial institutions or payment
service providers61
Number of deposit accounts with
formal financial institutions per 51,574 71,670 82,575 115,289 138,869
100,000 adults
Number of loan accounts with
formal financial institutions per 25,246 28,991 29,630 31,053 33,707
100,000 adults
Number of debit cards per 100,000
2,361 5,478 7,267 18,226 40,898
adults
Number of registered mobile money
accounts per 100,000 adults 16,183 49,075 88,418 123,781 173,870

Number of mobile money

transactions (during the reference 977,830 1,803,502 2,464,181 3,125,707 4,178,544
year) per 100,000 adults
Insurance policy holders per 1,500 4,826 3,165 11,649 11,387
100,000 adults disaggregated by life
and non-life insurance 920 1,636 2,006 4,973 2,552
QUALITY
Percentage of adults who have
knowledge of basic financial terms:
18%62 N.A. N.A. N.A. N.A.
interest rate, risk, inflation, and
diversification
Average monthly cost to have a $0.5–
basic account in banks N.A. N.A. N.A. N.A.
0.863

59 Baseline data are from 2017.

60 Defined as those who are 18 years old or older.
61 Excluding banks.
62 This figure has been based on the MAP Diagnostic report; there are no available data for later years.
63 This figure has been based on the MAP Diagnostic report; there are no available data for later years.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 51

 Indicators 201859 2019 2020 2021 2022
Percentage of borrowers who are
more than 30 days late with loan 2.9% 2.0% 3.2% 3.8% 1.13%
payment
Number of complaints per 100 bank
0.0113 0.0095 0.0335 0.0032 0.0016
accounts64
INCLUSIVE GROWTH
Annual growth rate of real GDP per
4.0% 5.5% –4.6% 1.29% 2.91%
capita

Annual growth rate of GDP 7.0% 7.1% –3.1% 3.0% 5.1%

Primary
89.55% 91.08% 91% 94.71% N.A.
education
Education
completion rate Lower
secondary 54.24% 57.74% 58.20% 57.66% N.A.
education
Proportion of
population
with access to 89.07% 93.00% 86.40% 92.30% N.A.
electricity –
Total
Proportion of
population
Access to basic
with access to 99.06% 99.77% 97.30% 99.00% N.A.
services
electricity –
Urban
Proportion of
population
with access to 86.09% 90.91% 82.90% 88.00% N.A.
electricity –
Rural
Unemployment
Unemployment 0.14% 0.15% 0.33% 0.61% 0.70%
rate
Proportion of
population
covered
by social
Redistribution N.A. N.A. N.A. N.A. 1,640.34
protection
floors/systems
per 100,000
population
Percentage of
Global
people living
development N.A. N.A. N.A. N.A. 16.60%
below national
goals
poverty line

FINANCIAL CAPABILITY INDICATORS

Indicator
Stage of country Indicator definitions 2021 2022
category
Number of stakeholders/Number of
Pre-formulation 3/5 3/5
key priority target groups identified
Formation of a financial capability
Formulation Yes Yes
working group
Governance/ Number of quarterly meetings held by
coordination Formulation 4 4
the financial capability working group
Percentage of stakeholders at
regulatory level who develop action
Formulation 100% 100%
or implementation plan for financial
education

64 Complaints received by NBC’s hotline team, which receives calls from the public on any complaints or if they want any clarifica-
tions on financial contracts with formal financial institutions.

2023 ASEAN MONITORING PROGRESS 52

Indicator
Stage of country Indicator definitions 2021 2022
category
Percentage of stakeholders at
regulatory level who achieve at least
Implementation 67% 67%
50% of goals/activities established in
action plan
Number of draft policies to promote
Pre-formulation 1 1
financial capability
Number of policies developed to
promote financial capability (e.g. NFIS,
Formulation consumer protection frameworks/ 2 2
policies, policies promoting inclusion
Enabling of specific vulnerable segments)
environment
Number of meetings with Ministry
of Education to promote integration
Formulation 2 2
of financial education into national
curriculum
Percentage of schools that integrate
Implementation N.A. N.A.
financial education into curriculum
Number of key terms defined at
Pre-formulation national level (e.g. financial capability, N.A. N.A.
financial education, financial literacy)
Establishment of policy priority to
Policy Formulation develop NFES or prioritize financial N.A. N.A.
alignment education in NFIS
Number of high-level/interagency
meetings to discuss NFES targets/
Implementation N.A. N.A.
outcomes with key regulatory
stakeholders
Number of virtual workshops to learn
Pre-formulation/
from countries in more advanced stage N.A. N.A.
Formulation
of developing or implementing NFES
Regional
collaboration Number of virtual workshops to share
lessons learned with countries in
Implementation N.A. N.A.
less advanced stage of developing or
implementing NFES
Number of existing initiatives identified
Pre-formulation 3 3
that promote financial capability
Number of government programmes
Pre-formulation identified to reach each target group 3 3
Supply-side
(touch points)
mapping
Number of stakeholders identified
during supply-side mapping that form
Formulation 3 3
part of the financial capability working
group
Number of secondary sources that
Pre-formulation measure levels of financial capability 1 1
within country
Number of key target groups identified
Pre-formulation 5 5
that have low financial capabilities
Demand-side
diagnostic Number of proposals reviewed to
Pre-formulation conduct national financial capability N.A. N.A.
survey
Number of policies and programmes
Formulation developed from national financial N.A. N.A.
capability survey results
Arithmetic score as per national
definitions; percentage of adults who
know definition of basic financial terms
Financial (i.e. importance of saving in a bank
All stages N.A. N.A.
knowledge account, has bank account, borrows
responsibly, plans ahead, knows how
to access and use the best financial
services etc.)

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 53

Indicator
Stage of country Indicator definitions 2021 2022
category
Percentage of adults able to use
Financial skills All stages account at bank or financial institution N.A. N.A.
without help if opened
Percentage of adults coming up with
All stages emergency funding (disaggregated by N.A. N.A.
sex, age, and geographic location)
Financial
All stages Source of emergency funding N.A. N.A.
behaviour
Percentage of adults who save for old
All stages age (disaggregated by sex, age, and N.A. N.A.
geographic location)
Percentage of stakeholders integrating
Implementation financial education at the programme 67% 67%
level
Programme Percentage of stakeholders using
level Implementation 67% 67%
digital channels for financial education
Percentage of outcomes achieved at
Implementation 67% 67%
programme level

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] yes
Percentage of MSME loans in total banking system loans
Percentage of MSMEs with account at financial institution
Access to finance

Share of new MSME lending as a percentage of total loans

Percentage of MSME borrowers with collateral
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no]
Percentage of MSMEs that report using an account at a financial
institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME loans/MSME borrowers

Percentage of MSMEs with outstanding loan or credit
Value of MSME loans
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target
Public support for MSME

10
group (NFIS/NFES)
MSME loan guarantee as a percentage of MSME loans
finance

MSME loan guarantees (value)

MSME direct government loans/loan funds (KHR billions)
Number of tax incentives for MSMEs 3
Number of pre-shipment export guarantee funds for export-based
MSMEs

2023 ASEAN MONITORING PROGRESS 54

 Indicator
Indicator 2022
category
P2P lending (volume, percentage share of total loans)

alternative finance
Venture and growth capital investments (volume, percentage of total
Digital finance/ financing)
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in regulatory
sandbox
Number of working groups for MSMEs
Coordination

Number of regulatory meetings focused on MSMEs annually

Number of capacity-building sessions for regulators/FSPs on MSME
finance

Number of ministries working together to promote financial inclusion

6
of MSMEs

Number of policy dialogues, roundtables, forums on MSME topics65

Collaboration

Number of partnerships with MSME-focused organizations/business

associations
Number of partnerships with fintechs, MMOs, telcos, e-commerce
platforms, digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days)
capabilities
Financial

Percentage of MSMEs that have at least one formal financial service

Number of government programmes to promote financial and digital
financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal financial Existing/
service66 Revised
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/women’s
business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned MSMEs

65 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
66 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 55

 INDONESIA
COUNTRY REPORT

2023 ASEAN MONITORING PROGRESS 56

Indonesia has taken substantial steps to strengthen its financial sector, notably
through the enactment of Law No. 4 of 2023, which focuses on the development
and strenghtening of the financial sector. This regulatory framework lays the
foundation for advancing financial inclusion and expanding access to affordable,
quality, and sustainable financial products and services for the nation’s popula-
tion, including improving financial literacy, strenghtening financial inclusion, and
enhancing financial consumer protection. This legislation also redefines financial
inclusion as the availability of accessible, quality, and sustainable financial prod-
ucts and services that cater to the needs and capacities of the financial commu-
nity, promoting their financial well-being.

PROGRESS IN FINANCIAL INCLUSION

Indonesia has made remarkable progress in financial inclusion. According to the
2022 Otoritas Jasa Keuangan (OJK) National Financial Literacy and Inclusion
Survey, 85.1 percent of Indonesia’s adult population have used formal finan-
cial products or services. Furthermore, gender-based analysis reveals that 83.9
percent of women and 86.3 percent of men in Indonesia have used financial
services. Financial literacy in the country reached 49.7 percent in 2022. When
examined by gender, the literacy rate stood at 50.3 percent for women and 49.1
percent for men.

The National Financial Inclusion Strategy (NFIS) implemented by the National

Council for Financial Inclusion (DNKI) plays a crucial role in the improvement of
financial inclusion and literacy in Indonesia. DNKI involves more than 27 minis-
tries/institutions divided into seven working groups on financial education, com-
munity property rights, financial intermediary facilities and distribution channels,
financial services in the government sector, consumer protection, and conducive
policies and regulations, with the seventh group concerned with information and
communication technology, digital financial technology and supporting finan-
cial infrastructure. Law No. 4 of 2023 recently enacted has given DNKI a stronger
role in the form of a national committee. The national financial inclusion target
focuses on segments such as migrant workers, women, the younger generation,
rural communities, MSMEs and marginalized populations.

Economic inclusion is an integral aspect of financial inclusion, thus Bank Indonesia

has initiated a framework for a National Strategy for Inclusive Economic and
Financial (SNEKI) based on the three pillars of: (i) economic empowerment,
which is a series of action programmes carried out in the real sector to enhance
economic and financial inclusion with a focus on improving productivity; (ii)
expansion of access and financial literacy, which is a series of programmes to
encourage access to and usage of financial services by the public and the usage
of financing to increase the scale of business with the goal of enhancing financial
intermediation; and (iii) policy harmonization, which is policy synergy to promote
business consolidation, making it easier to access capacity-building programmes
and financing with the goal of business corporatization.

2023 ASEAN MONITORING PROGRESS 57

As part of SNEKI and to support NFIS, and because most adults cannot access
finance due to reasons such as not having money,67 Bank Indonesia has initiated
a programme for inclusive economic and financial empowerment based on sub-
sistence groups, collaborating with relevant ministries, institutions, and related
stakeholders. The programme aims to enhance knowledge and skills in entrepre-
neurship and financial management, increase the usage of financial products and
services, and strengthen cooperation so that subsistence micro-business groups
can have increased business income, greater self-reliance, and better resilience.
The programme targets unbanked people, the underserved population, and vul-
nerable communities. It has expanded throughout Indonesia, with a total of 91
supported subsistence groups. Efforts to replicate it continue with the publication
of a guideline for the development of subsistence group-based inclusive eco-
nomic and financial initiatives. This guideline will serve as a reference for Bank
Indonesia, as well as for the ministries and institutions that plan to develop similar
programmes.

ADVANCEMENTS IN FINANCIAL CAPABILITY AND

DIGITALIZATION
Additionally, in support of digital financial literacy and in collaboration with the
World Bank and OJK, Bank Indonesia has published educational materials on
DFS for the public and instructional materials (lesson plans) for MSMEs. The edu-
cational materials aim to increase the adoption of DFS among non-users and
potential users and enhance the frequency of usage for passive users. The lesson
plans are intended to increase the usage of DFS for productive businesses, espe-
cially SMEs.

The lesson plans cover various topics, including an introduction to financial prod-
ucts and opening DFS accounts, including savings and electronic money, onboard-
ing as QRIS merchants, social commerce, the marketplace, and an introduction
to P2P lending. Tailoring education modules specifically for MSMEs enables them
to gain essential knowledge and skills for using DFS in their operations, ultimately
contributing to their growth and financial inclusion. Bank Indonesia conducts
training-of-trainers programmes for MSME mentors to ensure the scalability and
sustainability of its educational initiatives and empowering many businesses to
embrace DFS.

Bank Indonesia continues to strengthen its consumer protection strategy, includ-

ing through a consumer protection education programme. This enhances con-
sumer understanding, particularly about their rights and responsibilities when
using financial products and services. Bank Indonesia aims to empower them to
make informed decisions and protect themselves against potential risks.

67 Global Findex, 2021.

2023 ASEAN MONITORING PROGRESS 58

The financial education programme is conducted as part of Bank Indonesia’s
communication strategy, which is carried out through various channels, includ-
ing mass media, printed and digital media, websites, social media, representative
offices, and flagship events. The number of financial education initiatives of the
Financial Education Working Group68 nearly doubled to 1,940 in 2022 from 1,057
in 2021. Another key achievement in this area is that the financially literacy rate of
Indonesian adults increased from 38.03 percent in 2019 to 49.68 percent in 2022.

Efforts to increase digital financial inclusion, specifically among women, are also
being carried out by relevant ministries and institutions in collaboration with
international organizations, namely Women’s World Banking (WWB), the Asian
Development Bank (ADB) and the Islamic Development Bank (IsDB). The pro-
gramme is called Women’s Digital Financial Inclusion (IKDP) and aims to enhance
women’s access to technology, digital and financial skills, and DFS. Additionally,
the Women Entrepreneur Finance Code (We-Fi Code) programme focuses on
increasing financing for women-led SMEs.

ACCESS TO FINANCE FOR MSMEs

In general, access to financing is a primary concern for financial authorities in
Indonesia. Therefore, the country continues to promote financial inclusion and lit-
eracy for MSMEs. MSMEs play a significant role in Indonesia’s economy: over 65.5
million MSMEs contribute 61.07 percent to national GDP, employ 96.92 percent
of the workforce, and account for 15.65 percent of national exports. The intro-
duction of QRIS, initiated by Bank Indonesia, has also significantly expanded the
digital merchant ecosystem, user base and digital payment interoperability. The
adaptation of digitalization of transactions shows significant progress, marked by
the number of merchants using QRIS reaching 23.96 million by the end of 2022.
Notably, more than 90 percent of QRIS merchants are MSMEs. Furthermore, the
number of QRIS users reached 28.76 million by the end of 2022.

The Government of Indonesia has consistently supported the enhancement of

financial access for MSMEs since 2007 through subsidized loans (Kredit Usaha
Rakyat or KUR). KUR is a government initiative aimed at enhancing access to
financing for MSMEs through financial institutions with a credit guarantee scheme.
It provides working capital and investment funding to individual or group MSMEs,
as well as business entities that have productive and feasible businesses but lack
additional collateral or are not yet considered bankable. In 2022, the realization
of KUR amounted to IDR 365.5 trillion, reaching 97.94 percent of its target of IDR
373.17 trillion and marking a 29.66 percent increase from 2021. Nonperforming
loans (NPL) remained stable at 1.11 percent, while the number of KUR beneficia-
ries increased to 7.6 million by the end of 2022.

68 The financial education working group consists of 13 members from various ministries and agencies, including OJK and Bank
Indonesia.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 59

Productive sectors, particularly agriculture, services, and manufacturing, continue
to dominate KUR distribution (56.4 percent of KUR loans in 2022), with micro-
scale businesses receiving the highest share (66.4 percent).

In addition to providing credit subsidies to MSMEs through KUR, the Indonesian

government promotes access to financial services for MSMEs through various
programmes, including the Ultra Micro Financing Program (Ultra Mikro or UMi)
and the Revolving Fund Management Institution for Cooperatives and MSMEs
(Lembaga Pengelola Dana Bergulir Koperasi dan UMKM or LPDB-KUMKM). The
government launched UMi as one of its national priority programmes to facili-
tate the growth and development of ultra-micro enterprises, enabling them to
become bankable and make a more significant contribution to the Indonesian
economy. LPDB-KUMKM manages revolving funds for MSME financing and acts as
an integrator to accelerate the development of microfinance industries in differ-
ent regions. MSME credit growth reached IDR 1.35 trillion but experienced a slight
annual decline from 12.19 percent in 2021 to 10.47 percent in 2022, with credit
risk maintained at 3.41 percent. The credit slowdown was attributed to uncer-
tainties in the global and domestic economies which impacted MSMEs financing
expectations. The growth of MSME credit is supported primarily by micro-scale
businesses, with an improvement in the growth of medium-scale enterprises. The
number of MSME borrowers increased significantly from 33.5 million in 2021 to
40.7 million in 2022, with a declining loan size trend. This indicates an improving
inclusivity level.

Furthermore, Bank Indonesia has been instrumental in bridging the information

gap between MSMEs and financial institutions. This includes facilitating busi-
ness matching between MSMEs and formal financial institutions, and develop-
ing a database of MSMEs that are worthy of financing to be used as a reference
for financial institutions. Moreover, low awareness of financial record-keeping
among MSMEs contributes to information asymmetry between MSMEs and finan-
cial institutions. To address this, Bank Indonesia has facilitated the digitalization
of financial record-keeping through the development of digital tools for finan-
cial reporting, known as Sistem Informasi Aplikasi Pencatatan Informasi Keuangan
(SIAPIK). SIAPIK is being developed in collaboration with the association of an
account, and is accessible through mobile and web platforms, providing flexibility
and ease of use. In 2022, 995 MSME users of SIAPIK secured financing through
both banking and non-banking financial institutions, with a total financing of IDR
62 billion.

2023 ASEAN MONITORING PROGRESS 60

WAY FORWARD
Although various efforts have been made to improve access to financing, MSMEs
in Indonesia still face challenges related to information asymmetry, low credit
demand due to the global economic downturn, and limited financial literacy. In
conclusion, the financial inclusion landscape is evolving, with substantial progress
in enhancing MSME access to financing. The multifaceted approach of Indonesian
authorities includes regulatory reform, capacity-building, and facilitation, and is
playing a pivotal role in addressing the challenges faced by MSMEs and promoting
an inclusive and sustainable financial environment.

