APEC and MSMEs
APEC has been taking the lead in driving regional economic growth through trade and investment liberalization, and in pursuing regional economic integration. The growth of APEC economies soared through the years, with their combined real GDP doubling from just USD 16 trillion in 1989 to USD 31 trillion in 2013.
Micro, small and medium enterprises (MSMEs) have contributed to this growth trajectory. They make up over 97 percent of all enterprises and generate more than 70 per cent of all jobs in the region. However, the sector has yet to realize greater participation in global trade. MSMEs on the average account for less than 35 percent of annual global exports.
It is interesting to highlight APEC's achievements in this regard founded by the Leaders' instructions to convene the first SME Ministerial Meeting in 1993. This forum has generated a chain of valuable accomplishments, namely: the Action Program for Small and Medium Enterprises under the Osaka Action Agenda (OAA) in 1995; the preparation of the Integrated Plan of Action for SMEs (SPAN) in 1998; the series of Strategic Plans; the Daegu Initiative; the organization of the Joint SME-MRT Ministerial Meeting in 2011 to address top barriers to SME trade; as well as the Nanjing Declaration on Promoting Innovation and Sustainability.
While APEC's efforts have been wide-ranging from providing capacity building programs to facilitating access to financial services, MSMEs continue to be confronted with challenges on several fronts, thus impairing their ability to gain entry to regional and global markets, or even to be part of global value chains (GVCs). The key constraints include underdeveloped infrastructure; inadequate information especially regarding market opportunities across borders; and existing international trade policy frameworks and regulations that are less suited for the MSMEs; lack of facilities needed to comply with such border measures; limited access to competitively priced and internationally acceptable inputs; and lack of access to financing thus imposing significant barriers to MSME expansion.
MSMEs are also faced with challenges related to innovation on many fronts, but the most crucial of which are the lack ofability to develop globally competitive, market driven products and solutions and their inability to fully leverage on the benefits provided by the digital and internet economy. MSMEs have a role in bringing new ideas to the market and in fostering innovation in the 21st century; however, there is a need to boost innovation by creating an ecosystem that supports enterprise creation and increase innovation capabilities of MSMEs. These impediments prevent MSMEs from taking advantage of the potential benefits of freer markets in an increasingly integrated world.
The Bogor Goals set the target of free and open trade and investment in the APEC region. Over the years, numerous initiatives in APEC have been undertaken to promote free and open trade and investments, and to deepen regional economic integration. These have produced benefits in many ways in the form of increased levels of trade, greater cross border investment flows, and expanded choices for the consumers. It is important, however, to ensure that the work being done to promote free and open trade is as relevant to MSMEs as they are to bigger businesses.
The APEC MSME Marketplace
The "APEC MSME Marketplace" is an interactive repository of APEC activities and member economies' individual efforts as a tool to promote cooperation and linkages across MSMEs and other stakeholders with interest in MSME development. The initiative is an online portal which has the following functionalities: facilitating business matching for MSMEs, funders, innovation centers, incubators, and other stakeholders with interest on MSME development; providing information about international trade standards and regulations; disseminating information on available trade promotion assistance packages that APEC economies individually or collectively provide for MSME development and internationalization; and building networks and linkages among the MSMEs, academe, innovation centers, and other relevant stakeholders that have a shared interest to foster MSME participation in regional and global supply chains and markets may face as they participate in global trade.
The following pillars make up this portal:
Pillar 1: Facilitating business networking and matching involving MSMEs.
his pillar will allow MSMEs to leverage on the vast opportunities offered by international markets, including new niche markets; possibilities to exploit economies of scale, scope, volume and technological advantages; ways of spreading risks; lowering and sharing costs, and even affording improved access to finance. This pillar will seek to strengthen MSME participation, not only in local supply chains, but also in GVCs through long-term, value-driven partnerships with large enterprises (LEs) and small businesses. Through matching opportunities that will be made available by the MSME Marketplace, MSME participation in cross-border e-Commerce will also be promoted.
To support this activity, APEC economies shall contribute by providing relevant information on MSMEs and LEs which include listings and/or websites, whichever is practical, to encourage business networking and matching among these enterprises. Economies are also enjoined to identify and or accredit online marketplaces, innovation centers, incubators and accelerators, among others, that support MSMEs. While contribution to the portal is voluntary, its development will be progressive and will tap on the contributions of ABAC, harnessing the outcomes of its various initiatives and research works (i.e., Mapping of Incubators and Accelerators across APEC economies; C-BET; among others).
Pillar 2: Enhancing MSME Awareness and Feedback on Trade Regulations.
This pillar responds to the need of MSMEs for information on trade-related measures and standards by economy. There are several sources of this information such as the APEC Trade Repository (APECTR), the WTO International Trade Information Portal (I-TIP)2 and the International Trade Centre's Market Access Map or MacMAP3.
Another important functionality of this portal is that of providing MSMEs access to information on new NTMs. This facility will also allow MSMEs to share their views on proposed regulatory frameworks. This effectively serves as a consultation platform that allows governments/ international trade bodies to gain insights from MSMEs as basis for developing new policies that will be relevant and helpful to MSMEs. It also helps increase the transparency and promote inclusiveness in policy making.
Pillar 3: Improving Mechanism for Knowledge Sharing on Trade Facilitation, Business Support, Partnerships, and Capacity Building Activities for MSMEs.
This pillar will provide a platform for information sharing on key development and experiences of MSMEs in the context of global value chains, production and cross-border supply chains. This portal can help inspire partnerships, innovation, and linkages between MSMEs and LEs, thus increasing the potential and avenues for MSME internationalization. This will feature stories or cases featuring transformative partnerships on how MSMEs have been engaged by LEs and exporters in their value chains. This pillar will feature information on inclusive business models, cases of successful MSMEs export businesses, lessons extracted from successful experiences of internationalization and, cooperation among economies, between public and private sectors, and international organizations that helped hurdle barriers of MSMEs or advance their participation in global trade and value chain participation.
APEC economies are encouraged to help realize the operationalization of the MSME Marketplace. The Iloilo Initiative is a collective effort of all APEC economies. The MSME Marketplace can only succeed with all economies and MSMEs populating the various e- bulletins of it following the rules of use of the facilities.
With this initiative the seed of internationalization is bound to grow into global MSMEs in the near future.