10 Facts on APEC Initiatives for Micro, Small, and Medium Businesses

By Kris M. Crismundo

MANILA, Nov. 3 (PNA) — With the Asia Pacific Economic Cooperation (APEC) 2015 theme of “Building Inclusive Economies, Building a Better World”, the Philippines — as this year’s host economy — has put the spotlight on micro, small, and medium enterprises (MSMEs).

During their meeting in Iloilo City in September, the APEC SME Ministers, noted that MSMEs had contributed to the growth trajectory of APEC economies which combined gross domestic product (GDP) almost doubled from USD16 trillion in 1989 to USD31 trillion in 2013.

To increase the contribution of the sector to the region’s economy, Trade and Industry Secretary Gregory L. Domingo said the Philippines’ initiatives for MSMEs will increase the sector’s participation in global value chains (GVCs).

Here are some facts on APEC’s initiatives for MSMEs:

1. For the first time, APEC is focusing on micro enterprises.

The Philippines has pitched the idea of giving emphasis on micro enterprises, rather than just SMEs, to promote inclusive growth in the region by extending to them the benefits of free and open trade.

According to Domingo, MSMEs should not be treated as an afterthought of policies being created in the forum given their significant contributions to APEC member economies. In fact, MSMEs comprise over 97 percent of enterprises in the region; 70 percent of the total employment; 13 to 60 percent share to GDP which varies across countries; and contribute up to 35 percent of exports.

2. Thte APEC will hold the first SME Summit this year.

The APEC Business Advisory Council (ABAC), the voice of business community in Asia Pacific, will be hosting the APEC SME Summit on November 17.

The APEC SME Summit aims to enable the sector to innovate their products and services to meet the demand of the 21st century global market.

3. The rise of start-ups is changing the playing field.

Innovative business start-ups are now seen as the next big thing in APEC. Start-ups, which have innovative business models that disrupts the existing market, have the potential to further drive economic growth and promote inclusive growth through innovative ideas and tapping the digital economy.

One of the forum’s initiatives for start-ups is the APEC Accelerator Network (AAN) launched by Chinese Taipei in 2013. AAN aims to encourage start-ups to go global by giving them access to accelerator programs and resources. To date, AAN has 50 accelerator partners from 15 APEC member economies which can be tapped by start-ups.

Like business incubators, which help start-ups to survive in the vulnerable early stages of development, accelerators focuses on start-ups with potential of growing in the domestic and global markets.

4. APEC recognizes the role of women in the economy.

The Philippines hosted the APEC Women and the Economy (WE) Fora in September in Manila to boost women’s participation in Asia Pacific economy.

The United Nations estimates that APEC can gain US$ 89 billion annually when barriers to women’s economic participation are eliminated. Likewise, the region loses around US$ 47 billion in output each year due to lack of women’s participation in labor markets.

The APEC WE Fora in Manila has come up with a Strategic Plan 2015-2018 to increase women’s economic participation in the region by achieving deliverables in five key areas including access to capital; access to markets; capacity building, health, and leadership; technology and innovation; and voice and agency.

5. MSMEs still face key issues in regional and global trade.

During the APEC SME Finance Forum, which was on the margins of APEC SME Ministerial Meeting, it was noted that there are four issues that hamper MSMEs participation in regional and global trade.

These key issues that should be addressed by APEC member economies are access to capital; access to know-how or skills; access to markets; and infrastructure including physical infrastructure as well as intangible infrastructure like governance, contract law, and dispute resolution mechanisms, among others.

6. Trade facilitation is key to engage MSMEs to global trade.

With the increasing number of free trade agreements and economic integration in the region, there is also the proliferation of non-tariff measures which include stricter policies on safety and standards that now become a barrier for local MSMEs to trade with the global market.

During the SME Ministerial Meeting, it was noted that the government should implement trade facilitation to MSMEs and help them meet the global standards instead of exempting them in complying with the processes.

Trade facilitation can offset the costs due to non-tariff measures through reforms in business environment such as cutting rates of getting certificates and implementing paperless transactions, among others.

7. The Boracay Action Agenda targets to address key issues of MSMEs and help them access the global market.

The Philippine-led initiative Boracay Action Agenda, which was well-received during the Ministers Responsible for Trade (MRT) Meeting in Boracay in May, has put in place concrete and detailed action plans for APEC member economies to increase the participation of MSMEs in GVCs.

Under the Boracay Action Agenda, APEC will address trade and investment barriers for MSMEs particularly by reducing and eliminating tariffs and non-tariff measures in the region.

The initiative will also simplify and streamline rules for MSMEs, provide timely and accurate information on export and import procedures and requirements, and strengthen institutional support for the sector, among others.

8. The Iloilo Initiative supports the Boracay Action Agenda.

APEC SME ministers have adopted the Iloilo Initiative which supports the implementation of the Boracay Action Agenda.

It has two priority initiatives including providing bigger voice and better opportunities for MSMEs and advancing policy frameworks and international trade through APEC MSME Marketplace.

The APEC MSME Marketplace will be an interactive online portal that will allow APEC member-economies to promote cooperation and linkages to develop MSMEs. The interactive repository has three pillars: facilitating MSME business networking and matching; enhancing MSME awareness and feedback on trade regulations; and knowledge sharing on trade facilitation, business support, partnerships, and capacity building activities for MSMEs.

9. MSMEs need to be more resilient.

With the challenges posed by climate change to businesses, MSMEs need to be more resilient and should have capacity to cope with natural disasters.

Since 2013, Chinese Taipei has collaborated with the Philippines, Indonesia, Mexico, and Vietnam for APEC Business Continuity Planning (BCP) Workshops which trained related government, non-profit and private sector organizations to develop their own business continuity plan tailored to their unique needs.

The SME Ministers likewise has noted the role of public finance, such as credit guarantee systems designed for MSMEs’ operational continuity, rather than the rescue of financial institutions.

10. The Philippines uses APEC as a platform to pitch MSME initiatives to ASEAN and WTO.

Trade Secretary Domingo stressed the crucial role of pushing MSME initiatives in APEC as the forum has a big influence in the global economy. APEC accounts for about 60 percent of the world GDP and close to 50 percent of the global trade.

As APEC recognizes the significant role of MSMEs for sustainable and inclusive economic growth, other economic groupings worldwide are now giving more focus to the sector.

The Association of Southeast Asian Nations (ASEAN), where the Philippines is also a member, also targets to strengthen MSMEs and expand their contribution to the region’s economy.

In the World Trade Organization (WTO), the country has pushed for MSME initiatives in this year’s WTO Ministerial Conference in Nairobi, Kenya in December. The WTO likewise welcomed the Philippines’ proposal. (PNA)