Indicator Baseline
Indicators 2019 2020 2021 2022
definitions (2018)
1. Number of
bank branches
16 16 18 23 15
per 100,000
adults
2. Number
of ATMs per 55 54 53 50 50
Points of 100,000 adults
service 3. Number of
POS terminals
538 542 689 892 866
per 100,000
adults
4. Number of
DFS agents per 198 255 306 431 458
100,000 adults
Number of
access points
Access points per 100,000 269 324 376 504 523
adults at the
national level69
Age >15 22.42% 31.23% N.A. 62.01% N.A.
Age 15–24 77.05% 83.58% N.A. 91.83% N.A.
Age 25–64 38.11% 46.83% N.A. 59.64% N.A.

Connectivity Age >64 3.97% 5.32% N.A. 10.71% N.A.

Mobile phone
penetration
(total number 319,434,605 341,277,549 N.A. N.A. N.A.
of active mobile
phones)
Percentage of
respondents
who report
Adults with having an
55.70% N.A. 61.70% 65.40% N.A.
an account account at a
formal financial
institution (age
15+)70
Number of
account third-
Savings party funds in 1,589 1,632 1,909 2,186 2,574
banks per 1,000
adults
Number of
loan accounts
Credit 23,052 24,108 24,753 44,684 62,507
with banks per
100,000 adults

69 Bank branches + ATMs + DFS agents.

70 Survei Nasional Keuangan Inklusif (National Survey for Financial Inclusion), 2018 and 2020.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 61

 Indicator Baseline
Indicators 2019 2020 2021 2022
definitions (2018)
1. Number
of debit and
82,933 92,817 108,090 114,514 129,566
ATM cards per
100,000 adults
2. Number
of electronic
money 860 1,479 2,187 2,911 3,698
Payments
accounts per
1,000 adults
3. Volume of
electronic
money 1,502,453 2,644,823 2,340,706 2,758,494 3,504,593
transactions per
100,000 adults
Number of
insurance
policy holders
Insurance 24,436 22,318 30,814 48,423 N.A.
(life insurance)
per 100,000
adults
Proportion
of credit
Value with certain 2.57% 2.88% 3.21% 5.42% 7.03%
guarantee to
total credit
Nonperforming
loans:
Percentage
of borrowers
Indebtedness 2.37% 2.53% 3.06% 3.00% 2.44%
who are more
than 90 days
late with a loan
repayment

Indicator
Indicator definitions Aggregation Baseline 2019 2020 2021 2022
category

Male 9.59% 9.18% 9.59% 9.92% 9.40%

Proportion of the Female 10.06% 9.63% 9.96% 10.37% 9.68%

population living below
Macro-economic the national poverty line Age <18 12.05% 11.76% 12.23% 12.64% 11.80%
context
Age >18 8.77% 8.32% 8.65% 9.09% 8.60%

Annual growth rate of

3.93% 3.82% –3.15% 2.51% 4.13%
real GDP per capita

Elementary
94.68% 95.48% 96.00% 97.37% 97.82%
school

Education Completion rate Junior high

84.96% 85.23% 87.89% 88.88% 90.13%
school

High school 61.84% 58.33% 63.95% 65.94% 66.13%

Access to a basic
drinking water 31.75% 42.84% 42.31% 43.81% 44.94%
service
Proportion of the
Access to basic population living in Access to
services households with access an improved 69.27% 77.39% 79.53% 80.29% 80.92%
to basic services sanitation service

Access to basic
78.87% 76.07% 78.30% 79.59% 79.33%
hygiene facilities

Proportion of the
population with access 98.30% 98.89% 99.20% N.A. 97.73%
to electricity

Proportion of the Expenditure

N.A. 2.53% 2.23% 1.97% N.A.
population with large >10%
household expenditures
Health care
on health care as a
Expenditure
share of total household N.A. 0.53% 0.43% 0.35% N.A.
>25%
expenditure or income

2023 ASEAN MONITORING PROGRESS 62

 Indicator
Indicator definitions Aggregation Baseline 2019 2020 2021 2022
category

1. Number of MSME
14.62 15.92 15.97 33.46 40.73
credit accounts (millions)

2. Outstanding MSME
(Asset- 1,032,643 1,111,340 1,091,232 1,223,433 1,351,249
credit (IDR billions)
building and)
entrepreneurship 3. Outstanding MSME
credit to the agriculture,
94,110 109,544 130,012 161,456 214,198
hunting and forestry
sector (IDR billions)

Proportion of the
population covered by
Redistribution 87.17% 90.02%71 90.11%72 N.A. N.A.
social protection floors/
systems

Proportion of informal Male 53.90% 52.81% 57.29% 56.61% 56.03%

employment in total
employment, at national
Female 61.90% 60.81% 65.35% 63.80% 64.43%
level

Total unemployment 5.30% 5.23% 7.07% 6.49% 5.86%

Unemployment Total 12.63% 11.93% 11.99% 11.61% 10.16%
and income
inequality Persons without
12.42% 11.67% 11.77% N.A. N.A.
Proportion of people disabilities
living below 50% of
median income
Persons with
14.17% 14.33% 14.35% N.A. N.A.
disabilities

FINANCIAL CAPABILITY INDICATORS

Indicator Stage of
Indicator definitions 2021 2022
category country
Number of stakeholders/key priority target
Pre-formulation 13/10
groups identified
Formation of a financial capability working
Formulation 1 1
group
Number of quarterly meetings held by the
Formulation 4 4
financial capability working group
Governance/
coordination Percentage of stakeholders at
regulatory level that develop an action
Formulation
or implementation plan for financial
education
Number of stakeholders at regulatory level
Implementation that execute the action or implementation 13 15
plan for financial education
Number of draft policies to promote
Pre-formulation
financial capability
Number of policies developed to
promote financial capability (e.g. NFIS,
Formulation consumer protection frameworks/policies, 5
policies promoting inclusion of specific
Enabling marginalized segments)
environment
Number of meetings with the Ministry
of Education to promote the integration
Formulation
of financial education into the national
curriculum
Number of schools that integrate financial
Implementation 460,532
education into the curriculum

71 Estimated.
72 Estimated.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 63

 Indicator Stage of
Indicator definitions 2021 2022
category country
Number of key terms defined at the
Pre-formulation national level (e.g. financial capability,
financial education, financial literacy)
Establishment of policy priority to develop
Policy
Formulation an NFES or prioritize financial education 1 1
alignment
in an NFIS
Number of quarterly meetings held by
Implementation the financial capability working group to 4 4
discuss NFES targets/outcomes
Pre- Number of virtual workshops to learn from
formulation/ countries at a more advanced stage of N.A.
formulation developing or implementing an NFES
Regional
collaboration Number of virtual workshops to share
lessons learned with countries at a
Implementation N.A.
less advanced stage of developing or
implementing an NFES
1,05773 1,94075
Number of existing initiatives identified
Pre-formulation
that promote financial capability
4,58574 3,19876
Number of government programmes
Supply-side
Pre-formulation identified to reach each target group 7
mapping
(touch points)
Number of stakeholders identified during
Formulation the supply-side mapping that form part of
the financial capability working group
Number of secondary sources that
Pre-formulation measure levels of financial capability
within the country
Number of key target groups identified
Pre-formulation 10
Demand-side that have low financial capabilities
diagnostic Number of proposals reviewed to conduct
Pre-formulation
a national financial capability survey
Number of policies and programmes
Formulation developed from national financial 1
capability survey results
Arithmetic score as per national
definitions; percentage of adults who
know definitions of basic financial terms
Financial (i.e. importance of saving in a bank 38.03%
All stages 49.68%77
knowledge account, has a bank account, borrows (2019)
responsibly, plans ahead, knows how to
access and use the best financial services,
etc.)
Percentage of adults who are able to
Financial
All stages use an account at a bank or financial 29%
skills
institution without help if opened
Percentage of adults coming up with
emergency funding in 30 days, possible
92%
and not difficult at all (disaggregated by
sex, age and geographic location)
Financial
All stages
behaviour Female, male

15–24 years (youth) 93%

25+ years (adults) 92%

73 Working Group of DNKI.

74 Financial industries.
75 Working Group of DNKI.
76 Financial industries.
77 SNLIK OJK 2022.

2023 ASEAN MONITORING PROGRESS 64

Indicator Stage of
Indicator definitions 2021 2022
category country
Poorest 40% 90%

Richest 60% 93%

Rural 90%

Urban 93%
Out of labour force 93%

In labour force 91%

Main source of emergency funding (%)
Family or friends 44%
Loan from a bank, employer or private
5%
lender
All stages Sale of assets 6%
Savings 13%
Work 18%

Other 5%

Percentage of adults who save for old age

(disaggregated by sex, age and geographic 25%
location)
Female 26%

Male 24%
15–24 years (youth) 30%

25+ years (adults) 23%

All stages
Poorest 40% 16%

Richest 60% 31%

Rural 22%

Urban 26%
Out of labour force 18%

In labour force 29%

Percentage of stakeholders integrating
Implementation financial education at the programme
level
Programme
Percentage of stakeholders using digital
level Implementation
channels for financial education
Percentage of outcomes achieved at
Implementation
programme level

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 65

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 20.8%
Percentage of MSMEs with account at financial institution
Access to finance

Share of new MSME lending as a percentage of total loans

Percentage of MSME borrowers with collateral
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no] Yes
Percentage of MSMEs that report using an account at a financial
institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME loans/MSME borrowers

Percentage of MSMEs with outstanding loan or credit
Outstanding MSME loans (IDR billions) 1,351,249
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target
Public support for MSME

group (NFIS/NFES)
MSME loan guarantee as a percentage of MSME loans
finance

Guaranteed MSME loans (IDR billions) 456,613

MSME direct government loans/loan funds (IDR billions)
Number of tax incentives for MSMEs
Number of pre-shipment export guarantee funds for export-based
MSMEs
P2P lending (volume, percentage share of total loans)
alternative finance

Venture and growth capital investments (volume, percentage of total

Digital finance/

financing)
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in regulatory
sandbox
Number of working groups for MSMEs 2
Coordination

Number of regulatory meetings focused on MSMEs annually

Number of capacity-building sessions for regulators/FSPs on MSME
5
finance
Number of ministries working together to promote financial inclusion
of MSMEs
Number of policy dialogues, roundtables, forums on MSME topics78
Collaboration

Number of partnerships with MSME-focused organizations/business

associations
Number of partnerships with fintechs, MMOs, telcos, e-commerce
platforms, digital payment providers

78 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.

2023 ASEAN MONITORING PROGRESS 66

 Indicator
Indicator 2022
category
Percentage of MSMEs with nonperforming loans (i.e. 90 days) 3.41%

capabilities
Financial
Percentage of MSMEs that have at least one formal financial service
Number of government programmes to promote financial and digital
financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal financial Existing/
service79 Revised
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/women’s
business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs

79 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 67

 LAO PDR
COUNTRY REPORT

2023 ASEAN MONITORING PROGRESS 68

OVERVIEW OF ACHIEVEMENTS IN FINANCIAL INCLUSION
Financial inclusion in Lao PDR is based on the Lao PDR Financial Inclusion
Roadmap (2018–2025). This aims to improve household welfare by improving
access to financial services to provide broad, convenient, and deep access that
meets the need for livelihood development, assisting households and enterprises
to increase economic efficiency and supporting growth by improving financial
inclusion. The current financial inclusion rate is 81 percent, a noticeable increase
from last year of 68 percent.

PROGRESS ON FINANCIAL INCLUSION AND FINANCIAL ACCESS

Financial services are tools that promote access to capital for sustainable eco-
nomic development. Therefore, the Government of Lao PDR has promoted a
broadening of the financial service sector for many years. As a result, the finan-
cial sector has developed rapidly to support access to capital and financial ser-
vices, and to foster better understanding of financial products, including how to
use them properly and responsibly. However, the knowledge and capability of the
Lao PDR population on how to use these services most effectively has not been
growing at the same pace as the expansion of financial services.

In term of access, the number of ATMs per 10,000 adults increased slightly from
3.11 in 2021 to 3.22 in 2022, as did the number of POS terminals (from 9.6 to
10.1 per 10,000 adults). In terms of usage, the number of loan accounts with
banks or credit providers decreased from 745 to 699 per 10,000 population, while
there was a significant increase in the number of deposit accounts (from 7,484
per 10,000 in 2021 to 9,110 per 10,000 in 2022). The number of debit cards also
increased (from 3,366 to 4,522 per 10,000). The number of registered mobile
accounts increased almost sixfold (from 1,898 to 11,429 per 10,000), while the
number of mobile money transections nearly doubled (from 354,599 to 517,388
per 10,000). This was due mainly to greater usage of the digital payment platform,
as each person made on average 51 mobile money transactions per year.

FINANCIAL CAPABILITIES AND FINANCIAL INCLUSION

Financial services are tools to promote access to capital for sustainable eco-
nomic development Therefore, the Government of Lao PDR has promoted a
broadening of the financial service sector for many years. As a result, the financial
sector has developed rapidly to support access to capital, financial services, and
proper understanding of financial products to use them properly and responsi-
bly. However, the knowledge and capability of the Lao population on how to use
these services most effectively has not been growing at the same pace as the
expansion of financial services.

2023 ASEAN MONITORING PROGRESS 69

Financial literacy is a priority in Lao PDR. Promoting financial literacy opens
opportunities for people to build knowledge, understanding, skills, confidence,
and motivation in managing their personal finance. The Bank of Lao PDR (BOL)
has provided a small programme to enhance financial literacy (accessing finan-
cial services, investing, and saving) through short films and awareness-raising for
educational institutions. However, these activities were restricted by a limited
budget and a lack of human resources and capacity. BOL is therefore consider-
ing collaboration with relevant agencies to create a strategy for financial literacy.

DIGITAL FINANCIAL ACCESS

In April 2021, the government issued its Five-year Payment System Development
Strategy for the Banking Financial System (2021–2025). In addition, the Lao PDR
Financial Inclusion Roadmap (2018–2025) prioritizes improving the payment
ecosystem through mobile money, DFS and improved payment infrastructure.
BOL is tasked with implementing the strategy in coordination with stakeholders.
The vision expressed in the strategy is to develop infrastructure, payment systems
and payment services that link domestic and international systems, promote
and support growth of the digital economy, contribute to monetary policy and
maintain financial stability. This aims to provide swift, modern, safe, and low-cost
payment services to citizens. Reduction of cash usage and increased adoption of
digital payments to support the digital economy are strong priorities of the strat-
egy. Furthermore, digital retail payments have expanded rapidly through mobile
money wallets, branchless banking, digital microfinance and QR code-enabled
merchant payments. The number of mobile money transactions doubled in 2022.

Lao PDR will increase competition and diversity in the market for digital payment
service providers. The market is currently still concentrated around the main
commercial banks; however, innovative fintech companies are emerging and will
introduce new payment products to serve diverse use cases. Increased competi-
tive pressure on incumbents will increase acceptance of digital payments, reduce
the cost of services and lead to the development of customer-centric products.

SUPPORT FOR MSMEs

MSMEs play a very important role in enhancing economic and social development
in Lao PDR, particularly relating to production, trade, and services. They contrib-
ute to job creation and employment opportunities and promote income-generat-
ing activities to improve living standards. The Ministry of Industry and Commerce
is responsible for regulating and promoting manufacturing, trade, import and
export activity, and for representing Lao PDR and its interests in the international
business community.

According to Decree No.04/GOL/2023 on SME classification (enacted on 12

January 2023), currently there are three criteria defining MSMEs in Lao PDR. These
include the average number of employees, total assets, and annual turnover. The

2023 ASEAN MONITORING PROGRESS 70

value of MSME loans represents 12 percent of total banking system loans and
totalled LAK 154,76.53 billion in 2022.

The key objectives of the MSME Development Plan 2021–2025, are to improve
the enabling environment for MSMEs, to enhance their competitiveness and sus-
tainable growth and to enable their integration into regional and international
markets. However, Lao PDR faces challenges in implementing this plan relating to
productivity, technology innovation, entrepreneurial capacity, and market access.

The Savings and Credit Union (SCU), regulated by BOL, aims to help, and support
village funds and provide a safe place to save small amounts and borrow when
necessary. Generally, loans are granted for modest amounts, for urgent matters,
for day-to-day expenses and to provide capital for micro-enterprises. SCU plays
an important role in contributing to financial inclusion in Lao PDR.

The Government of Lao PDR provides tax relief to MSMEs. There are policies on
income tax for micro-enterprises based on the Law on Income Tax No.67/NA,
dated 18 June 2019 and the Law on Income Tax No.0819/MOF, dated 10 February
2021 (Article 29). Micro-enterprises with incomes lower than LAK 50 million will
be exempt from income tax, and micro-enterprises with incomes between LAK
50 million and LAK 400 million will pay 1 percent for manufacturing, agriculture
and industry sectors, 2 percent for trade and 3 percent for services.

Lao PDR does not yet have credit guarantee facilities for MSMEs. BOL is in the
process of establishing these with the Ministry of Industry and Commerce, and
the Ministry of Finance under the MSME Access to Finance Emergency Support
and Recovery Project supported by the World Bank. Initially, the credit guarantee
corporation will be established as a state-owned enterprise.

There have been several meetings with various stakeholders, including the private
sector, regarding amendments to MSME promotion legislation, namely the Law
on MSME Promotion, the Decree on MSME Classification and the Decree on the
SME Promotion Fund. However, the annual meeting regarding MSME regulations
is not yet in place, although it is included in other forums such as the Lao PDR
Business Forum and other workshops with related agencies.

KEY CHALLENGES AND POTENTIAL SOLUTIONS

There are several key challenges to advancing financial inclusion in Lao PDR.
These include lack of resources, experience, and capacity-building. In addition,
there are challenges relating to a mainly rural population of farmers with low
financial literacy levels and lack of access to financial services. Financial inclusion
activities need to be scaled up, and the regulatory and policy environments need
to catch up with the development and innovation of the financial sector.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 71

WAY FORWARD
The next steps include disseminating, implementing, monitoring, and evaluating
the Lao PDR Financial Inclusion Roadmap (2018–2025). For this, BOL will need to
engage key stakeholders across the public and private sectors and build on the
key findings of the Lao PDR Financial Inclusion Survey (2021).

