, including connected transactions associated with capital contribution, investment and guarantee. in recent years, this system has provided lots of valuable information promptly to authorities in their handling of tieben delong and pricemart cases. the system has become an important instrument in improving financial supervision. at the same time, its data can be used in analysis of economic and financial structure, which serves as a basis for policy making and macro economic adjustment. individual credit information database has been playing an increasingly important role in individual credit risk prevention. since the trial operation of this database in 2005, commercial banks and rural credit cooperatives have joined it one after another, the daily volume of inquiries has also increased from about 1, 000 at the beginning of 2005 to the current level of 110, 000. commercial banks and rural credit cooperatives have established a system of individual credit risk assessment based on this system and made reviewing credit report part of the procedure. at the moment, commercial banks and rural credit cooperatives have opened 52, 000 inquiry terminals. peak daily volume of inquiries exceeded 120, 000. according to the statistics from some commercial banks, about 10 percent of the loan applications were rejected on the basis of inquiry with the system. corporate and individual credit information database have not only helped prevent over - indebtedness of businesses and individuals and credit fraud, reduce non - performing loan ratio, but also played an important role in raising the efficiency of loan application assessment, and making it easier for companies and individuals to borrow. in the western countries, although mortgage, guarantee and insurance can be used to prevent risks, banks still follow the basic principle in credit management that what happened in the past will happen again. if banks know little about the credit history of a company or an individual, a very prudent attitude will be adopted in lending ; also, banks are usually willing to lend to companies and individuals that have maintained a good credit history. in the past year or so, banks were unwilling to provide automobile loans because of the high npl ratio that occurred as a result of car price drop. now that the individual credit information database is established and contains information of every loan borrowed by an individual, default on one loan will affect future borrowing. this has served as a strong impetus for prompt repayment of loans, and created a good environment for consumer credit growth in china. student loan is a major policy measure taken by the government to improve the higher education financing policy system and a strategic measure that bears on china ’ s future development. however,

zeti akhtar aziz : reflections on small and medium sized enterprises keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 7th conference of asia - pacific economic cooperation ( apec ) financial institutions dealing with smes, lanai kijang, 16 july 2010. * * * introduction this conference takes place at a time of great consequence for the financial industry as the world emerges from the recent global financial and economic crisis. attention continues to be focused on supporting this recovery process and to provide more permanent solutions that would ensure sustainable global growth. in relation to this, the development of small and medium sized enterprises ( smes ) is an important and urgent agenda. for emerging economies, in particular in the apec region, this is not only important as a driver of the economic growth process but also that it would achieve a more balanced growth. it is my pleasure to be here this morning to speak at this 7th conference of apec financial institutions dealing with smes, that is organised by the association of banks in malaysia. history has shown that in the 20th century, it was large corporations that drove economic progress ; particularly in the industrial economies. in this century, there is a discernible shift towards the increased importance of smes as drivers of growth. the growing importance of domestic demand and the emergence of new sources of growth and new business models have encouraged the emergence of small and medium size businesses. this trend is particularly pronounced in the apec economies in which the economic activities are now more diversified – with the growing importance of the services sector, with the agricultural sector becoming more advanced and the industrial sector being supported by a supply chain of small and medium scale businesses. in the apec region, smes account for 90 % of the total business establishments and 60 % of total employment. in malaysia, smes constitute 99 % of all businesses and 57 % of total employment. in terms of output, the sme sector in malaysia accounts for 35 % of gross domestic product and 20 % of total exports. the smes have the advantage of having greater flexibility and the ability to adjust more quickly to changes in the market. the smes also have the potential to meet the new challenges to raise productivity and performance. there is therefore enormous potential for smes to create significant positive value for the economy, and thus contribute towards sustainable and balanced economic growth, employment and social stability. this morning allow me to take this opportunity to share with you some reflections on sm