on small and medium enterprises credit in the asian region globalisation can be simply understood as the way in which the world has become a small ‘ village ’ or ‘ community ’ as a result of faster transport, communication and technological advancement which in turn resulted in the reduction in the cost of international trade, investment and in doing business ( time and space / distance ) between places and people. the asia - pacific region is part of this globalisation process, which has influenced the pace of growth and patterns in the region over the past decades. today we see vibrant and strong economies that are in the forefront of influencing the globalisation process itself through increased world trading, capital transfers and investments, skilled labour movements, and technological innovations and their use. there are many that argue, including those in our region, that globalisation has very limited impact on small and medium enterprises in the developing countries compared to those in the developed economies. there are also those who critically argue that globalisation has disadvantaged the small and medium enterprises in countries that do not have appropriate policy framework, regulations, entrepreneurial and managerial skills, finance and technology necessary for competition and survival. although this view has some merit, the reality about globalisation is that, among other positive changes, it eased capital transfers which provided for relatively easier access to funds by credit and supplementation institutions for on - lending to small and medium enterprises in the asia - pacific region. as international trade and investments increase, this trend is likely to continue and grow. innovative policies and practices of credit supplementation institutions in the asian region one of the major challenges to foster growth and sustainability, particularly in the developing economies, is the design and implementation of appropriate policies on developing small and medium enterprises. in economies where sound policies are in place, the problem may be due to the failure by the government to seriously ensure that those policies are implemented. as most small and medium enterprises in the developing economies do not have comparative advantage compared to large established companies, any attempts to capture niche markets, domestic as well as international, would be difficult unless appropriate government policies are in place and are effectively implemented to provide relief, particularly in the ‘ infant ’ stages of their growth cycle. observations from other economies, including japan, china and republic of korea showed that these countries have done very well because of their governments ’ policies and focus on encouraging small and medium enterprises to contribute towards economic growth. these are experiences worth noting and studying. regulation of small and medium enterprises small and medium enterprises in most countries do not have a

benny bm popoitai : prudential supervision of the financial system in papua new guinea speech by mr benny bm popoitai, mbe, acting governor of the bank of papua new guinea, at the seminar for external auditors of regulated financial institutions to cpa - png, port moresby, 7 april 2005. * * * my dear auditors, good morning. it gives me great pleasure to address your association once again. the purpose of this seminar is to enhance the bank of papua new guinea ’ s relationship with important players in the financial system, with respect to compliance with the bank ’ s reporting requirements to ensure stability of the financial system in papua new guinea. bpng, as a corporate statutory body established by the central banking act 2000 ( cba ), is empowered to supervise the operations of the licensed financial institutions, including commercial banks, licensed financial institutions, savings & loan societies, superannuation funds and life insurance companies. the primary function of bank, as the prudential supervisor, is to foster efficiency, maintain confidence and stability in the financial system. effective prudential supervision of financial system is an essential component of a strong economic environment because the financial sector plays a central role in mobilizing the necessary capital for private sector participation in the economy to stimulate economic growth. prudential supervision, however, cannot, and should not, provide an assurance that financial institutions will not fail. in a market economy, failures are a part of risk - taking and the objective of the bank, as the prudential supervisor, is to ensure that the number of failures and the resulting financial losses to depositors, policyholders and contributors, is minimized. financial crises are a serious concern and can be extremely costly – not only in terms of the direct cost to the government and taxpayers, but also in terms of foregone growth. the npf saga is a classical example. perhaps, the challenging part of prudential supervision and threat to stability in the financial sector in papua new guinea is the potential for corruption and blatant dishonesty creeping into our financial institutions, and the bank will have to ensure that there is zero tolerance to such behaviors. this is the reason why the bank requires individuals holding or intending to hold board, trustee and management positions to go through a vigorous ‘ fit and proper person ’ test before occupying responsible position in any financial institution regulated by the bank. the primary responsibility for the overall conduct of the financial institution is vested in the