Indicator category Indicator definitions 2018 2019 2020 2021 2022

ACCESS INDICATORS

1. Number of branches
0.25 0.31 0.31 0.31 0.28
per 10,000 adults

2. Number of ATMs per

Points of service 2.67 2.80 2.83 3.11 3.22
10,000 adults
3. Number of POS
terminals per 10,000 8.5 8.28 9.7 9.6 10.10
adults
Number of access
points (including
Access points mobile money agents) 13.53 15.21 18.01 27.84 27.44
per 10,000 adults at a
national level
1. Access to the
internet (percentage
of total population 47% 50% 52% 63% 63%
with internet access
Connectivity anywhere)
2. Mobile phone
penetration (active
mobile phones as 92% 92% 95% 100% 100%
percentage of total
population)
USAGE INDICATORS
Percentage of adults
who report having an 45.2% 74%
account at a bank
Adults with an Percentage of adults
account who report having an
account at a formal 58% 58%
financial institution or
mobile money provider
Number of deposit
accounts with banks
Savings or deposit-taking 4,802 5,464 5,985 7,484 9,110
institutions per 10,000
population
Number of loan
accounts with banks or
Credit 337 478 695 745 699
other credit providers
per 10,000 population
1. Number of debit
cards per 10,000 68 1,707 1,733 3,366 4,522
population
Payments 2. Number of
registered mobile
500 535 1,173 1,898 3,021
money accounts per
10,000 population
3. Number of mobile
money transactions
(during the reference 25,253 73,280 115,453 354,599 517,389
year) per 10,000
population

2023 ASEAN MONITORING PROGRESS 72

 Indicator category Indicator definitions 2018 2019 2020 2021 2022

Population access to
Insurance 0.90% 1.00% 0.75% 0.53% 0.43%
insurance
OUTCOME AND IMPACT INDICATORS AS PER THE GUIDANCE NOTE
Percentage of
Segmental financing and loans 20.2% 18.1% N.A. N.A. N.A.
Impact issued to SMEs
National Average national
6.29% 5.46% 3.28% 3.48% 4.40%
goals growth rate
INCLUSIVE GROWTH INDICATORS
Proportion of
population living below 24.6%
18.3% N.A. N.A. N.A.
Macroeconomic the national poverty (2013)
context line, by sex and age
Annual growth rate of 7.02%
6.29% 3.28% 2.50% 2.70%
real GDP per capita (2016)

FINANCIAL CAPABILITY INDICATORS

Indicator Stage of
Indicator definitions 2021 2022
category country
Number of stakeholders/key priority target
Pre-formulation
groups identified
Formation of a financial capability working
Formulation
group
Number of quarterly meetings held by the
Formulation
Governance/ financial capability working group
coordination
Percentage of stakeholders at regulatory level
Formulation that develop an action or implementation plan
for financial education
Number of stakeholders at regulatory level
Implementation that execute the action or implementation
plan for financial education
Number of draft policies to promote financial
Pre-formulation
capability
Number of policies developed to promote
financial capability (e.g. NFIS, consumer
Formulation protection frameworks/policies, policies 380 3
promoting inclusion of specific marginalized
Enabling segments)
environment
Number of meetings with the Ministry
of Education to promote the integration
Formulation 1 1
of financial education into the national
curriculum
Number of schools that integrate financial
Implementation
education into the curriculum
Number of key terms defined at the national
Pre-formulation level (e.g. financial capability, financial 1 1
education, financial literacy)
Establishment of policy priority to develop an
Policy
Formulation NFES or prioritize financial education in an
alignment
NFIS
Number of quarterly meetings held by the
Implementation financial capability working group to discuss
NFES target/outcomes

80 LAO PDR Financial Inclusion Roadmap (2018–2025), Decree on Financial Consumer Protection (2020), Decision on Resolving
Financial Disputes.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 73

Indicator Stage of
Indicator definitions 2021 2022
category country
Pre- Number of virtual workshops to learn from
formulation/ countries at a more advanced stage of 1 1
Regional formulation developing or implementing an NFES
collaboration Number of virtual workshops to share lessons
Implementation learned with countries at a less advanced
stage of developing or implementing an NFES
Number of existing initiatives identified that
Pre-formulation 1 1
promote financial capability
Number of government programmes
Supply-side Pre-formulation identified to reach each target group (touch
mapping points)
Number of stakeholders identified during the
Formulation supply-side mapping that form part of the
financial capability working group
Number of secondary sources that measure
Pre-formulation
levels of financial capability within the country
Number of key target groups identified that
Pre-formulation
Demand- have low financial capabilities
side Number of proposals reviewed to conduct a
diagnostic Pre-formulation 1 1
national financial capability survey
Number of policies and programmes
Formulation developed from national financial capability
survey results
Arithmetic score as per national definitions;
percentage of adults who know definitions
of basic financial terms (i.e. importance of
Financial
All stages saving in a bank account, has a bank account,
knowledge
borrows responsibly, plans ahead, knows how
to access and use the best financial services,
etc.)
Percentage of adults who are able to use
Financial
All stages an account at a bank or financial institution 39%
skills
without help if opened
Percentage of adults coming up with
emergency funding in 30 days, possible and
17%
not difficult at all (disaggregated by sex, age
and geographic location)
Female 13%

Male 21%
15–24 years (youth) 11%

All stages 25+ years (adults) 19%

Poorest 40% 6%

Richest 60% 24%

Rural 14%
Financial
behaviour Urban 30%
Out of labour force 22%

In labour force 17%

Main source of emergency funding (%)
Family or friends 33%
Loan from a bank, employer or private lender 4%

All stages Sale of assets 10%

Savings 15%
Work 15%

Other 0%

2023 ASEAN MONITORING PROGRESS 74

Indicator Stage of
Indicator definitions 2021 2022
category country
Percentage of adults who save for old age
(disaggregated by sex, age and geographic 24%
location)
Female 24%

Male 25%
15–24 years (youth) 15%

25+ years (adults) 29%

All stages
Poorest 40% 18%

Richest 60% 29%

Rural 23%

Urban 30%
Out of labour force 17%

In labour force 25%

Percentage of stakeholders integrating
Implementation
financial education at the programme level
Programme Percentage of stakeholders using digital
Implementation
level channels for financial education
Percentage of outcomes achieved at
Implementation
programme level

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 12.04%
Percentage of MSMEs with account at financial institution
Access to finance

Share of new MSME lending as a percentage of total loans

Percentage of MSME borrowers with collateral
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no]
Percentage of MSMEs that report using an account at a financial
institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME loans/MSME borrowers

Percentage of MSMEs with outstanding loan or credit
Value of MSME loans (LAK billions) 15,476.53
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target
Public support for

group (NFIS/NFES)
MSME finance

MSME loan guarantee as a percentage of MSME loans

MSME loan guarantees (value)
MSME direct government loans/loan funds (LAK billions)
Number of tax incentives for MSMEs 1

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 75

 Indicator
Indicator 2022
category
Number of pre-shipment export guarantee funds for export-based
MSMEs
P2P lending (volume, percentage share of total loans)
alternative finance Venture and growth capital investments (volume, percentage of total
Digital finance/

financing)
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in regulatory
sandbox
Number of working groups for MSMEs
Number of regulatory meetings focused on MSMEs annually 2
Coordination

Number of capacity-building sessions for regulators/FSPs on MSME

finance

Number of ministries working together to promote financial inclusion

of MSMEs

Number of policy dialogues, roundtables, forums on MSME topics81

Collaboration

Number of partnerships with MSME-focused organizations/business

associations
Number of partnerships with fintechs, MMOs, telcos, e-commerce
platforms, digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days)
capabilities
Financial

Percentage of MSMEs that have at least one formal financial service

Number of government programmes to promote financial and digital
financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal financial Existing/
service82 Revised
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/women’s
business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned MSMEs

81 These can serve as platforms for sharing best practices, guidelines, and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
82 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

2023 ASEAN MONITORING PROGRESS 76

 MALAYSIA
COUNTRY REPORT

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 77

Bank Negara Malaysia (BNM) continues to focus on strategies to enhance finan-
cial inclusion and capability, and to further elevate the financial well-being of
Malaysians in line with the objectives and vision set out in the Financial Sector
Blueprint (2022–2026).

OVERVIEW OF FINANCIAL INCLUSION

Malaysia’s financial inclusion level remained high in 2022, with 96.8 percent of
adults having at least one active deposit account at a banking institution (com-
pared with 95.7 percent in 2021). The use of financial services included savings,
credit, payments, and insurance, all of which increased in 2022.

The usage of DFS also continued to increase. In 2022, the number of e-pay-
ment transactions grew by 31.5 percent to 9.5 billion (from 7.2 billion in 2021). On
average, each Malaysian made 291 e-payment transactions in 2022 in the form
of payment cards, online banking, and e-wallets (221 in 2021). This finding is sup-
ported by the increasing penetration rate of internet banking (134 percent) and
mobile banking (61 percent) (compared with 122 percent and 51 percent, respec-
tively, in 2021).

Continuing the trend from 2021, the number of physical access points (bank
branches and agent banks) continued to decrease, as focus shifts to DFS.

KEY FINANCIAL INCLUSION INITIATIVES IN 2022

EXPANSION OF PHYSICAL ACCESS POINTS

Agent banks continue to serve as an important channel for basic banking ser-
vices in Malaysia, particularly for rural communities. Services provided by agent
banks include cash deposits and withdrawals, fund transfers, bill payments and
mobile phone prepaid top-up transactions. In June 2022, BNM revised its Agent
Banking Policy Document to expand the scope of financial services offered by
agent banks. Agent banks can now facilitate the opening of banking accounts via
electronic know-your-customer (e-KYC) protocols, undertake money services,
distribute, and market micro-insurance and micro-takaful products, and conduct
e-money cash-in and cash-out activities. At the end of 2022, a total of 3,829
agent banks were in operation across the country.

In addition to existing agent banks, mobile banks also play an important role in the
underserved areas that typically lack bank branches. BNM continues to collabo-
rate with the industry in ensuring more mobile banks are deployed in underserved
areas across the country. Mobile banks have helped to widen access to essential
banking services, including providing advisory services and catalysing the adop-
tion of DFS among rural communities. At the end of 2022, a total of 19 mobile
banks were deployed, covering 39 underserved sub-districts in seven states.

2023 ASEAN MONITORING PROGRESS 78

ADVANCING THE DIGITALIZATION OF FINANCIAL SERVICES
To enhance financial inclusion, BNM continued to focus on ensuring a condu-
cive ecosystem that spurs greater innovation, competition, and dynamism. A key
part of this is facilitating the entry of digital banks into the Malaysian financial
sector. Digital banks are mandated to focus on underserved and unserved seg-
ments; this will advance the financial inclusion agenda and enhance participation
in the economy. Digital banks offer banking services via online platforms without
a physical branch network, allowing them to overcome geographical barriers by
focusing on innovative technologies and user experiences. In April 2022, BNM
announced five successful applicants for digital bank licences as approved by
the Minister of Finance. The digital banks will begin operation between 2023 and
2024, upon completing operational readiness checks that will be validated by
BNM.

Following the model of digital banks, new digital insurers and takaful operators
(DITOs) may soon enter Malaysia’s financial landscape to deliver greater finan-
cial inclusion, market competition and efficiency, primarily through digital means.
DITOs are envisaged to conduct insurance and takaful business wholly or almost
wholly through digital means and offer innovative solutions to address critical
protection gaps among the unserved and underserved segments in Malaysia. The
Exposure Draft of the Licensing and Regulatory Framework for DITOs was issued
in November 2022 to outline the proposed licensing and application procedures
as well as specific requirements for DITOs. Like digital banks, the newly licensed
DITOs will be required to observe a foundation phase and comply with sound risk
management and consumer protection requirements. The policy document for
DITOs should be finalized in 2024.

In October 2022, BNM launched the e-Duit campaign in collaboration with the
industry to encourage greater use of e-payments among Malaysians. This is done
through outreach programmes and education campaigns that highlight the ben-
efits and responsible usage of digital payments. The e-Duit campaign aims to
coordinate e-payment initiatives by the public and private sectors nationwide,
with a view to sustaining the positive e-payment growth trends and achieving the
target of a compound annual growth rate (CAGR) of e-payment transactions of
more than 15 percent, as set out in the Financial Sector Blueprint (2022–2026).

PROMOTING AND ACHIEVING FINANCIAL CAPABILITY

BNM, as the co-chair of the Financial Education Network (FEN),83 continued to
implement various initiatives and programmes in 2022 to elevate the financial
capability of Malaysians. In 2022, FEN members and partners implemented a total
of 395 financial literacy initiatives, which were aligned with FEN’s five strategic
priorities: (i) nurture values among young people; (ii) increase access to financial
management information, tools, and resources; (iii) promote positive behaviour

83 FEN is an inter-agency platform comprising eight members, chaired by BNM and Securities Commission Malaysia, committed to
elevating the level of financial literacy and improving financial well-being.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 79

among targeted groups; (iv) boost long-term financial and retirement planning;
and (v) build and safeguard wealth. These initiatives successfully reached 11.6
million people.

FEN’s annual flagship event, Financial Literacy Month (FLM), held in October 2022,
successfully reached more than 3.2 million people through various programmes,
including roadshows, exhibitions, pocket talks, webinars, workshops, symposia,
and competitions. Guided by the findings of the Financial Capability and Inclusion
(FCI) Demand-side Survey (2021), which identified a low level of digital financial
literacy among Malaysians as one of its key concerns, the events focused on pro-
moting awareness of cyber-hygiene and the benefits of DFS.

During Financial Literacy Month 2022, the FEN mobile coach was launched to
widen outreach to communities through nationwide roadshows. The mobile
coach travelled to 61 locations across the country, providing free and indepen-
dent financial educational resources, including advisory services on personal
financial management, digital financial literacy, and debt management. FEN suc-
cessfully engaged more than 20,000 people through the roadshows.

FEN continues to use social media to advocate the importance of financial liter-
acy among the public. In 2022, FEN’s Facebook and Instagram accounts reached
over 8.5 million users. In addition, FEN’s website, which offers a wide range of
financial education resources and tools, has been accessed by more than 55,000
users since its launch in 2021.

A short video competition called MyDuitStory (MDS3.0) was organized in 2022,

aiming to raise awareness among the youth segment on financial scams and
empowering them as agents of change among their inner circle and wider com-
munity. This competition is open to students from universities and other educa-
tional institutions, harnessing their creativity to convey essential financial mes-
sages. It has reached more than 1 million people.

BNM and other FEN members regularly engaged the financial industry and aca-
demia to discuss multifaceted issues on financial literacy and capability. The
National Financial Literacy Symposium 2022 was held during Financial Literacy
Month with the theme Advancing Financial Literacy Towards Rebuilding Financial
Resilience Post-Pandemic. The event brought together a diverse group of partic-
ipants, including researchers, academics, think tanks, policymakers, and industry
practitioners, to foster innovative ideas to enhance financial literacy and promote
financial well-being in the post-pandemic landscape.

As an active OECD/INFE member, BNM regularly participates in meetings of its

technical committee. In 2022, BNM and other FEN members, partners, and stra-
tegic collaborators organized various financial education initiatives at the national

2023 ASEAN MONITORING PROGRESS 80

level, in conjunction with Global Money Week 2022 (GMW2022). The initiatives
were targeted to different life stages, including children, youth, teachers, and uni-
versity students, successfully achieving 4.8 million interactions.

Furthermore, BNM extended its collaborative efforts with other central banks to
promote capacity-building in financial literacy. In 2022, BNM actively shared valu-
able experiences and insights during workshops with the Bank of Lao PDR and
Bank Indonesia, as well as at the Alliance for Financial Inclusion (AFI) Global Policy
Forum in Jordan.

FEN also increased its efforts to enhance awareness of financial scams and
empower individuals to better protect themselves. BNM provides continuous
updates to consumers on the latest information and tips on financial fraud and
scams via the Amaran Scam Facebook page. At the end of 2022, Amaran Scam had
60,000 followers and more than 5.7 million impressions. BNM continues to foster
close collaboration with law enforcement, government agencies and non-gov-
ernmental organizations NGOs to combat financial scams, complementing the
establishment of the National Scam Response Centre (NSRC) in October 2022 to
enable consumers to lodge a report if they fall victim to a scam.

PROGRESS IN MSME FINANCE

Continued MSME support from the financing ecosystem, with further institu-
tional enhancements and advancements in innovative social finance to meet the
needs of undeserved entrepreneur segments

Malaysian MSMEs have benefited from increased financial support from banks and
DFIs, supported by the holistic MSME financing ecosystem that has been strength-
ened over the years.84 This includes sustained access to finance throughout the
COVID-19 pandemic, which helped MSMEs weather the economic downturn and
regain vitality in the recovery period. At the end of 2022, finance outstanding
to MSMEs amounted to MYR 356 billion, almost double that of a decade ago,
reflecting in part the successes of structural measures to enhance SME access
to financing as well as financial institution recognition of MSMEs as a key eco-
nomic segment. Financing to MSMEs now represents almost half (48 percent) of
the total outstanding loans extended to businesses, compared with less than 45
percent pre-pandemic.85 In 2022, the number of loans increased by 5.8 percent,
supported by robust financing approvals and disbursements for both cash flow
and capital investment needs, at levels exceeding pre-pandemic trends.

84 Some key pillars of the financing ecosystem are:

(i) Credit information infrastructure that facilitates credit underwriting and assessments (i.e. the Central Credit Reference
Information System and private credit bureaus such as CTOS and Experian).
(ii) Public credit guarantee schemes to support financing for viable but thin-file or riskier segments (i.e. by the Credit Guarantee
Corporation and Syarikat Jaminan Pembiayaan Perniagaan).
(iii) Channels for financing information, facilitation, advisory and redress (e.g. one-stop information portals such as MyAssist MSME
and SMEInfo, online financing matching platform at imSME portal by CGC Malaysia, advisory upon loan rejections by myKNP@
CGC, complaints units at financial institutions and BNMLINK and BNMTELELINK).
(iv) Platforms for debt remedial measures and resolution (e.g. loan restructuring and rescheduling by banks, small debt restructur-
ing scheme under the Credit Counselling and Debt Management Agency).
(v) Financial education outreach programmes and development programmes.
85 Refers to 2018–2019 average.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 81

DFIs specifically continued to play a catalytic role in the provision of access to
financial products and services to SMEs that may face difficulty obtaining financ-
ing from banking institutions. These institutions with specific development
mandates continued to be the main financing provider for micro-enterprises,
accounting for a significant 84 percent share of total accounts approved under
the Microfinancing Scheme initiative in 2022. During the year, BNM supported
DFIs in their efforts to innovate products and develop solutions that bridge gaps
in financial inclusion. BNM facilitated regular engagements between DFIs and
fintech companies, aiming, for instance, to encourage exploration of non-debt
solutions for MSMEs such as equity financing, and enhance credit assessment
methods for ‘thin-file’ customers using artificial intelligence/machine learning or
other credit scoring methods (e.g. psychometric analysis).

BNM also worked closely with DFIs to refine their internal governance systems
and resources relating to the Performance Measurement Framework (PMF),
which was introduced by BNM in 2021 to capture and institutionalize DFI impact
beyond financing. This resulted in improved reporting of baseline impact indi-
cators by DFIs and more meaningful application of the PMF to track long-term
development outcomes. The PMF also prompted DFIs to take proactive action to
enhance outreach and draw in private sector financing for underserved areas (e.g.
new growth areas, micro-enterprises, social enterprises and green financing) and
borrower segments (e.g. vulnerable segments and ‘thin-file’ customers).

