Regulatory fragmentation stalls Southeast Asia’s supply chain finance push: YCP

The report said stakeholders must first address regulatory fragmentation.

Southeast Asian supply chains face market headwinds and need to adopt innovative supply chain finance (SCF) solutions to improve liquidity and operational resilience, according to a YCP report.

However, the lack of standardisation poses a significant issue as stakeholders and buyers struggle to understand how SCF can contribute to economic and social development.

The report said stakeholders must address regulatory fragmentation, as diverse receivables laws and inconsistent electronic documentation standards create legal uncertainty and hinder cross-border SCF scalability.

They must optimise harmonisation and sandbox-led reforms as these are critical to overcoming these barriers.

Local banks' limited SCF options and high perceived risks often create financial barriers for smaller suppliers.

“Companies can help these small and medium-sized businesses by using innovative financing models and blended guarantees to unlock liquidity and include more suppliers in their network,” YCP said.

Moreover, developing seamless SME integration layers and adopting frameworks such as PEPPOL or AFACT will enhance platform interoperability and user experience.  

Finally, ESG-linked pricing and verified impact tracking are becoming crucial tools that align financial practices with sustainability goals and create long-term value.