ASEAN SME Policy Index 2018 launch | WPN World People News

A new benchmarking study released by the OECD, on September 1, ERIA and the ASEAN Secretariat reveals considerable progress in advancing policy frameworks for small and medium-size enterprise (SME) development in Southeast Asia.

‌The region as a whole is a powerhouse for global trade, and has demonstrated remarkable success at integrating into global value chains. However many SMEs across the region remain concentrated in low value-added activities, and in many economies productivity growth in the FDI sector significantly outstrips growth in non-FDI sectors. Since SMEs constitute the majority of firms across Southeast Asia, bolstering policies to facilitate their creation, development and exit may have a positive impact on aggregate productivity growth, which is a key priority for policy makers across ASEAN.

The ASEAN SME Policy Index 2018 maps and benchmarks SME development policies across ASEAN Member States (AMS). The assessment cuts across eight different policy areas related to SME development, namely: i) productivity, technology and innovation; ii) environmental policies and SMEs; iii) access to finance; iv) access to market and internationalisation; v) institutional framework; vi) legislation, regulation and tax; vii) entrepreneurial education and skills; and viii) social and inclusive entrepreneurship.

The assessment was completed with considerable support from the ASEAN Coordinating Committee on MSMEs (ACCMSME) and received input from over 300 policy makers across the region It took place over the course of Q2 to Q3 2017 and was based on over 600 indicators. Key findings include:

● ASEAN countries have made significant advances in SME policy, notably in the areas of business development services, access to e-commerce and GVC integration. Although methodological changes limit the full comparability of scores, marked progress can nevertheless be observed compared to the last evaluation in 2014.

● MSMEs operate mainly in wholesale and retail trade, with high levels of informality.While there are no exact figures on enterprise informality in the region, data on informal employment, both in formal and informal enterprises, suggest that informal practices are widespread across most AMS.

● SME development is an increasing priority for policy makers across ASEAN as they seek to establish a broader base for growth while ensuring that it is resilient and inclusive. The creation of the ASEAN Economic Community in 2015 has increased this drive to find ways to narrow considerable income gaps between and within AMS.

● Most ASEAN countries are active in the area of SME policy and apply a mix of horizontal and targeted approaches. On the horizontal side, they tend to prioritise measures to cut red tape and streamline business registration. On the targeted side, they tend to focus on measures to enhance productivity and increase access to finance.

● Some AMS regard SME policy as a core tool to enhance welfare. SME policy takes on a distinctly social approach in the majority of AMS, and in a few countries, especially Indonesia and the Philippines – as well as historically in Malaysia – it has been used as a core tool to advance social policy objectives.

Source: Organization for Economic Co-operation and Development