Meanwhile, as the Malaysian economy emerged with a strong recovery in 2022,

BNM also realigned the focus of its Fund for SMEs in complementing banks’ pro-
vision of finance to MSMEs, particularly to offer better support for future MSME
growth in strategic areas and move them up the economic value chain. BNM
placed emphasis on two financing facilities that support MSMEs in making the
transition to low-carbon and sustainable operations86 and incentivize businesses
to invest in digital technology, green technology and biotechnology.87

Another important agenda for BNM in 2022 was to advance the iTEKAD88 pro-
gramme (see figure). This targets low-income micro-entrepreneurs to main-
stream social finance as an integral component of the financial system for
underserved segments. Since its pilot phase in 2020, the number of participat-
ing banks and participants, the geographical coverage and the reach of business
sectors have grown steadily. For instance, the number of participants increased
more than tenfold to reach nearly 1,600 (from 127 in 2021). Together with their

86 The Low Carbon Transition Facility (LCTF), introduced in 2022, provides financing to SMEs for the purposes of improving energy
efficiency, increasing the use of sustainable materials for production, and obtaining sustainability certification. The total allocation for
LCTF is MYR 2 billion, comprising a MYR 1 billion allocation from BNM and another MYR 1 billion matched by participating banks from
their own funds. Under LCTF, BNM has also established the Greening Value Chain Programme, which combines funding with tech-
nical training, on-site assessments and access to measurement software. Further details are available at: https://www.bnm.gov.my/
funds4sme.
87 aThe High Tech and Green Facility, rebranded from the High Tech Facility – National Investment Aspirations Facility, was introduced
at the end of 2020. Further details are available at: https://www.bnm.gov.my/funds4sme.
88 iTEKAD is a blended social finance programme that combines public, commercial, and social funds to provide low-income
micro-entrepreneurs with seed capital, microfinancing and structured training. Further details are available at: https://www.bnm.gov.
my/social-finance.

2023 ASEAN MONITORING PROGRESS 82

 iTEKAD is a blended finance programme that mobilizes social finance*
and commercial funds, aimed to nuture lower-income microenterprises
to generate substantive revenues for upward mobility.

KEY COMPONENTS COORDINATED IN

OF ITEKAD BY PARTNERSHIP

Seed Participating Implementing

capital financial institutions partners

• Bank Islam • Training providers

• CIMB ISLAMIC • State Islamic
• Bank Muamalat Religious Councils
Micro- • RHB Islamic Bank • NGOs
financing • BSN • Changemakers
• Bank Rakyat • Government
• SME Bank agencies
• AGRO BANK • Anchor companies
• AmBank Islamic
• Public Islamic Bank
Structured
training

KEY PROGRESS (AS OF DEC 2022)

1,595 MYR 9.8 MILLION

PARTICIPANTS SOCIAL FINANCE FUNDS MOBILIZED
(2021: 172) (2021: RM 0.8 MILLION)

14 MYR 8.5 MILLION

STATES FINANCING AND INVESTMENTS DISBURSED
(2021: 5) (2021: RM 2.2 MILLION)
*e.g. zakat, cash, waqf, donations, corporate social responsibility (CSR), social impact investment

implementation partners (e.g. training providers, government agencies and

non-governmental organizations), participating banks committed to onboard
more than 4,000 new participants and mobilize almost MYR 40 million of diverse
social finance funds (including donations, zakat, and social impact investment) in
2023, supported by a total government allocation of MYR 10 million for the seed
capital component.89

KEY CHALLENGES IN ADVANCING FINANCIAL INCLUSION

While Malaysia has made significant progress in advancing financial inclusion over
the past decade, several barriers and challenges remain to be addressed (as out-
lined in the Financial Inclusion Framework Strategy Paper 2023–2026).90

DIGITAL FINANCIAL LITERACY

Reliance on cash and traditional banking prevails, particularly among low-income
elderly and rural communities, mainly due to a lack of knowledge of and trust

89 MYR 4 million initially allocated under the Budget 2023, and later supplemented by an additional MYR 6 million allocation in August
2023.
90 BNM (2023) Financial Inclusion Framework 2023 – 2026: Strategy paper. Kuala Lumpur, Malaysia: Central Bank of Malaysia (https://
www.bnm.gov.my/documents/20124/55792/SP-2nd-fin-incl-framework.pdf accessed 18 April 2024).

2023 ASEAN MONITORING PROGRESS 83

in financial products and services. Low digital financial literacy also persists; for
example, 37 percent of Malaysians share passwords, and/or PINs of bank accounts
with close friends, and only 11 percent regularly change their password for online
shopping and personal finance.

TAKE-UP OF INSURANCE AND TAKAFUL

While ownership of banking accounts is high in Malaysia, the take-up of insurance
and takaful remains low; for example, 23 percent of individuals and 67 percent of
SMEs, due to a lack of affordability and awareness of the need for risk protection
and limited understanding of products.

INNOVATION IN PRODUCTS FOR UNDERSERVED SEGMENTS

There is limited exploration of targeted, innovative financial solutions for the
underserved.

FINANCIAL AWARENESS AND EDUCATION

Only 29 percent of consumers rate themselves as having low financial knowl-
edge. Improvements in financial knowledge have yet to manifest as substantial,
positive shifts in behaviour and attitudes.91

LOW FINANCIAL BUFFERS FOR SOME SEGMENTS

With 55 percent of consumers’ household income decreasing during the COVID-
19 pandemic, 15 percent were unable to cover their basic needs. 30 percent of
Malaysians cited high indebtedness, particularly for those in the education, public
and/or professional sectors. In all, 47 percent of Malaysians claim to have diffi-
culty raising MYR 1,000 as emergency funds.

WAY FORWARD: REACHING THE LAST MILE

To address these gaps, financial inclusion strategies in Malaysia for the next four
years will be guided by the Financial Inclusion Framework Strategy Paper (2023–
2026), which was issued in June 2023.

The implementation of the first Financial Inclusion Framework (2011–2020) has

led to significant improvements in the accessibility and take-up of basic financial
services in Malaysia. Despite the progress made over the past decade, several bar-
riers and challenges need to be addressed to further improve financial inclusion.

Aligned with the goals envisioned in the Financial Sector Blueprint (2022–2026)
to elevate the financial well-being of households and businesses, the Financial
Inclusion Framework (2023–2026) serves as a four-year strategic roadmap to
advance financial inclusion in Malaysia.

91 Based on the Malaysia Financial Literacy and Capability Index: a composite index that assesses the level of financial capability of
Malaysians based on measures of financial knowledge, behaviour and attitudes.

2023 ASEAN MONITORING PROGRESS 84

It features a shift in the focus from accessibility and usage to achieving the broader
development outcomes of advancing financial inclusion to elevate the financial
well-being and standard of living of all residents of Malaysia.

The Framework outlines policy objectives and broad strategies to support the
achievement of four desired outcomes, namely: (i) access to affordable and suit-
able financial products and services; (ii) responsible usage of financial products
and services; (iii) financial innovation that delivers value for all; and (iv) financially
capable consumers with good financial health.

The Framework also provides principle-based guidance for the industry to define
the financially unserved and underserved segments, to ensure streamlining of
financial inclusion initiatives in the country.

Indicator
Indicator definitions 2018 2019 2020 2021 2022
category
ACCESS INDICATORS
1. Number of branches per
1.3 1.3 1.2 1.2 1.2
10,000 adults
2. Number of ATMs per
4.5 4.4 5.6 5.5 5.4
10,000 adults
3. Number of POS terminals
209 268 298 317 333
Points of service per 10,000 adults
4. Number of mobile money
agents or similar financial 6,254 5,532 4,696 4,119 3,829
services agents92

5. Number of mobile banks 19

Number of access points

Access points per 10,000 adults at national 3.9 3.5 3.1 2.9 2.7
level93
Access to the internet
Connectivity (percentage of adults with 87.4% N.A. 88.7% N.A. N.A.
internet access anywhere)
USAGE INDICATORS
1. Percentage of adults who
report having an account at 95.5% 96.0% 95.9% 95.7% 96.8%
a bank94
2. Number of e-money
accounts (banks and non- 61.1 81.5 107.5 128.6 152.1
banks; millions)
Adults with an 3. Number of active
account e-money accounts95 11.10 14.8 15.9 22.6 24.9
(millions)
4. Number of inactive
49.88 66.6 91.5 106.1 127.3
e-money accounts (millions)
5. Number of e-money
accounts (banks and non- 25,534 33,538 43,565 51,664 60,682
banks) per 10,000 adults

92 Refers to the number of bank agents only. Data on mobile money agents are not available.
93 As nationally defined: includes only bank branches and agent banks.
94 Refers to the percentage of Malaysian adults (15 years and above) with deposit accounts at a financial institution.
95 Refers to users with at least one transaction made during the reporting month.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 85

 Indicator
Indicator definitions 2018 2019 2020 2021 2022
category
6. Number of active
e-money accounts96 per 4,639 6.090 6,484 9,079 9,934
10,000 adults
7. Number of inactive
e-money accounts per 20,895 27,407 37,081 42,625 50,788
10,000 adults
Number of deposit accounts
Savings with banks or deposit-taking 31,429 30,640 30,999 30,698 31,009
institutions per 10,000 adults
Number of loan accounts
Credit with banks or other credit 8,335 8,321 8,914 8,752 8,993
providers per 10,000 adults
1. Number of debit cards per
17,218 18,123 18,956 18,532 19,225
10,000 adults
2. Number of e-money
purchase transactions (i.e.
Payments 1,900 2,091 1,828 2,108 3,187
refers to transaction volume)
(millions)
3. Number of e-payment
125 150 170 221 291
transactions per capita97
Number of life insurance
Insurance policy holders per 10,000 4,883 4,928 4,964 4,994 5,752
adults
QUALITY INDICATORS
Average cost as a percentage
Affordability of a low-value remittance 4.75% 4.00% 4.18% N.A. N.A.
transaction98
Percentage of adults who
Financial literacy know definitions of basic 49.3% N.A. N.A. 52.3% N.A.
financial terms99

Percentage of borrowers
Indebtedness who are more than 90 days 1.48% 1.60% 1.56% 1.50% 1.72%
late with a loan repayment

INCLUSIVE GROWTH INDICATORS

Internet banking penetration
rate (percentage of 91.1% 97.6% 112.5% 122.4% 134.3%
population)
Digital financing
Mobile banking penetration
rate (percentage of 44.6% 52.9% 61.8% 73.1% 88.7%
population)
IMPACT INDICATORS
Percentage of adult women
using at least one formal 96.66% 96.49% 96.08% 97.57%
financial service
Segmental
Percentage of MSMEs using
at least one formal financial 99%
service

96 Accounts with at least one financial transaction in the past six months.
97 Includes all financial transactions made through credit transfer, payment cards, direct debit and e-money services offered by banks
and/or non-banks.
98 Average transaction cost of sending remittances from a specific country.
99 Arithmetic score as per national definitions.

2023 ASEAN MONITORING PROGRESS 86

FINANCIAL CAPABILITY INDICATORS

Indicator Stage of
Indicator definitions 2021 2022
category country
Number of stakeholders/key priority
Pre-formulation
target groups identified
Formation of a financial capability
Formulation
working group
Number of quarterly meetings held by
Formulation
the financial capability working group
Governance/
coordination Percentage of stakeholders at
regulatory level that develop an action
Formulation
or implementation plan for financial
education
Number of stakeholders at regulatory
level that execute the action or
Implementation
implementation plan for financial
education
Number of draft policies to promote
Pre-formulation
financial capability
Number of policies developed to
promote financial capability (e.g. NFIS,
Formulation consumer protection frameworks/ 1 1
policies, policies promoting inclusion of
Enabling specific marginalized segments)
environment
Number of meetings with the Ministry
of Education to promote the integration
Formulation
of financial education into the national
curriculum
Percentage of schools that integrate
Implementation 100% 100%
financial education into the curriculum
Number of key terms defined at the
Pre-formulation national level (e.g. financial capability,
financial education, financial literacy)
Establishment of policy priority to
Formulation develop an NFES or prioritize financial
Policy alignment
education in an NFIS
Number of high-level/inter-agency
meetings to discuss NFES targets/
Implementation 2 2
outcomes with key regulatory
stakeholders
Number of virtual workshops to learn
Pre-
from countries at a more advanced
formulation/
stage of developing or implementing an
formulation
Regional NFES
collaboration Number of virtual workshops to share
lessons learned with countries at a
Implementation 2 3
less advanced stage of developing or
implementing an NFES
Number of existing initiatives identified
Pre-formulation
that promote financial capability
Number of government programmes
Pre-formulation identified to reach each target group
Supply-side
(touch points)
mapping
Number of stakeholders identified during
the supply-side mapping that form
Formulation 8 8
part of the financial capability working
group100
Number of secondary sources that
Demand-side
Pre-formulation measure levels of financial capability
diagnostic
within the country

100 Number of members of the FEN working group.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 87

 Indicator Stage of
Indicator definitions 2021 2022
category country
Number of key target groups identified
Pre-formulation
that have low financial capabilities
Number of proposals reviewed to
Pre-formulation conduct a national financial capability
survey
Number of policies and programmes
Formulation developed from national financial
capability survey results
Arithmetic score as per national
definitions; percentage of adults who
know definitions of basic financial terms
Financial (i.e. importance of saving in a bank
All stages 59.7%101 61.0%102
knowledge account, has a bank account, borrows
responsibly, plans ahead, knows how
to access and use the best financial
services, etc.)
Percentage of adults who are able to
Financial skills All stages use an account at a bank or financial 24%
institution without help if opened
Percentage of adults coming up with
emergency funding in 30 days, possible
25%
and not difficult at all (disaggregated by
sex, age and geographic location)
Female 25%

Male 25%
15–24 years (youth) 11%

All stages 25+ years (adults) 29%

Poorest 40% 10%

Richest 60% 34%

Rural

Urban
Out of labour force 21%

In labour force 27%

Financial Main source of emergency funding in 30
behaviour days (%)
Family or friends 29%
Loan from a bank, employer or private
1%
lender
All stages
Sale of assets 9%
Savings 40%
Work 8%

Other

Percentage of adults who save for old

age (disaggregated by sex, age and 52%
geographic location)
Female 51%
All stages
Male 54%
15–24 years (youth) 38%

25+ years (adults) 57%

101 OECD/INFE Toolkit 2021. The score measures a set of basic financial skills, behaviours and attitudes.
102 OECD/INFE Toolkit 2022.

2023 ASEAN MONITORING PROGRESS 88

 Indicator Stage of
Indicator definitions 2021 2022
category country
Poorest 40% 41%

Richest 60% 60%

Rural

Urban
Out of labour force 36%

In labour force 61%

Implementation Number of financial education initiatives 222 395
Percentage of stakeholders integrating
Implementation financial education at the programme 100% 100%
Programme level
level Percentage of stakeholders using digital
Implementation 100% 100%
channels for financial education
Percentage of outcomes achieved at
Implementation N.A. N.A.
programme level

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 16.3%
Percentage of MSMEs with account at financial institution 90%
Share of new MSME lending as a percentage of total loans 20.7%
Access to finance

Percentage of secured MSME loans to total MSME outstanding loans103 49.7%

Percentage of MSME borrowers with collateral 50.24%
12-month average of lending rates (%) on new SME loans approved 4.98%
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no] Yes
Percentage of MSMEs that report using an account at a financial institution 90%
Percentage of MSMEs that report using a mobile account 65%
Number of MSME loans/MSME borrowers >1million
Usage

Percentage of MSMEs with outstanding loan or credit 29.2%

Value of MSME loans 355,656
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target group
Public support for

9
(NFIS/NFES)
MSME finance

MSME loan guarantees (value) 22,700

MSME direct government loans/loan funds (MYR billions) 21,200
Number of tax incentives for MSMEs
Number of pre-shipment export guarantee funds for export-based MSMEs

103 Reflects SME loan accounts with newly approved loans backed by collateral during the year, as a share of total SME loan accounts
with newly approved loans from banks and DFIs.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 89

 Indicator
Indicator 2022
category
P2P lending (volume, percentage share of total loans)

Digital finance/alternative
Venture and growth capital investments (volume, percentage of total
financing)
finance
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total financing)
Number of MSME-related products/services being tested in regulatory
1
sandbox
Percentage of MSMEs with digital payment capabilities104 92%
Number of working groups for MSMEs
Coordination

Number of regulatory meetings focused on MSMEs annually

Number of capacity-building sessions for regulators/FSPs on MSME finance

Number of ministries working together to promote financial inclusion of

MSMEs

Number of policy dialogues, roundtables, forums on MSME topics105

Collaboration

Number of partnerships with MSME-focused organizations/business

associations
Number of partnerships with fintechs, MMOs, telcos, ecommerce platforms,
digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days) 3.6%
capabilities
Financial

Percentage of MSMEs that have at least one formal financial service 99%
Number of government programmes to promote financial and digital
financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal financial
service106
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/women’s
business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned MSMEs107 6

104 This is a new indicator and reflects the share of 1,000 surveyed Malaysian SMEs reporting using some form of digital payments
[PayPal (2022) Accelerating SME Digitalisation in Malaysia. (https://tinyurl.com/yc6nmzz5 accessed 18 April 2024)].
105 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
106 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.
107 These loan schemes are from financial institutions only.

2023 ASEAN MONITORING PROGRESS 90

 PHILIPPINES
COUNTRY REPORT

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 91

PROGRESS ON FINANCIAL INCLUSION
The Philippines is on track to meet its target of 70 percent financial inclusion by
2023. The biennial financial inclusion survey of the Bangko Sentral ng Pilipinas
(BSP) recorded account ownership among Filipino adults at 56 percent in 2021, a
significant increase from 29 percent in 2019. From 2023 onwards, the survey will
be conducted annually as the Consumer Finance and Inclusion Survey, which will
feature expanded questions and a larger sample size.108

In the interim, financial inclusion questions have been included in the BSP
Consumer Expectations Survey, from the second quarter (Q2) of 2022. This quar-
terly survey of households showed that the percentage of households with a
transaction account rose to 65 percent in Q4 2022 from 57 percent in Q2 2022.

