While large public-listed corporations tend to dominate the business world in terms of brand visibility and recall, in reality, it is the Small and Medium Enterprises (SMEs) that are the engines of growth in many economies around the world.
This is also seen in the Asia Pacific region where almost 98 per cent of all businesses are SMEs. Among the economies of the Asia Pacific Economic Cooperation (Apec) economies, SMEs only contribute around 35 per cent to revenues from direct exports. However, they account for over half the jobs and contribute significantly to the local economies with between a 40 per cent to 60 per cent share of the GDP. The wholesale and retail trade sector, followed by service sector industries, comprise the highest share of total SMEs in most Apec economies.
As a regional body dedicated to building the economies of member nations with a collaborative approach, Apec also places a strong emphasis on the growth of SMEs. In 1995, it formed a Policy Level Group dedicated to the development of SMEs in the region. Since 2000, this Group has been known as the Small and Medium Enterprises Working Group (SMEWG). The strategic focus of the SMEWG has been to champion for the inclusive development of sustainable Apec region SMEs that are well-prepared to meet the challenges of the 21st century.
Although large corporations have significant advantages over SMEs, mainly in terms of financial clout and resources, SMEs have the edge when it comes to versatility and entrepreneurial efficiency brought about by a more flexible and speedier operational procedure. The SMEWG's efforts have been focused on helping SMEs to bridge the gap, not only with capacity building and sometimes financial support, but also to help provide a thrust to these enterprises by pushing opportunities that are more easily available through international trade.
The devastating impact of the COVID-19 pandemic has not spared SMEs in the Apec region. Many enterprises were unprepared to face the onslaught upon their businesses caused by economic lockdowns and movement controls. The resulting loss of revenue over several months in 2020 has seen many SMEs having to scale down business, including cutting back on expansion plans and even having to let go of employees. Sadly, some enterprises have even perished, with no way out of the financial leakages caused by a loss in revenue.
The SMEWG has responded by initiating a strategic approach to not only help regional SMEs combat the threats posed by the pandemic, but to also focus on strengthening the resilience and growth prospects of the businesses that are a critically important set of spokes to the economic wheels of all nations. Much of the emphasis of the SMEWG's efforts is to drive important policy frameworks that member economies can adopt and implement in a collaborative approach. This will be able to create mutual opportunities amongst the nations, and thereby create an SME sector that is sustainable in the longer term.
At the ongoing Apec 2020 Meeting hosted by Malaysia, the ministerial level meeting has endorsed and agreed to adopt the Apec SME Strategic Plan 2021 – 2024. The 26th Apec SME Ministerial Meeting (SMEMM) held recently in October, was chaired by YB Dato Sri Dr. Haji Wan Junaidi Bin Tuanku Jaafar, Minister of Entrepreneur Development and Cooperatives (MEDAC), Malaysia, and was held virtually due to the pandemic-related travel restrictions in place.
This mid-to-long term Strategic Plan sets out the roadmap for member economies to help rebuild and revitalise the SME sector in their respective nation, and thereby return the role of the SMEs as the drivers of economic growth of the region.
The Strategic Plan 2021 – 2024 has been designed to create a bulwark for the creation of a more resilient SME sector in the region. This is to be implemented on a public-private partnership approach by emphasising the following five priority areas:
- Promoting entrepreneurship, innovation and start-ups
- Ensuring SME access to international market and global value chains (GVCs)
- Enabling inclusive capability development towards digitalisation
- Improving access to finance and alternative financial solutions
- Increasing the adoption of digital innovation
One immediate positive outcome from the strategic initiative of the SMEWG is the "Apec Micro, Small & Medium Enterprises (MSME) Marketplace". This is an interactive repository of Apec activities and member economies' individual efforts as a tool to promote cooperation and linkages across SMEs, micro SMEs and other stakeholders with an interest in MSME development. The interactive virtual platform, which is already live, serves as a "one-stop" marketplace hub for SMEs in the region to not only gain relevant trade and regulatory information, but to also get invaluable market leads and pitch their products and services to regional buyers.
The ministerial meeting has also emphasised the realisation that the SME sector also has strong social impacts from various fronts. Not forgetting the concern for the micro SMEs, these include very small businesses that provide daily sustenance for many families from the lower end of family income levels, This includes businesses run by women, especially single mothers. The ministers have jointly declared the commitment to focus on repairing the damaging effect of the pandemic upon marginalised communities involved in the SME and micro SME sector.
Their declaration states that, "We recognise the economic and social impact the pandemic has had on women and women-owned MSMEs. We support the implementation initiatives for businesses in Apec economies, especially those that support women-owned MSMEs in driving the economic and social recovery. At this time of heightened uncertainty, we recognise the importance of economies intensifying cooperation to turn challenges into opportunities by promoting entrepreneurship and small business development in an inclusive manner. Continued efforts to facilitate trade brings us towards closer economic partnership in the global market, thereby creating greater socio-economic impact and inclusive economic development".
Almost all member economies have responded to the effect of the pandemic crisis upon SMEs by providing immediate relief through unprecedented levels of fiscal stimulus, and temporary measures to cushion the impact of the pandemic and to restart and revive economies. The policy-makers have committed to encouraging their respective economies to improve access to finance for SMEs and to also diversify funding sources. This is a significant step in the right direction that will not only rescue deserving enterprises, but will also ensure the sector gets back on track to be the prime mover of economic growth.
The Apec SME Strategic Plan 2021-2024 also places significant emphasis on the strong potential of digitalisation to revitalise the SME sector. A relevant digital strategy will enable innovation and technology in building the resilience of SMEs. The SMEWG will continue to support and encourage the member economies to harness the opportunities of the digital economy. Key to this will be commitment to cooperation on facilitating the flow of data and strengthening consumer and business trust in digital transactions.
The working group will continue to assist member economies in their digital transformation efforts and will work together to address the challenges of digitalisation such as security and privacy concerns, skills deficit, and digital infrastructure. The real digital potential for SMEs, including women-owned businesses, will come from expanding access to digital tools, removing barriers to digital trade and e-commerce, providing digital skills-building activities, and enhancing access to information and communications technologies for business development and cross-border commerce.
This is a critical path, in the way forward for a more resilient and dynamic SME sector for the Apec region. The consequence of such a development can only be heightened levels of economic growth as well as the creation of much-needed job opportunities. SMEs must continue to stake their claim as the engine of growth for Asia Pacific nations. Such is the goal that is well articulated by the theme for Apec 2020, "Optimising Human Potential towards a Resilient Future of Shared Prosperity: Pivot. Prioritise. Progress".
This year, Malaysia as the host of Apec 2020 is committed to ensuring the success of Apec 2020 amidst the COVID-19 pandemic. As host, Malaysia has transformed the format of the annual fora to a virtual format. Over 70 virtual meetings have been executed and on 16 November, the Apec Ministerial Meeting (AMM) is set to take place and will be chaired by Senior Minister and Minister of International Trade & Industry YB Dato' Seri Mohamed Azmin Ali. This will be followed by the Apec Economic Leaders' Meeting (AELM) on November 20, to be chaired by prime minister of Malaysia, YAB Tan Sri Muhyiddin Yassin.
Source: https://www.nst.com.my/business/nation/2020/11/640996/apec-prioritises-revitalising-sme-sector