The BSP complements demand-side surveys with supply-side data collected from
financial service providers. Supply-side information reveals the following insights:

• In 2022, there were 17 bank branches and 30 ATMs per 100,000 adults.
Around 85 percent of cities and municipalities in the Philippines have a
banking presence.109
• The number of deposit accounts in commercial banks increased to 129,503
per 100,000 adults in 2022 from 105,588 in 2021.
• The number of basic deposit accounts (BDAs)110 rose to 15.3 million in 2022,
nearly double the amount of 7.9 million in 2021. A BDA is an affordable and
easy-to-open account designed for the unbanked. It has simplified docu-
mentary requirements for account opening and a minimum opening deposit
capped at PHP 100 (approximately US $1.75) with no maintaining balance and
no dormancy charges.
• In terms of indebtedness, the proportion of households that are behind
schedule in their debt repayments decreased slightly to 8.2 percent in 2022
from 8.5 percent in 2021.
• The BSP received 22,142 complaints through its consumer assistance mech-
anism in 2022, 76.9 percent of which have been resolved.

The shift to digital payments from traditional cash-based transactions has become
more pronounced. The number of registered mobile money accounts or e-money
wallets per 100,000 adults jumped by 48 percent from 221,866 accounts in 2021
to 328,192 accounts in 2022. Meanwhile, the number of mobile money trans-
actions per 100,000 adults more than doubled in 2022. Outflow transactions hit
1.5 million per 100,000 adults from around 600,000 in 2021. Furthermore, the
electronic fund transfer service InstaPay reported a continued upsurge in the
volume of digital payments, which reached 21.5 percent in 2022, attributed partly
to cheaper InstaPay fees ranging from zero to PHP 30 in 2022 (zero to PHP 40 in
2021).

108 The 2023 Consumer Finance and Inclusion Survey report is expected to be published in Q1 2025.
109 Banking presence includes cash agents.
110 List of Banks Offering Basic Deposit Accounts: https://www.bsp.gov.ph/Lists/Directories/Attachments/18/BDA.pdf.

2023 ASEAN MONITORING PROGRESS 92

With this momentum, the country is progressing towards achieving the BSP
Digital Payments Transformation Roadmap target of converting 50 percent of all
retail payments into digital form by the end of 2023.

IMPLEMENTING THE NATIONAL STRATEGY FOR FINANCIAL

INCLUSION (2022–2028)
On 30 June 2023, the interagency Financial Inclusion Steering Committee
(FISC),111 of which the BSP serves as chair and secretariat published the 2022
Annual Report of the National Strategy for Financial Inclusion (NSFI) outlining
the country’s accomplishments in the inaugural year of implementing the NSFI
2022-2028. A key initiative in 2022 under digital finance was the institutional-
ization of the ‘test-and-learn’ approach through the regulatory sandbox frame-
work,112 which espouses responsible innovation in building an inclusive digital
financial system. Additional milestones include the release of the implementing
rules and regulations of Executive Order No. 170, s. 2022113 on the “Adoption of
Digital Payments for Government Disbursements and Collections”, and the issu-
ance of BSP and the Department of the Interior and Local Government’s Joint
Memorandum Circular No. 01, s. 2022 or the “Guidelines to Local Government
Units Enjoining Participation in the Paleng-QR Ph Program.”114

The nation is poised to build on existing interventions to achieve its strategic

objectives in the remaining six years of the NSFI implementation. Interventions
will continue to expand low-cost access points in unserved and unbanked areas
(e.g. the Agent Registry System115) and onboard priority sectors in the financial
system through affordable financial products that promote financial resilience
(e.g. micro-insurance).

Furthermore, BSP’s interventions will target the development of a sustain-

able financing ecosystem for MSMEs, start-ups and the agriculture sector, with
a focus on strengthening the credit infrastructure (e.g. Credit Risk Database,116
Credit Surety Fund117), promoting innovative financing approaches (e.g. moveable
asset financing118) and addressing information gaps (e.g. Standard Business Loan

111 Comprising 21 Philippine government agencies, the FISC provides direction in the implementation of the strategy and serves as
a platform for the whole-of-nation pursuit of the NSFI’s vision to achieve “financial inclusion toward inclusive growth and financial
resilience.”
112 BSP Circular No. 1153, dated 5 September 2022.
113 Signed on 26 October 2022.
114 The Paleng-QR Ph programme aims to promote financial inclusion and cashless transactions in public markets, community shops
and local transportation by capitalizing on BSP’s QR Ph initiative.
115 The Agent Registry System is a regulatory technology solution designed to improve visibility of the reach and depth of penetra-
tion of agents and services points. The agent network is expected to be instrumental in expanding access to low-cost touchpoints to
reach the unbanked segments of society by tapping ubiquitous retail outlets and other establishments as service points for financial
institutions.
116 BSP, in partnership with the Japan International Cooperation Agency, rolled out the Credit Risk Database Project in April 2022,
which aims to improve access to finance for SMEs by lessening banks’ dependence on collateral and promoting risk-based lending.
117 The Credit Surety Fund is a credit enhancement scheme providing a maximum surety cover of 80 percent to loans granted by
banks to MSMEs.
118 Moveable asset financing is a lending methodology that leverages moveable assets such as warehouse receipts, receivables,
inventory flows and supply chain relationships to boost MSME lending.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 93

Application Form119) to enhance the bankability of enterprises and enable financial
institutions to better understand the broader needs of MSMEs.

PROMOTING CONSUMER EMPOWERMENT AND FINANCIAL

CAPABILITIES
Recognizing that a whole-of-nation approach is needed to achieve a financially
capable citizenry, the BSP has forged strategic partnerships with various national
government agencies that work with priority segments such as agriculture, edu-
cation, overseas workers, uniformed personnel, and civil servants, among others.
This collaborative effort aims to ensure the inclusivity and targeted nature of the
country’s financial education programs. As of 2022, 10 of the 12 target govern-
ment partners120 have committed to formally incorporate financial education into
their systems through a memorandum of agreement, of which seven have also
issued separate official directives mandating inclusion in curricula, career courses,
training and orientation sessions for their employees or beneficiaries. Meanwhile,
6 of the 10 partners121 have already achieved at least 50 percent of the commit-
ments outlined in their respective memoranda of agreement.

The BSP continued its delivery of financial learning sessions in 2022 through the
Economic and Financial Learning Program, which targeted diverse audiences
such as students, educators and working groups. A total of 50 learning sessions
were conducted, reaching 26,896 attendees. In parallel, the BSP distributed 47
sets of learning materials throughout the year, disseminated through the online
platform Pisolit, which had 60,105 followers as of December 2022.

Furthermore, as part of the Paleng-QR Ph program, the BSP organized a lecture

for market vendors and market section heads in Baguio City. This lecture served
as a digital financial literacy component aiming to promote the adoption and
usage of QR Ph in digital payments and transactions. Additionally, BSP took the
lead in organizing the Fifth Financial Education Stakeholders Expo in November
2022. The Expo featured seven virtual learning sessions on various topics, attract-
ing 91,000+ views from Filipinos worldwide on the BSP and Pisolit Facebook
accounts.

To safeguard the financial consumer rights of Filipinos, Circular No. 1160 on

Regulations on Financial Consumer Protection to Implement Republic Act No.
11765 was issued in November 2022. Republic Act No. 11765, also known as the

119 The Standard Business Loan Application Form serves as the primary application screening tool for entities offering secured or
unsecured business loans to MSMEs, including start-ups and individuals proposing to do business, for financing business operations
and capital expenditures. It is designed to make the loan application process simple and borrower-friendly and provide much-needed
granular and sex-disaggregated MSME data.
120 Department of Education, Commission on Higher Education, Technical Education and Skills Development, Department of
Agriculture Bureau of Fisheries and Aquatic Resources, Department of Agriculture Agricultural Credit Council, Department of Social
Welfare and Development, Department of Trade and Industry, Overseas Workers and Welfare Administration, Civil Service Commission,
Armed Forces of the Philippines, Bureau of Fire Protection and Philippine National Police.
121 These include Armed Forces of the Philippines, Bureau of Fire Protection, Department of Agriculture Bureau of Fisheries and
Aquatic Resources, Department of Education, Department of Social Welfare and Development, Overseas Workers and Welfare
Administration.

2023 ASEAN MONITORING PROGRESS 94

Financial Products and Services Consumer Protection Act, hopes to instil market
discipline and protect the financial consumer rights of Filipinos.

ENHANCING THE MSME FINANCE ECOSYSTEM

The MSME sector’s pivotal role as a driver of broad-based inclusive economic
growth is evident in its significant contribution to the livelihoods and income gen-
eration of Filipinos. MSMEs comprise a substantial portion of the country’s busi-
ness landscape, accounting for a 99.6 percent share of all registered enterprises in
2022.122 Majority (90.5 percent) of MSME establishments, were micro-enterprises;
8.7 percent were small enterprises; and 0.4 percent were medium sized. These
enterprises are categorized according to asset size (excluding land) defined under
Republic Act No. 9501, or the Magna Carta for MSMEs.123,124

Collectively, these MSMEs accounted for 65.1 percent of the country’s total
employment in 2022, generating 5.6 million jobs during this period and serving as
an effective pathway for greater financial inclusion.

In terms of loan portfolio, latest available data showed that the value of MSME
loans decreased by 15 percent to PHP 492.6 billion in 2022 from PHP 578.0 billion
in 2018.125 The latest figure represents 2.2 percent of the country’s gross domestic
product (GDP) in 2022. Similarly, the share of MSME loans to total banking system
loans fell to 4.3 percent from 6.2 percent during the same period. In terms of
usage, the number of MSME borrowers totalled 1.5 million in 2022.

A survey commissioned by the Asian Development Bank (ADB) in 2021126 revealed

that 52.3 percent of MSMEs in the Philippines were using an account at a finan-
cial institution in 2021, while 30 percent of the surveyed MSMEs used merchant
and business chequing accounts. While sex-disaggregated MSME finance data
are limited, the survey showed that most women MSMEs (84.8 percent) had an
outstanding loan or line of credit in financial institutions. More than half (52.2
percent) of surveyed women MSMEs indicated that they have access to at least
one formal financial service/product. However, the survey also revealed that only
50.8 percent of women MSMEs used any form of banking services and digital
tools for their business, compared to 73.3 percent of men MSMEs.

122 DTI Philippines (2022) 2022 Philippine MSME Statistics. Makati City, Philippines: Department of Trade and Industry (https://www.
dti.gov.ph/resources/msme-statistics/).
123 Republic Act No. 9501: An Act to promote entrepreneurship by strengthening development and assistance programs to micro,
small and medium scale enterprises, amending for the purpose Republic Act No. 6977, as amended, otherwise known as the “Magna
Carta for Small Enterprises” and for other purposes. Metro Manila, Philippines: Congress of the Philippines (https://www.officialgazette.
gov.ph/downloads/2008/05may/20080523-RA-9501-GMA.pdf). R.A. 9501 defines MSMES as - micro: not more than PHP 3,000,000 ;
Small: PHP 3,000,001 –15,000,000 ; Medium: PHP 15,000,001–100,000,000.
124 The Philippine Statistics Authority categorizes the MSME sector according to number of employees. An enterprise is classified as a
micro-enterprise if it has fewer than 10 employees, small with 10–99 employees, and medium sized with 100–199 employees.
125 BSP Financial Inclusion Dashboard: https://www.bsp.gov.ph/Pages/MediaAndResearch/FinancialInclusionDashboard.aspx.
126 ADB (2021) Measuring Progress on Women’s Financial Inclusion and Entrepreneurship in the Philippines: Results from a Micro,
Small, and Medium-Sized Enterprise Survey. Metro Manila, Philippines: Asian Development Bank (https://www.adb.org/publications/
women-financial-inclusion-entrepreneurship-philippines).

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 95

Given the strategic importance of MSMEs in inclusive growth, four national poli-
cies127 have prioritized this market segment as a key target group in various pro-
grammes and initiatives. This is also well complemented with the support of
partnerships with female-focused organizations such as the Women’s Business
Council of the Philippines and capacity-building programmes born out of a collab-
oration between the International Labour Organization (ILO) and the Department
of Trade and Industry’s Negosyo Centers.128 The government has likewise intensi-
fied its efforts to assist the sector by providing tax incentives to qualified MSMEs.129
Furthermore, to facilitate the flow of credit to the MSME sector, guarantee pro-
grammes are being leveraged as credit enhancement schemes. While the base-
line percentage share of MSME loans with loan guarantee to total MSME loans was
recorded at merely 1 percent in 2021,130 the latest available data showed that the
outstanding guarantee portfolio had reached PHP 1.29 billion as of June 2023.131

Subsequently, fintech plays an increasingly important role in MSME financing.

Recent gains in fintech innovations have unlocked new sources of funding for
MSMEs to help them thrive amid the challenges in starting and expanding their
businesses. Among the various innovations that are rapidly changing today’s finan-
cial services delivery, peer-to-peer (P2P) lending has gained traction among small
businesses by providing non-collateralized loans at competitive interest rates. In
lieu of collateral, P2P lenders use innovative credit scoring models and big data
analytics to assess the creditworthiness of MSME borrowers.132 With over a third
(34.7 percent) of MSMEs having digital payment capabilities in 2021,133 the volume
of P2P lending in the country totalled PHP 2.36 million in 2022.134 Meanwhile, only
28.5 percent of women-owned MSMEs have digital payment capabilities, com-
pared to 44.0 percent of their male counterparts.

Similarly, venture capital is seen to deliver many benefits to MSMEs. As a distinct

component of private equity, venture capital funds provide new opportunities
for innovative, high-growth-potential start-ups facing challenges securing credit
from traditional sources.135 Notably, in 2021, there were 46 venture capital deals
in the country with a total investment value of US $631 million.136

127 NSFI (2022–2028), Philippine Development Plan (2023–2028), MSME Development Plan (2017–2022) and Philippine Export
Development Plan (2023–2028).
128 ILO and DTI conducted a series of capacity-building (financial and non-financial services) webinars targeting women entrepre-
neurs (ILO-DTI Online Women Entrepreneur [WE] Hour).
129 Tax incentives for MSMEs are provided under the following legislative measures: (i) National Income Revenue Code of 1997; (ii)
Corporate Recovery and Tax Incentives for Enterprises; (iii) Barangay Micro Business Enterprises Act of 2022; and (iv) Bayanihan to
Heal as One Act.
130 NSFI Annual Report.
131 Philippine Guarantee Corporation.
132 OECD (2020) Alternative Financing for ASEAN SMEs. Paris, France: Organisation for Economic Co-operation and Development
(https://asean.org/wp-content/uploads/2012/05/Alternative-Financing-Instruments-for-ASEAN-SMEs.pdf).
133 MSMEs that reported using DFS (e.g. mobile account, e-wallet, digital payment services) either for personal or business use (ADB
MSME Survey).
134 BSP (2022) 2020 Status of Digital Payments. Manila, Philippines: Bangko Sentral ng Pilipinas (https://www.bsp.gov.ph/
PaymentAndSettlement/2022_Report_on_E-payments_Measurement.pdf).
135 OECD (2015) New Approaches to SME and Entrepreneurship Financing: Broadening the range of instruments. Paris, France:
Organisation for Economic Co-operation and Development (https://www.oecd.org/cfe/smes/New-Approaches-SME-full-report.pdf).
136 Latest available data are as of 2021. Statistica (undated) Number of venture capital deals in the Philippines from 2017 to 2021. New
York, NY: Statistica (https://www.statista.com/statistics/1343899/philippines-number-of-venture-capital-deals/ accessed 18 April
2024).

2023 ASEAN MONITORING PROGRESS 96

KEY CHALLENGES AND POTENTIAL SOLUTIONS
Notwithstanding the commitment of stakeholders to implement the strategic ini-
tiatives under the NSFI (2022–2028), challenges persist in achieving the strategy’s
desired outcomes and targets.

Information technology connectivity, digital financial literacy and consumer pro-

tection have become more important with increasing digitalization. The BSP rec-
ognizes that complementary initiatives in these policy areas are needed to protect
and compound the gains from promoting trust and confidence in the usage of
digital finance. Hence, the BSP supports legislative measures and national efforts
to improve digital connectivity in the country. The BSP also supports the digital
transformation of rural financial institutions and other last-mile providers, includ-
ing microfinance institutions (MFIs).

In the same vein, while the Philippines has made significant strides in support-
ing the development of the MSME sector, much remains to be done in terms
of strengthening the financial infrastructure (e.g. credit guarantees, crop insur-
ance system, credit information registry, secured transactions framework) that
will reduce the risks and associated costs of serving MSMEs, including agri-busi-
nesses. The NSFI aims to strengthen the Credit Surety Fund (CSF) as a local gov-
ernment unit (LGU)-based credit enhancement scheme for MSMEs; expand agri-
cultural insurance through private sector participation; develop, enhance and
promote the usage of credit risk information support (e.g. a credit risk database)
for all financial institutions; and ensure effective implementation of the Personal
Property Security Act and support the passage of laws promoting credible ware-
house receipt systems. These are critical credit infrastructures that could facili-
tate promotion of financing approaches to boost MSME lending. For instance, the
establishment of a well-functioning online collateral registry, such as the Personal
Property Security Registry, has the potential to enhance MSME access to afford-
able credit by facilitating the acceptance of moveable assets as collateral.

Latest available data suggest that financial institutions have not been keen on
MSME lending. Most banks viewed MSMEs as unbankable due to limited informa-
tion on their market operations and repayment capacities. MSMEs, on the other
hand, seem intimidated by the voluminous and complex financing requirements
of banks which, in turn, hinder them in accessing formal credit. Information asym-
metry and data gaps pose a barrier to the development of targeted interventions
for MSME development.

To address these challenges, the BSP will continue to collaborate with local
stakeholders and international partners and explore the possibility of conduct-
ing another round of a national demand-side survey like the study commissioned
by the ADB in 2021 to generate new insights and more granular and sex-disag-
gregated data on MSME access to finance. This initiative is envisioned to bolster

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 97

evidence-based policymaking, offering profound market insights to empower
financial service providers in strategically catering to the sector.

WAY FORWARD
The Philippines’ financial inclusion agenda will continue to be guided by the NSFI
in the next six years, with the goal of intensifying the execution of ongoing and
forthcoming undertakings. These efforts, marked by collaborative multi-stake-
holder engagement, are designed to scale up for replication and create a mean-
ingful and sustainable impact on the unserved and underserved.

Indicator
Indicator definitions 2018 2019 2020 2021 2022
category
ACCESS INDICATORS
1. Number of banking
offices (domestic) per 16.9 17.2 17.1 17.0 16.8
100,000 adults137
Points of 2. Number of ATMs per
29.1 29.1 30.0 29.8 29.8
service 100,000 adults
3. Number of POS
terminals per 100,000 142.1 107.0
adults
Number of access
points (cash-in and
Access points 102.3 124.0 290.5 288.1 282.9
cash-out) per 100,000
adults

1. Percentage of adults 42.0%

53.0% 76.7%
with internet access (2017)

Female 54.1% 78.7%

Male 52.5% 74.7%

2. Mobile phone
penetration
Connectivity Mobile phone
69.0% 92.2%
ownership
Female 71.5% 93.7%

Male 66.1% 90.8%

Smartphone ownership 51.0% 81.5%
Female 53.0% 83.6%
Male 50.0% 79.4%
USAGE INDICATORS
1. Percentage of adults
11.5%
who report having an 12.2% 23.4%
(2017)
account at a bank
Adults with an
11.4%
account Female 10.7% 20.4%
(2017)
11.6%
Male 13.8% 26.3%
(2017)

137 Adults are defined as those aged 15 years and above.

2023 ASEAN MONITORING PROGRESS 98

 Indicator
Indicator definitions 2018 2019 2020 2021 2022
category
2. Percentage of adults
who report having an
account with a formal 22.6%
28.6% 55.6%
financial institution (2017)
or a mobile money
provider138
29.1%
Female 32.9% 57.4%
(2017)
15.4%
Male 24.2% 53.8%
(2017)
Number of deposit
Savings accounts with banks 86,046.2 98,973.6 105,587.8 112,860.6 129,503.1
per 100,000 adults
1. Number of cards per 100,000 adults, disaggregated by type of card:
Debit cards139 40,743.3 47,000.4 45,014.3 64,066.9 74,021.6
Credit cards 12,754.9 14,248.2 13,490.1 13,298.7 14,500.4
Prepaid cards linked to
23,808.4 26,376.6 38,681.9 56,922.6 64,838
e-money140
2. Number of registered
mobile money
accounts (e-money 73,470.4 113,911.3 141,494.4 221,866.2 328,191.8
wallets) per 100,000
adults
Payments 3. Number of mobile money transactions per 100,000 adults, disaggregated by
type of transaction:
Inflow 162,667.3 239,607.8 660,664.6 209,474.3 541,841

Outflow 555,017.9 603,375.9 1,591,637.5 603,560.7 1,496,866.3

Percentage of adults
making and receiving 88%
89.4% 91.2%
payments in various (2017)
forms
Volume of digital
payments via InstaPay
1,274.3% 582.9% 93.9% 21.5%
(percentage year-on-
year growth)141
Total number of persons with insurance coverage, disaggregated by life and
non-life insurance and insurance provider:
Insurers: Insurers: Insurers:
45,194,096 43,513,663 47,426,349

Life insurance Micro- Micro- Micro-

companies insurers: insurers: insurers:
14,018,366 14,697,338 15,427,792

Insurers: Insurers: Insurers:

19,326,604 30,261,108 26,536,250
Insurance Non-life insurance Micro- Micro- Micro-
companies insurers: insurers: insurers:
8,774,453 6,691,351 8,997,426

Percentage of adults 18.0%

23.0% 17.5%
with insurance142 (2017)
20.0%
Female 27.0% 20.3%
(2017)
15.0%
Male 19.1% 14.6%
(2017)

138 The BSP also refers to the World Bank Findex for data on these indicators.
139 Data provided refer to ATM debit cards
140 Used proxy data since a major EMI player was unable to submit a report on e-money accounts for years 2018-2019.
141 InstaPay is an electronic fund transfer service launched in 2018.
142 Excluding PhilHealth

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 99

 Indicator
Indicator definitions 2018 2019 2020 2021 2022
category
Appropriate- Number of basic 658,868 4,019,559 6,594,673 7,850,390 15,341,202
ness deposit accounts
QUALITY INDICATORS
MSME loans with
guarantee as a
Value 0.04% 1%
percentage of MSME
loans
Range of Instapay fees 0.00– 0.00– 0.00– 0.00– 0.00–
Affordability
per transaction (PHP)143 100.00 150.00 40.00 40.00 30.00
Percentage of adults
who obtained a perfect
2%
score in a financial
literacy quiz144
Financial
literacy Percentage of
adults who correctly
answered inflation and 8% 4.3%
interest rate questions
(%, age 15+)
Number of
10,644 9,250 23,275 19,181 22,142
complaints145

Consumer Female 1,347 4,560 12,146

protection Male 1,163 4,480 9,961
Percentage of resolved
76.9%146
complaints
Percentage of
households with loan
Indebtedness 16.2% 13.9% 10.9% 8.5% 8.2%
repayments behind
schedule
Percentage of cities
and municipalities
with access to all
Choice types of financial 84.3% 84.5% 84.5% 84.5%
services: savings, credit,
insurance, payments,
and remittances

Indicator category Indicator definitions 2019 2020 2021 2022

Proportion of the population
living below the national 18.1%
Macroeconomic poverty line
context
Annual growth rate of real
4.6% -11.1% 4.9% 6.7%
GDP per capita

Completion rate (primary

101.0% 98.1% 91.1% 88.0%
education)

Education Female 101.6% 99.6% 92.8% 89.1%

Male 100.5% 96.7% 89.5% 86.9%

Total value of MSME loans

588.8 488.0 470.1 492.6
(Asset- (PHP billions)
building and)
entrepreneurship Percentage of MSME loans in
6.1% 4.9% 4.57% 4.3%
total banking system loans

143 PHP 40.00 is approx. US$0.75 [BSP (29 February 2024) Summary of Corresponding Transfer Fees through Digital Channels (https://
www.bsp.gov.ph/PaymentAndSettlement/Fees.pdf)].
144 Includes questions on investment diversification and risk
145 “Sex at Birth” field is an optional field in the conversation flows of the BSP Online Buddy (BOB) chatbot and in the Complaints,
Inquiries and Requests (CIR) Form. As such, there are blank fields in the data set which indicate that no “Sex at Birth” was declared by
the complainant when they filed the complaint via the BSP CAM, this led to a notable disparity when comparing the sex disaggregated
data to the overall annual complaint volumes. The process of gathering data pertaining to sex disaggregation was put into effect only
in July 2020.
146 Year 2022 complaints resolved as of December 2023.

2023 ASEAN MONITORING PROGRESS 100

 Indicator category Indicator definitions 2019 2020 2021 2022
Number of beneficiaries
receiving social protection
Redistribution 14.0147
payments through digital
channels (millions)

Unemployment rate 5.1% 10.3% 7.8% 5.4%

Female 5.0% 9.9% 8.3% 5.8%

Unemployment
and income Male 5.2% 10.7% 7.5% 5.1%
inequality
Proportion of people living
below 50% of median 16.7%
income
Remittance costs as a
proportion of the amount 4.1% 3.8% 4.1% 4.4%
remitted148
Percentage of farmers using
at least one formal financial 34.3% 27.2%
service
Percentage of women using
Segmental at least one formal financial 32.9% 57.5%
service
Percentage of youth using
at least one formal financial 13.1% 40.1%
service
Global Percentage of people living 2.7%
Development below international poverty 3.0%
Goals line (2018)

National goals Annual growth rate of GDP149 6.1% –9.5% 5.7% 7.6%

FINANCIAL CAPABILITY INDICATORS

Indicator
Stage of country Indicator definitions 2021 2022
category
Number of stakeholders/key priority target
Pre-formulation 12150
groups identified
Formation of a financial capability working
Formulation 8151 10
group
Number of quarterly meetings held by the
Formulation 66152 110
Governance/ financial capability working group
coordination
Percentage of stakeholders at regulatory
Formulation level that develop an action or 67% 83%
implementation plan for financial education
Number of stakeholders at regulatory level
Implementation that execute the action or implementation 40 60
plan for financial education

147 Cash assistance given when community quarantine periods were imposed (i.e. the Social Amelioration Programme).
148 The indicator uses the cost of sending US$200 from the USA to the Philippines as a proxy for the average cost of remittances.
149 At constant prices.
150 Government agencies.
151 Government partners with an institutionalized financial education partnership.
152 Partnership meetings.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 101

 Indicator
Stage of country Indicator definitions 2021 2022
category
Number of draft policies to promote
Pre-formulation 2153
financial capability
Number of policies developed to promote
financial capability (e.g. NFIS, consumer
Formulation protection frameworks/policies, policies 5154 7155
promoting inclusion of specific marginalized
Enabling segments)
environment
Number of meetings with the Ministry
of Education to promote the integration
Formulation 3 2
of financial education into the national
curriculum
Number of schools that integrate financial
Implementation TBD156 TBD
education into the curriculum
Number of key terms defined at the national
Pre-formulation level (e.g. financial capability, financial 4 4
education, financial literacy)
Establishment of policy priority to develop
Policy
Formulation an NFES or prioritize financial education in 1
alignment
an NFIS
Number of quarterly meetings157 held by the
Implementation financial capability working group to discuss 2 2
NFES target/outcomes
Number of virtual workshops to learn from
Pre-formulation/
countries at a more advanced stage of N.A. N.A.
formulation
developing or implementing an NFES
Regional
collaboration Number of virtual workshops to share
lessons learned with countries at a
Implementation 1 1
less advanced stage of developing or
implementing an NFES
Number of existing initiatives identified that
Pre-formulation 17158 17
promote financial capability
Number of government programmes
Supply-side Pre-formulation identified to reach each target group (touch 19 19
mapping points)
Number of stakeholders identified during
Formulation the supply-side mapping that form part of 39
the financial capability working group
Number of secondary sources that measure
Pre-formulation levels of financial capability within the 2 2
country
Number of key target groups identified that
Pre-formulation 5 5
Demand-side have low financial capabilities
diagnostic Number of proposals reviewed to conduct a
Pre-formulation 2 2
national financial capability survey
Number of policies and programmes
Formulation developed from national financial capability 12 14
survey results
Arithmetic score as per national definitions;
percentage of adults who know definitions
of basic financial terms (i.e. importance
Financial
All stages of saving in a bank account, has a bank 69%
knowledge
account, borrows responsibly, plans ahead,
knows how to access and use the best
financial services, etc.)159

153 Two out of 10 government partners.

154 Five out of 10 government partners.
155 Seven out of 10 government partners.
156 Nationwide adoption of financial education into the K–12 curriculum per Department of Education policy dated 3 June 2021.
157 The Financial Inclusion Steering Committee meetings are semestral and not quarterly.
158 Among government agencies. There are various financial education initiatives in the private sector.
159 Respondents were asked six questions to measure their knowledge of financial concepts such as division, risk–return trade-off,
diversification, inflation, and simple and compounded interest rates. Two thirds (69 percent) of respondents were able to correctly
answer half of the six questions. Only 2 percent could answer all six questions correctly.

2023 ASEAN MONITORING PROGRESS 102

 Indicator
Stage of country Indicator definitions 2021 2022
category

Percentage of adults who achieved a perfect

2.0%
score in a financial literacy quiz (age 15+)160

Percentage of adults who correctly

answered inflation and interest rate 4.3%
questions (age 15+)
Percentage of adults who are able to use
Financial
All stages an account at a bank or financial institution 41.5%
skills
without help if opened
Percentage of adults coming up with
emergency funding in 30 days, possible and
14%
not difficult at all (disaggregated by sex, age
and geographic location)
Female 9%

Male 19%
15–24 years (youth) 8%

All stages 25+ years (adults) 16%

Poorest 40% 4%

Richest 60% 20%

Rural

Urban
Out of labour force 9%

In labour force 16%

Main source of emergency funding (%)
Family or friends 41%
Loan from a bank, employer or private
9%
Financial lender
behaviour All stages Sale of assets 2%
Savings 19%
Work 21%

Other 6%

Percentage of adults who save for old age

(disaggregated by sex, age and geographic 35%
location)
Female 31%

Male 39%
15–24 years (youth) 32%

25+ years (adults) 35%

All stages
Poorest 40% 19%

Richest 60% 45%

Rural

Urban
Out of labour force 23%

In labour force 40%

160 Includes questions on investment diversification and risk.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 103

 Indicator
Stage of country Indicator definitions 2021 2022
category
Percentage of stakeholders integrating
Implementation 50%
financial education at the programme level
Programme Percentage of stakeholders using digital
Implementation
level channels for financial education
Percentage of outcomes achieved at
Implementation
programme level

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 4.3%
Percentage of MSMEs with account at financial institution
Share of new MSME lending granted by UB/KBs as a percentage
0.49%
of total loans
Access to finance

Percentage of secured MSME loans to total MSME outstanding

loans161
Percentage of MSME borrowers with collateral
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no] Yes
Percentage of MSMEs that report using an account at a
52.3% (2021)
financial institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME borrowers 1,491,227

Percentage of MSMEs with outstanding loan or credit
Value of MSME loans (PHP billions) 492.6
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key
4
target group (NFIS/NFES)
Public support for MSME

MSME loan guarantee as a percentage of MSME loans/

percentage of MSME loans with loan guarantee to total MSME 1% (2021)
loans
finance

MSME loan guarantees162 (PHP billions) 1.29

MSME direct government loans/loan funds (PHP billions)
Number of tax incentives for MSMEs 7
Number of pre-shipment export guarantee funds for export-
based MSMEs

161 Reflects instead SME loan accounts with newly approved loans backed by collateral during the year, as a share of total SME loan
accounts with newly approved loans from banks and DFIs. Instead of percentage of MSME borrowers with collateral.
162 Pertains to outstanding guarantee portfolio.

2023 ASEAN MONITORING PROGRESS 104

 Indicator
Indicator 2022
category
P2P lending (PHP millions) 2.36

Digital finance/alternative
Venture and growth capital investments (volume, number of
46 (2021)
deals)
finance Leasing and hire purchases (volume, percentage of total
financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in
regulatory sandbox
Percentage of MSMEs with digital payment capabilities163 [new] 34.7% (2021)
Number of working groups for MSMEs 3
Number of regulatory meetings focused on MSMEs annually 3
Coordination

Number of capacity-building sessions for regulators/FSPs on

MSME finance

Number of ministries working together to promote financial

21
inclusion of MSMEs

Number of policy dialogues, roundtables, forums on MSME

4
Collaboration

topics164
Number of partnerships with MSME-focused organizations/
4
business associations
Number of partnerships with fintechs, MMOs, telcos,
4165
e-commerce platforms, digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days) 9.3%
capabilities
Financial

Percentage of MSMEs that have at least one formal financial

60.1% (2021)
service
Number of government programmes to promote financial and
38
digital financial capabilities of MSMEs
Percentage of women MSMEs with outstanding loan or line of
84.8% (2021)
credit in financial institution
Percentage of women MSMEs that have at least one formal
52.2% (2021)
financial service166
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/
2
women’s business associations
Percentage of nonperforming loans from women-owned
MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs

163 MSMEs who use digital payments using personal or merchant/business accounts
164 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
165 These are limited to press releases published on the BSP website in 2021 and 2022.
166 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 105

 THAILAND
COUNTRY REPORT

2023 ASEAN MONITORING PROGRESS 106

KEY ACHIEVEMENTS IN FINANCIAL INCLUSION
As a result of considerable collaborative efforts from all relevant authorities to
promote financial access in Thailand, continuous advancements in financial
inclusion have been made. These have contributed to achieving a high overall
level of financial access of 97.3 percent, increasing from 95.6 percent in 2020. In
terms of gender-based financial inclusion, there were no significant gender dis-
parities. Both men and women had levels of access at 97.3 percent. Moreover,
there was notable progress particularly in the usage of digital payments services,
as the number of mobile banking transactions per 100,000 adults doubled to
more than 40 million in 2022, while the number of registered mobile banking
accounts per 100,000 adults experienced an average growth of 20 percent per
year over the past five years.

These achievements signify notable progress in enhancing financial inclusion and

ensuring that most of the population can access at least one formal financial
service, with minimal gender-related disparities. There are areas for improvement,
specifically in making credit, insurance, and investment products such as mutual
funds more accessible to the broad population.

PROGRESS IN DIGITALIZATION AND DIGITAL FINANCIAL

INCLUSION
As noted previously, there was notable growth in the usage of digital payments
and mobile banking transactions (which both doubled) and in the number of
registered mobile accounts. These indicators suggest that Thailand is moving
towards inclusive digital finance. This increase is due to a shift in business models
of banks and government policy supported by digital infrastructure to promote
the usage of digital financial transactions such as G-wallet (Paotang).

The significant growth and development of digital finance presents a promising

opportunity to bolster financial inclusion. The Bank of Thailand (BOT) has incor-
porated digital strategies in the new financial landscape to encourage the finan-
cial sector to build on technology and data to bridge financial inclusion gaps. This
action is guided by three key strategic directions (three ‘opens’), with significant
progress achieved.

OPEN COMPETITION
BOT has introduced a virtual banking licence to promote competition and inno-
vation in the market. It issued two consultation papers in 2023 to gather public
feedback on the licensing framework proposal. Currently, BOT is working with the
Ministry of Finance to finalize the application forms and regulations on the virtual
banking licence. Acceptance of applications for the licence is planned to com-
mence between March and September 2024, and BOT will undertake a detailed
review of the proposals.

2023 ASEAN MONITORING PROGRESS 107

Based on the recommendation of the BOT, the Finance Minister expected to
announce successful applicants by 2025 and the virtual banks are expected to
begin business operations within 1 year of the announcement.

BOT is conducting a review of regulations that might be restricting financial insti-

tutions’ ability to adapt, compete, innovate, or better serve their customers. The
regulatory review will ensure that regulations remain relevant and conducive to
the changing financial landscape and do not jeopardize financial stability under
normal or crisis conditions.

OPEN INFRASTRUCTURE
BOT supports initiatives such as PromptBiz, which is a centralized infrastructure
to facilitate digital trade transactions and payments for businesses by enabling
data sharing and accessibility. The digital footprint will present an opportunity for
businesses, especially MSMEs, to have better access to finance. This initiative was
launched in August 2023 and has begun to gain traction with several banks and
financial institutions.

OPEN DATA
BOT published its Consultation Paper on Open Banking Data for Consumer
Empowerment in November 2023. This aims to build a mechanism that allows
consumers to exercise their rights to conveniently and securely transfer their data
stored at one provider to another so that consumers can apply for and receive
better services from any provider. The mechanism will allow financial service pro-
viders to access and use data and key digital infrastructure with standardized pro-
cesses and connections, which will reduce redundancy and costs and, in turn,
enhance financial services to better serve consumer needs. BOT will initiate these
mechanisms among financial service providers under its supervision and prepare
to connect with the ecosystem at the national level.

PROMOTING AND ACHIEVING FINANCIAL CAPABILITY

Working with the National Statistical Office, BOT conducted a survey of the finan-
cial literacy levels of Thais in accordance with the framework of the Organisation
for Economic Co-operation and Development (OECD), consisting of three com-
ponents: financial behaviour, financial knowledge, and financial attitudes. The
results of the 2022 survey indicate a continuous improvement in financial literacy
levels, with an average score of 71.4 percent (up from 67.4 percent in 2020), which
is higher than the average OECD score of 60.5 percent.

The 2022 survey incorporated some aspects of digital financial literacy and aware-
ness of financial risks. In terms of digital financial skills, most Thais (73.3 percent)
have knowledge of digital finance, but only 34.8 percent and 21.0 percent scored
well in digital financial attitudes and behaviours, respectively. Considering aware-
ness of financial risks, the survey indicated that approximately 8.3 percent of Thais

2023 ASEAN MONITORING PROGRESS 108

have experienced some form of financial risk. This was mainly the result of being
deceived to invest in fraudulent financial products, but people also gave financial
information to scammers through emails, phones, or mobile applications. BOT
will continue to monitor and review the outcomes of the survey.

The Ministry of Finance of Thailand actively promotes initiatives that enhance

consumers’ digital and financial literacy according to the Financial Literacy Action
Plan (2022–2027). The plan to uplift digital financial knowledge and skills is formu-
lated by categorizing the population into nine groups by generation, occupation,
income, and education. The target groups are: (i) children and youth; (ii) under-
graduate students; (iii) workers (employees, freelancers, and entrepreneurs); (iv)
government officers; (v) grass roots (low-income people and local financial units);
(vi) elderly people and retirees; (vii) the general public; (viii) financial literacy intel-
lectuals; and (ix) financially vulnerable groups. Among these, four target groups
are prioritized for the need to better understand their financial health – i.e. those
with the highest financial vulnerability (over-indebted and low-income popula-
tions), the grass roots, children, and youth, as well as elderly people/retirees.

Recently, the Ministry of Finance implemented a package of measures following

the Financial Literacy Action Plan:

• Mandating a national-level financial awareness campaign for the public – i.e.

organizing the FIs and Fin Forum 2023 seminar.
• Developing the Financial Literacy Competency Framework for each target
group.
• Promoting financial literacy through a foundational education curriculum,
vocational education, non-formal education, and self-learning.
• Integrating participation in training and successful completion of debt man-
agement tests as a condition of student loan approval from the Student Loan
Fund (SLF).
• Targeting newly recruited government employees for financial literacy
training.
• Advocating the development of a financial knowledge data system to inform
targeted policies – i.e. Thai Household Money Map: Navigating the Path to
Financial Wisdom.

In 2022, BOT promoted financial knowledge information including fraud alerts

to the public, reaching over 33.5 million online views (a 59 percent increase from
2021). The messages were delivered through online channels such as Facebook,
the BOT website, YouTube and TikTok, and included the channels of strategic part-
ners with over 20.2 million followers (21 percent increase from 2021). BOT also
used local media, connecting with local staff and volunteers to deliver content
suitable for each context. BOT fostered financial knowledge learning through
its learning centre, which included ‘talk and share’ activities focusing on money
management and updates on key financial innovation trends.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 109

BOT promoted debt relief by giving advice to support sustainable debt resolu-
tion. It developed e-learning courses on debt management in collaboration with
the Stock Exchange of Thailand and Sukhumvit Asset Management Co., Ltd. The
debt e-learning courses focused on the whole debt journey (getting into debt,
being in debt and dealing with debt-related problems). In addition, BOT devel-
oped a course on debt and financial dispute mediation in collaboration with the
Department of Protection of Rights and Freedoms, the Ministry of Justice and
the Institute of Education and Development of Peaceful Conflict Management to
increase the skills of mediators to help debtors find a resolution.

‘Fin Dee We Can Do!’, a financial literacy competition project that began in
2018, aims to help vocational students deal with financial issues in the education
context. In 2022, the programme engaged more than 117 vocational colleges
(40 percent of all vocational colleges nationwide). In addition, BOT organized a
role model track for the award-winning colleges to expand their financial liter-
acy projects to a wider target group, including schools, colleges, and surrounding
communities. This will strengthen the network of financial literacy promotion at
the vocational education level. Currently, there are more than 50 model colleges.

‘Fin Dee Happy Place’ is a financial literacy training programme that targets the
working-age population. It aims to create financial mentors within participat-
ing organizations to help change the financial behaviour of employees. In 2022,
the project engaged 109 new organizations (public and private) and successfully
trained 682 financial trainers who in turn trained their colleagues for a total of
89,281 employees. BOT also developed a toolkit comprising video clips of per-
sonal finance management (over 30 sections), content and infographics, and an
online financial health check programme to be used as a standardized scale-up
platform. In addition, BOT bestowed awards to 71 organizations to encourage
project continuity.

BOT also launched sign language video clips focusing on three common finan-
cial frauds: phishing, Ponzi schemes and mule accounts. These were published
on the BOT website and shared with the Thai Sign Interpreter Association. This
marked the beginning of collaboration among relevant organizations to promote
financial literacy to people with disabilities.

OVERVIEW AND ANALYSIS OF MSME FINANCE

The Thai government and relevant public agencies recognize the significance of
access to affordable and reliable financial products and services for MSMEs and
have worked and collaborated closely to achieve this goal. The government pro-
motes access to finance for MSMEs through its credit guarantee scheme, the Thai
Credit Guarantee Corporation, established in 1991. The 2017 amendment added
guarantees for (1) non-banks, which commercial banks or SFIs holding the equity
more than 51%, and (2) and factoring and hire-purchase leasing used for business

2023 ASEAN MONITORING PROGRESS 110

purposes. It also promotes MSME finance through the Office of SME Promotion
(OSMEP), which plans and coordinates SME promotion policies, and the National
Board of SME Promotion, which stipulates SME promotion policies and plans and
supervises OSMEP’s operations. OSMEP is responsible for implementing the Fifth
SME Promotion Plan 2023-2027, which aims to promote the growth of MSMEs,
create market opportunities and develop ecosystems to reduce obstacles for
MSMEs in doing business, including through improved access to finance. The
Securities and Exchange Commission’s three-year strategic plans 2022-2024 also
promote SME access to finance through capital markets.

In terms of innovation, eight financial services (with five technologies) promoting

MSME finance are currently being tested in the regulatory sandbox in Thailand.
These include international money transfer (blockchain), letters of guarantee
private nodes (blockchain BCI), biometrics (biometrics), national digital ID (bio-
metrics), QR payment via PromptPay (standardized QR code payment), payment
by credit/debit card (standardized QR code payments) and a P2P lending platform
(P2P lending).

Several indicators shed light on the status of MSME finance in Thailand. As of

2022, around 41 percent of Thai MSMEs had an active loan or credit with formal
financial institutions. MSME loans constitute 21.9 percent of the overall loan port-
folio in the banking system, which is considered a significant amount. The pro-
portion of new lending to MSMEs amounts to 8.7 percent of the entire loan port-
folio. These data indicate ongoing financial support for MSMEs and reflect a better
level of engagement of MSMEs with the formal financial sector. However, the
International Finance Corporation estimates that there remains a financing gap
of $40 billion, equivalent to 10.3 percent of the country’s GDP,167 which highlights
the unmet financial needs of the MSME sector.

These indicators provide a comprehensive overview of the status of MSME finance

in Thailand, indicating both progress and the need for further measures to enhance
credit accessibility for MSMEs, particularly those in the ‘under/unserved’ category
facing challenges in securing traditional forms of financing. These smaller busi-
nesses typically lack substantial collateral, require lower loan amounts and may
not be able to provide a comprehensive proof of income or debt serviceability.

KEY CHALLENGES AND POTENTIAL SOLUTIONS

One of the main challenges is to increase credit accessibility within the formal
financial system at reasonable cost, while promoting responsible lending and
borrowing. This is to ensure that households and MSMEs that are creditworthy
can gain appropriate access to financial services (conventional and digital) and do
not fall into debt traps.

167 Calculation based on data as of 2018/2019.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 111

The main barriers to the improvement of credit accessibility for households and
MSMEs include: (i) information asymmetry between borrowers and lenders, which
impedes service providers’ ability to verify and assess clients’ debt serviceability;
(ii) lack or insufficiency of collateral; and (iii) high cost of service due to small
ticket sizes. In responding to these challenges, BOT will continue to foster finan-
cial access through its three ‘opens’ strategy.

While digital initiatives have considerable potential to broaden access to financial

services, a digital divide could arise between those with and without the skills and
knowledge to use the internet and digital technologies. To facilitate the transi-
tion towards digitalization, BOT promotes digital financial literacy in line with the
National Financial Literacy Action Plan.

WAY FORWARD
In collaboration with industry and relevant authorities, BOT will continue to focus
on building an ecosystem with healthy competition and a balance between inno-
vation and risk in which different players develop financial services that meet con-
sumer needs and improve financial access for households and MSMEs, thereby
fostering economic growth and sustainability.

Indicator Indicator Baseline

2019 2020 2021 2022
category definitions (2018)

ACCESS INDICATORS
1. Number of
commercial
bank branches
12.6 12.3 11.8 10.9168 10.2
and service
points per
100,000 adults
Points of service 2. Number
of ATMs per 105 104 118 118 114
100,000 adults
3. Number of
POS terminals
1,588 1,588 1,602 1,656 1,969
per 100,000
adults
Total number
of points of
Access points 1,706 1,705 1,732 1,784 2,092
service per
100,000 adults
1. Access to
the internet
per adult
(percentage 57% 67% 73% 86% 88%
of adults with
internet access
Connectivity anywhere)
2. Mobile
phone
penetration
176% 182% 163% 169% 176%
(active mobile
phones per
adult)

168 Decreased by 0.9 percent due to a shift in BOT’s business models to digital channels.

2023 ASEAN MONITORING PROGRESS 112

 Indicator Indicator Baseline
2019 2020 2021 2022
category definitions (2018)

USAGE INDICATORS
1. Percentage
of adults who
report having
an account at a 79.2% 87.2% 89.6%
Adults with an formal or semi-
account formal financial
institution169
2. Number
of e-money
167,406 165,500 195,903 217,802 223,560
accounts per
100,000 adults
Number
of deposit
accounts with
Savings 182,245 188,426 193,825 206,011 218,872
commercial
banks per
100,000 adults
Number of
adults with
credit with
Credit 28,015 29,142 33,749 34,752 34,766
formal financial
institutions per
100,000 adults
1. Number of
debit cards per 104,746 119,990 116,433 117,355 110,509
100,000 adults
2. Number
Payments of registered
mobile banking 83,940 111,304 124,876 152,545 174,284
accounts per
100,000 adults
3. Number of
mobile banking
transactions 5,284,012 9,123,618 17,430,218 29,030,714 41,166,623
per 100,000
adults
Life insurance
policy holders
Insurance as a percentage 39.65% 39.92% 43.04% 39.55% 40.36%
of the adult
population
QUALITY INDICATORS
Number of
basic banking
accounts
Appropriateness 2.2 2.3 2.1
(low-income
product) in
millions
Average
bank fees for
Affordability low-income/ 0 0 0
basic banking
accounts (THB)
Arithmetic
score as
per national
definitions;
percentage
Financial literacy 66.2% 67.4% 71.4%
of adults
who know
definitions of
basic financial
terms

169 Self-exclusion included.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 113

 Indicator Indicator Baseline
2019 2020 2021 2022
category definitions (2018)

INCLUSIVE GROWTH INDICATORS

Annual growth
Macroeconomic
rate of real 3.9% 1.8% –6.3% 1.2% 2.5%
context
GDP per capita
Completion
rate of upper
Education 63.0% 66.0% 65.0%
secondary
education170
Proportion
of informal
employment 64.4% 52%
in total
employment
Labour force
participation 68.3% 67.5% 67.8% 67.8% 68.1%
rate (%)
Unemployment
Unemployment 1.1% 1% 1.7% 1.9% 1.3%
rate (%)
and income
inequality Proportion of
people living
in poverty 8.3% 6.3% 6.8% 6.3%
(expenditure)
(%)
Remittance
costs as a
proportion of 15.8% 12.9% 13.3%
the amount
remitted
OUTCOME AND IMPACT INDICATORS AS PER THE GUIDANCE NOTE
Percentage of
adults using
Overall at least one 89.8% 95.6% 97.3%
formal financial
service
Percentage of
women using
Segmental at least one 90.3% 95.0 97.3
formal financial
service
Annual growth
National goals 4.2% 2.1% –6.1% 1.6% 2.5%
rate of GDP

FINANCIAL CAPABILITY INDICATORS

Indicator
Stage of country Indicator definitions 2021 2022
category
Number of stakeholders/key priority
Pre-formulation 9 9
target groups identified
Formation of a financial capability
Formulation
working group
Governance/ Number of quarterly meetings held by
coordination Formulation
the financial capability working group
Percentage of stakeholders at
regulatory level that develop an action
Formulation
or implementation plan for financial
education

170 The minimum educational requirement in Thailand.

2023 ASEAN MONITORING PROGRESS 114

 Indicator
Stage of country Indicator definitions 2021 2022
category
Number of stakeholders at regulatory
level that execute the action or
Implementation
implementation plan for financial
education
8 8
Number of draft policies to promote measures, measures,
Pre-formulation
financial capability 19 action 19 action
plans plans
Number of policies developed to
promote financial capability (e.g. NFIS,
Formulation consumer protection frameworks/
Enabling policies, policies promoting inclusion
environment of specific marginalized segments)
Number of meetings with the
Ministry of Education to promote the
Formulation
integration of financial education into
the national curriculum
Number of schools that integrate
Implementation
financial education into the curriculum
Number of key terms defined at the
Pre-formulation national level (e.g. financial capability,
financial education, financial literacy)
Prioritize
Establishment of policy priority to
Policy financial
Formulation develop an NFES or prioritize financial
alignment education
education in an NFIS
in an NFIS
Number of quarterly meetings held by
Implementation the financial capability working group
to discuss NFES target/outcomes
Number of virtual workshops to learn
Pre-formulation/ from countries at a more advanced
Formulation stage of developing or implementing
Regional an NFES
collaboration Number of virtual workshops to share
lessons learned with countries at a
Implementation
less advanced stage of developing or
implementing an NFES
Number of existing initiatives identified
Pre-formulation 10
that promote financial capability
Number of government programmes
Pre-formulation identified to reach each target group 26
Supply-side
(touch points)
mapping
Number of stakeholders identified
during the supply-side mapping that
Formulation
form part of the financial capability
working group
Number of secondary sources that
Pre-formulation measure levels of financial capability 2171 2
within the country
Number of key target groups identified
Pre-formulation 4172 4
Demand- that have low financial capabilities
side Number of proposals reviewed to
diagnostic Pre-formulation conduct a national financial capability
survey
Number of policies and programmes
Formulation developed from national financial
capability survey results

171 BOT and National Statistical Office of Thailand.

172 Children and youth, grass roots (low-income people and local financial units), elderly and retired people, and financially marginal-
ized groups.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 115

 Indicator
Stage of country Indicator definitions 2021 2022
category
Arithmetic score as per national
definitions; percentage of adults who
know definitions of basic financial
Financial terms (i.e. importance of saving in a 72% 71%
All stages
knowledge bank account, has a bank account, (2020) (2022)173
borrows responsibly, plans ahead,
knows how to access and use the best
financial services, etc.)
Percentage of adults who are able to
Financial
All stages use an account at a bank or financial N.A.
skills
institution without help if opened
Percentage of adults coming up
with emergency funding in 30
days, possible and not difficult at 36%
all (disaggregated by sex, age and
geographic location)
Female 32%

Male 41%
15–24 years (youth) 38%

25+ years (adults) 36%

All stages
13%
Poorest 40%
52%
Richest 60%

Rural
N.A.
Urban
Out of labour force 30%

In labour force 38%

Main source of emergency funding (%)
Family or friends 49%
Financial Loan from a bank, employer or private
behaviour 9%
lender
All stages Sale of assets 4%
Savings 10%
Work 5%

Other 1%

Percentage of adults who save for old

age (disaggregated by sex, age and 40%
geographic location)
Female 37%

Male 43%
15–24 years (youth) 40%

25+ years (adults) 40%

All stages
Poorest 40% 21%

Richest 60% 53%

Rural 22%

Urban 26%
Out of labour force 37%

In labour force 41%

173 OECD/INFE Financial Literacy Survey 2023.

2023 ASEAN MONITORING PROGRESS 116

 Indicator
Stage of country Indicator definitions 2021 2022
category
Percentage of stakeholders integrating
Implementation financial education at the programme
level
Programme Percentage of stakeholders using
level Implementation
digital channels for financial education

Percentage of outcomes achieved at

Implementation
programme level

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes174
Percentage of MSME loans in total banking system loans 21.9%
Percentage of MSMEs with account at financial institution
Access to finance

Share of new MSME lending as a percentage of total loans 8.7%

Percentage of MSME borrowers with collateral
Interest rate spread between small and large enterprises 1.2%
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap 10.3%175
QR systems [yes/no] Yes
Percentage of MSMEs that report using an account at a
financial institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME borrowers 1,299,378

Percentage of MSMEs with outstanding loan or credit 40.9% (2021)
Value of MSME loans (THB) 3,386,815
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key
Public support for MSME

2
target group (NFIS/NFES)
MSME loan guarantees as a percentage of MSME loans 13.3%
finance

MSME loan guarantees (value) (THB) 651,121

MSME direct government loans/loan funds (THB billions)
Number of tax incentives for MSMEs
Number of pre-shipment export guarantee funds for export-
based MSMEs
P2P lending (volume, percentage share of total loans) 4,329
Digital finance/alternative

Venture and growth capital investments (volume, percentage

of total financing)
finance

Leasing and hire purchases (volume, percentage of total

financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in
8
regulatory sandbox

174 Definition of SMEs by Ministerial Regulation based on number of employees and annual revenue of SMEs.
175 Calculated using data from the International Finance Corporation as of 2018.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 117

 Indicator
Indicator 2022
category
Number of working groups for MSMEs

Coordination
Number of regulatory meetings focused on MSMEs annually
Number of capacity-building sessions for regulators/FSPs on
MSME finance

Number of ministries working together to promote financial

inclusion of MSMEs

Number of policy dialogues, roundtables, forums on MSME

Collaboration

topics176
Number of partnerships with MSME-focused organizations/
business associations
Number of partnerships with fintechs, MMOs, telcos,
e-commerce platforms, digital payment providers
Percentage of MSMEs with nonperforming loans (i.e. 90 days) 7.4%
capabilities
Financial

Percentage of MSMEs that have at least one formal financial

service
Number of government programmes to promote financial and
digital financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal
Existing/Revised
financial service177
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/
women’s business associations
Percentage of nonperforming loans from women-owned
MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs

176 These can serve as platforms for sharing best practices, guidelines and frameworks in areas such as protection and security of
cross-border data flows, competition, taxation, trade and logistics infrastructure.
177 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

2023 ASEAN MONITORING PROGRESS 118

 VIET NAM
COUNTRY REPORT

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 119

Promoting financial inclusion has been one of the priorities of the Vietnamese
Government in the post-COVID-19 pandemic economic recovery. In 2022, Viet
Nam continued to effectively implement the National Financial Inclusion Strategy
(NFIS) to support people and enterprises in stabilizing their production and busi-
ness activities and developing sustainably.

ACHIEVEMENTS IN FINANCIAL INCLUSION

The legal and policy framework has been improved to support financial inclu-
sion objectives. This includes issuance of a decree to promote the development
of micro-insurance that meets the needs of low-income individuals and house-
holds. Second, it also includes amendment and supplement of regulations on
the operational network of credit institutions to facilitate the expansion of the
ability to provide financial services, especially in rural, remote, and isolated areas.
Finally, it includes issuance of regulations on opening payment accounts, issuing
bank cards and electronic lending to improve financial access for individuals and
businesses.

The coverage of financial services has been increased by encouraging the expan-
sion of the network of financial service transaction points in rural, remote, and
isolated areas. At the end of 2022, the proportion of communes in rural areas
having financial service transaction points (excluding Viet Nam Bank for Social
Policies financial service transaction points) had increased to 32.6 percent of the
total number of communes nationwide.

Digital transformation in the banking sector has been promoted. Many banking
services have become completely digitized with simple and fast processes and
procedures, and some of them are designed to suit people in rural, remote, and
isolated areas. Thanks to the development of DFS, customers may access diverse
and convenient products and services that are suitable to their needs and at low
cost.

Non-cash, e-commerce and public services payments and other payments and
money transfer services have been promoted in rural, remote and isolated areas.
The proportion of people with bank accounts has reached 77.41 percent, and the
annual growth rate of payments via mobile channels, internet channels and QR
codes has reached over 100 percent.

Supporting policies for agriculture and rural areas have been issued, including
agricultural insurance; credit support for hi-tech, clean and value chain agricul-
tural development and for processing and consuming agricultural products; and
unsecured loans for SMEs, cooperatives and production and business households
in the agricultural and rural sectors.

2023 ASEAN MONITORING PROGRESS 120

By the end of 2022, outstanding loans in agricultural and rural areas accounted
for 24.76 percent of the total outstanding loans of the whole economy, of which
outstanding non-collateral loans accounted for about 21.78 percent of the total
outstanding loans for agricultural and rural areas.

Shared information, payment and credit information infrastructure have been

upgraded and modernized. Banks and payment intermediaries have been actively
exploiting and applying national data on the population in all banking operations,
especially in payment and credit activities, to promote the development of non-
cash payments and digital transformation of the economy.

Financial education and communication programmes were promoted, targeting

all people and businesses, especially those in rural, remote, and isolated areas, to
improve their knowledge and skills in financial management and usage of basic
financial products and services. In addition, the Ministry of Education and Training
continued to compile financial knowledge content and incorporate it into the
education curriculum for middle and high school students to equip them with
financial literacy and support them to develop skills in daily money management.

CHALLENGES AND OPPORTUNITIES FOR MSME FINANCE

MSMEs are a crucial segment and growth engine of the economy. In 2021, MSMEs
accounted for more than 97 percent of enterprises, created 38.36 percent of total
jobs generated by enterprises, and contributed about 45 percent to Viet Nam’s
GDP, 31 percent to total state budget revenue and 30 percent to export value.
However, this sector still faces many difficulties in accessing finance due to limited
financial capacity, lack of collateral, weak management capacity, low competi-
tiveness, lack of effective economic production plans, and non-transparent and
inaccurate financial data.

The government has issued various policies to support MSMEs, especially in

accessing finance, such as encouraging credit institutions to: (i) provide MSMEs
with unsecured loans and loans based on their credit ratings; (ii) restructure debt
repayment terms, waiving interest and fees, and maintaining the same debt group
for MSMEs facing difficulties in production and business; (iii) support the develop-
ment of production and business plans and strengthen capacity on management
and operation; (iv) provide loans with preferential interest rates; (v) provide credit
guarantee from the Credit Guarantee Fund178 and capital support through the SME
Development Fund;179 (vi) deploy a variety of preferential loan product packages
specifically for MSMEs; and (vii) support loans for innovative start-ups, technolog-
ical innovation and industrial value chain linkages. Thanks to these policies, credit

178 The Vietnamese Government established a credit guarantee scheme (CGS) in 2001, managed by local governments, to back the
loans taken out by SMEs and facilitate their access to credit.
179 The SME Development Fund was established in 2013, with an initial capitalization of VND 2 trillion from the state budget and
became operational in April 2016. Funding to SMEs from the SME Development Fund is channelled largely through partnering banks.
The Viet Nam Development Bank (VDB), a public development bank, and four partner commercial banks have been authorized to
deliver the loans, with the Fund providing 80 percent of the loan amount (not to exceed VND 30 billion per project), and the company
required to contribute at least 20 percent of the project cost in equity. Loans from the Fund can have a maturity of up to seven years
at interest rates capped below market rates.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 121

institutions have made strong changes in credit policies for MSMEs, deployed a
variety of preferential loan packages, diversified the forms of credit extension,
and provided a wide range of utility services for MSMEs. As a result, at the end of
2022, outstanding loans for MSMEs accounted for 18.68 percent of those of the
entire economy.

PROGRESS IN FINANCIAL INCLUSION INDICATORS

Notable results of some financial inclusion indicators in 2022 are as follows:

• The number of commercial bank branches and transaction offices per

100,000 adults reached 15.31.
• The number of ATMs and POS terminals per 100,000 adults reached 27.94
and 545.5, respectively.
• The percentage of adults having a banking account in 2022 reached 77.41
percent (compared to 74.63 percent in 2021). This indicator increased due
to the rapid development of non-cash payments, the application of digital
account opening and improvements in financial literacy.
• The number of debit cards per 100,000 adults in 2022 was 142,030, and the
growth rate from the previous year was 7.78 percent. This indicator contin-
ues to increase due to the opening of digital accounts, as well as increased
demand for debit cards.
• The number of SMEs with an outstanding loan or credit at credit institutions
reached 191,565.
• The percentage of adults having credit history at the National Credit
Information Center reached around 68 percent.

WAY FORWARD
To realize the objectives set out in the NFIS, Viet Nam is focusing on the following
solutions and measures:

• Improving the legal framework to facilitate digital transformation of banking

activities, promoting non-cash payments, and developing diversified and
modern payment models, products, and services. Priority is given to issuing
regulations on payment agents and a controlled testing mechanism (sandbox)
for fintech activities in the banking sector.
• Effectively deploying the Banking Sector Digital Transformation Plan to 2025,
with a vision up to 2030 to support banks and payment intermediaries in
providing safe, secure, and convenient products and services meeting the
increasing needs of customers. This includes actively and effectively deploy-
ing the project on application of population data and electronic identification
and authentication in the process of verification of customer identification
information in the provision of financial products and services.

2023 ASEAN MONITORING PROGRESS 122

• Developing and improving the efficiency of microfinance institutions and the
People’s Credit Fund systems to support financial access for poor, low-in-
come people, women, and micro-enterprises in rural, remote, and isolated
areas.
• Promoting communication and financial literacy programmes in diverse
forms for poor, low-income people, pupils, students, women, retirees, and
people in rural, remote, and isolated areas.

Indicator Indicator
2018 2019 2020 2021 2022
category definitions

ACCESS INDICATORS
1. Number of
branches per 15.1 15.12 15.14 15.11 14.33
100,000 adults
2. Number
of ATMs per 25.60 26.30 26.66 27.36 27.94
100,000 adults
Points of 3. Number of
service POS terminals
335.10 381.30 375.05 433.67 545.50
per 100,000
adults
4. Number of
mobile money
agents or similar 7,834 8,833
financial services
agents
1. Access to
the internet
(percentage
70.0% 70.3% 70.3% 74.2% 78.6%
of adults with
internet access
anywhere)
Connectivity
2. Mobile phone
penetration
(active mobile
147,575 141,318 142,000 127,642 128,575
phones per
100,000
population)
USAGE INDICATORS
Percentage
Adults with an of adults who
account report having 63.70% 63.96% 65.99% 74.63% 77.41%
an account at a
bank (age 15+)
Number of
deposit accounts
with banks or
Savings N.A. 20%
deposit-taking
institutions (age
15+)
1. Percentage of
adults (age 15+)
52.22% 59.97% 60.86% 65.36%
who have credit
access
Credit
Number of
loan account
52,221 59,969 60,863 65,357 70,192
with banks per
100,000 adults180

180 Number of customers with credit history at the National Credit Information Center of Viet Nam.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 123

Indicator Indicator
2018 2019 2020 2021 2022
category definitions

1. Number of
debit cards per 110,591 111,424 120,122 131,777 142,030
100,000 adults
2. Number
of registered
2,334 3,766
Payments mobile money
agents
3. Number of
mobile money
16,201 25,313
transactions per
100,000 adults
Insurance policy
holders
1. Life insurance
policy holders
12,220 14,435 16,390 16,579
per 100,000
Insurance adults
2. Non-life
insurance policy
63,392 65,293 65,900 86,379
holders per
100,000 adults
QUALITY INDICATORS
MSME loan
guarantees as
Value a percentage 53.1% 45.4% 48.7% 45.3% 42.8%
of MSME loans
(value)
Percentage
of borrowers
who are more
Indebtedness 3.82% 3.51% 4.25% 5.36% 5.51%
than 90 days
late with a loan
repayment
Percentage of
communes/
towns
Choice 31.39% 32.13% 32.60%
nationwide with
financial service
points

Indicator Indicator
Aggregation 2018 2019 2020 2021 2022
category definitions

INCLUSIVE GROWTH INDICATORS

Proportion of
the population
living below 4.8% 4.4% 4.2%
the national
poverty line
Macro-
economic Urban 1.1% 1.0% 1.5%
context
Rural 7.1% 6.5% 5.9%
Annual growth 6.7% per year
rate of real between 2016 1.71% 1.60% 7.07%
GDP per capita and 2019
Percentage
of students
recognized
Completion for
Education 99.7%
rate completing
the primary
school
programme

2023 ASEAN MONITORING PROGRESS 124

Indicator Indicator
Aggregation 2018 2019 2020 2021 2022
category definitions

Percentage
of students
completing
99.3%
lower
secondary
school
Proportion of
the population
living in
92.71% 94.64% 81.82%
households
Access to with access to
basic services basic services
Proportion of
the population
99.0% 99.5% 99.5%
with access to
electricity
Proportion of
the population
Over
participating 83.5% 85.7%
90.0%
in health
insurance
Proportion of Expenditure
Health care households 8.46%
>10%
with large
medical
expenditures as
Expenditure
a share of total 1.73%
>25%
expenditure or
income

Number of
MSME loans 834,938 869,313 929,197 992,335 1,061,859
from banks
Asset-
building and Value of MSME
entrepreneur- loans from VND billions 1,243,001 1,463,565 1,621,033 1,852,411 2,056,068
ship banks
Proportion of
the population
1.7% 1.2%
living in poorly
built houses
Number of
people covered
by social 16,493,000
insurance
programmes
Re-
distribution Number
of people
receiving 3,730,600
monthly social
insurance
payments
Total 2.19% 2.17% 2.48% 3.20% 2.34%
Unemployment
Male 1.97% 2.09% 2.01% 3.15% 2.36%
rate
Un-
employment Female 2.45% 2.26% 3.05% 3.26% 2.32%
and income Proportion of Total 20.9% 19.7% 17.9%
inequality people living
Male 19.1% 17.4%
below 50% of
median income Female 20.3% 18.4%

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 125

 Indicator Indicator
Aggregation 2018 2019 2020 2021 2022
category definitions

IMPACT INDICATOR
Outstanding
agricultural
and rural credit
Segmental 24.78% 25.07%
(percentage of
all outstanding
credit in banks)

FINANCIAL CAPABILITY INDICATORS

Indicator
Stage of country Indicator definitions 2021 2022
category
Number of stakeholders/key priority
Pre-formulation
target groups identified
Formation of a financial capability
Formulation
working group
Number of quarterly meetings held by
Formulation
the financial capability working group
Governance/
coordination Percentage of stakeholders at
regulatory level that develop an action
Formulation
or implementation plan for financial
education
Number of stakeholders at regulatory
level that execute the action or
Implementation
implementation plan for financial
education
Number of draft policies to promote
Pre-formulation
financial capability
Number of policies developed to
promote financial capability (e.g. NFIS,
Formulation consumer protection frameworks/ 2181
policies, policies promoting inclusion of
Enabling specific marginalized segments)
environment Number of meetings with the Ministry
of Education to promote the integration
Formulation
of financial education into the national
curriculum
Middle
Number of schools that integrate
Implementation and high
financial education into the curriculum
school182
Number of key terms defined at the
Pre-formulation national level (e.g. financial capability,
financial education, financial literacy)
Prioritize
Establishment of policy priority to
Policy financial
Formulation develop an NFES or prioritize financial
alignment education
education in an NFIS
in NFIS
Number of quarterly meetings held by
Implementation the financial capability working group to
discuss NFES target/outcomes
Number of virtual workshops to learn
Pre-
Regional from countries at a more advanced
formulation/
collaboration stage of developing or implementing an
Formulation
NFES

181 NFIS and a Consumer Protection Law.

182 In the process of approving a curriculum for primary school students integrated into the curriculum for middle and high school
students.

2023 ASEAN MONITORING PROGRESS 126

 Indicator
Stage of country Indicator definitions 2021 2022
category
Number of virtual workshops to share
lessons learned with countries at a
Implementation
less advanced stage of developing or
implementing an NFES
Number of existing initiatives identified
Pre-formulation 6
that promote financial capability
Number of government programmes
Pre-formulation identified to reach each target group
Supply-side
(touch points)
mapping
Number of stakeholders identified
during the supply-side mapping that
Formulation
form part of the financial capability
working group
Number of secondary sources that
Pre-formulation measure levels of financial capability
within the country
Number of key target groups identified
Pre-formulation
that have low financial capabilities
Demand-side
diagnostic Number of proposals reviewed to
Pre-formulation conduct a national financial capability
survey
Number of policies and programmes
Formulation developed from national financial
capability survey results
Arithmetic score as per national
definitions; percentage of adults who
know definitions of basic financial terms
(i.e. importance of saving in a bank
account, has a bank account, borrows
responsibly, plans ahead, knows how
to access and use the best financial
Financial
All stages services, etc.)
knowledge183

Percentage of adults who have 80.1%

knowledge of banking products/services (2019)

Percentage of adults who know the 35.6%

importance of personal credit history (2019)
Percentage of adults who are able to
Financial skills All stages use an account at a bank or financial NA
institution without help if opened
Percentage of adults who are able
94%
All stages to mobilize money in case of urgent
(2019)
financial needs
All stages Main source of emergency funding
Financial
behaviour Percentage of adults who save for old
60.1%
age (disaggregated by sex, age and
(2019)
All stages geographic location)
Percentage of adults who plan ahead for 49.4%
their income (2019)
Percentage of stakeholders integrating
Implementation financial education at the programme
level
Programme
Percentage of stakeholders using digital
level Implementation
channels for financial education
Percentage of outcomes achieved at
Implementation
programme level

183 There is no updated information from the Global Findex Database in 2021 for Viet Nam.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 127

MSME INDICATORS

Indicator
Indicator 2022
category
Standardized definitions of MSMEs [yes/no] Yes
Percentage of MSME loans in total banking system loans 21.5% (2020)
Percentage of MSMEs with account at financial institution
Access to finance

Share of new MSME lending as a percentage of total loans

Percentage of MSME loans with collateral
Interest rate spread between small and large enterprises
Number of SMEs with deposit accounts
Number of moveable collateral registries
SME financing gap
QR systems [yes/no]
Percentage of MSMEs that report using an account at a financial
institution
Percentage of MSMEs that report using a mobile account
Usage

Number of MSME loans/MSME borrowers 1,061,859

Percentage of MSMEs with outstanding loan or credit
Value of MSME loans (VND billions) 2,056,068
Volume of digital payments for MSMEs
Number of policies/strategies that prioritize MSMEs as a key target
Public support for MSME

group (NFIS/NFES)
Percentage of secured MSME bank loans to total MSME bank
42.81%
loans outstanding
finance

MSME loan guarantees (value)

MSME direct government loans/loan funds (VND billions)
Number of tax incentives for MSMEs
Number of pre-shipment export guarantee funds for export-based
MSMEs
P2P lending (volume, percentage share of total loans)
alternative finance

Venture and growth capital investments (volume, percentage of

Digital finance/

total financing)
Leasing and hire purchases (volume, percentage of total financing)
Factoring and invoice discounting (volume, percentage of total
financing)
Number of MSME-related products/services being tested in
regulatory sandbox
Number of working groups for MSMEs
Coordination

Number of regulatory meetings focused on MSMEs annually

Number of capacity-building sessions for regulators/FSPs on
MSME finance
Number of ministries working together to promote financial
inclusion of MSMEs
Number of policy dialogues, roundtables, forums on MSME
Collaboration

topics184
Number of partnerships with MSME-focused organizations/
business associations
Number of partnerships with fintechs, MMOs, telcos, e-commerce
platforms, digital payment providers

184 These can serve as platforms for the sharing of best practices, guidelines and frameworks in areas such as protection and security
of cross-border data flows, competition, taxation, trade and logistics infrastructure.

2023 ASEAN MONITORING PROGRESS 128

 Indicator
Indicator 2022
category
Percentage of MSMEs with nonperforming loans to total MSME
11.3% (2020)
loans (i.e. 90 days)

capabilities
Financial Percentage of MSMEs that have at least one formal financial
service
Number of government programmes to promote financial and
digital financial capabilities of MSMEs
Number of loans to women-owned MSMEs
Percentage of women MSMEs that have at least one formal
Existing/Revised
financial service185
Value of loans to women-owned MSMEs
Gender

Percentage of women MSME loans in total banking system

Number of partnerships with female-focused organizations/
women’s business associations
Percentage of nonperforming loans from women-owned MSMEs
Number of loan funds/loan schemes targeting women-owned
MSMEs

185 This is revised from the current indicator of percentage of women MSMEs enabled through financial inclusion.

FINANCIAL INCLUSION IN SELECTED ASEAN COUNTRIES 129

For more information, please contact:
Francesca Cioni
[email protected] Follow @UNCDF