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Development of SMEs to take center stage in APEC research conference

From the Philippine Institute for Development Studies

Enhancing the ability of small and medium enterprises (SMEs) to take advantage of trade opportunities and be able to participate in the regional and global markets is one of the highlights of this year’s conference of the APEC Study Centers Consortium (ASCC).

Slated for May 12-13, the ASCC Conference serves as an avenue for researchers and scholars to discuss and exchange ideas on the APEC themes and to identify areas for regional collaboration among APEC Study Centers. The conference is organized by the Philippine Institute for Development Studies (PIDS) and the Philippine APEC Study Center Network (PASCN) in cooperation with the Ateneo de Manila University (ADMU) and the Asian Development Bank Institute (ADBI). It is part of the Second Senior Officials Meeting (SOM2) and Related Meetings of APEC which will be held in Boracay, Aklan.

Small-and-Medium-EnterpriseSMEs account for more than 97 percent of all enterprises in the APEC region and employ more than half of the workforce in the region.  However, the sector’s share of gross domestic product ranges from only 20 percent to 50 percent in most APEC economies. SMEs contribute only 35 percent or less of the direct exports. Enhancing the management capabilities of SMEs, strengthening their access to financing, and creating an environment that allow easy access to overseas markets will result in increased exports and more jobs from SMEs.

One of the papers to be presented at the ASCC conference, authored by ADBI Dean Naoyuki Yoshino, looks at ways to improve SMEs’ access to financing.  SMEs face difficulty in borrowing money from banks because of the absence of credit rating data. Yoshino suggests that an efficient credit rating scheme that rates SMEs based on their financial health will reduce banks’ aversion to SMEs and encourage them to lend money to small businesses.

Meanwhile, a paper by Eunsook Seo of Sangmyung University, Korea, looks at how financial cooperation through the ASEAN Economic Community and the ASEAN+3 can expand SMEs’ access to finance in the region. However, Seo cautions that a more open financial market could worsen problems of information asymmetries, with agency cost likely to be magnified on an international scale due to national disparities in terms of firms’ credit worthiness and credit rating system, among other things. To overcome these issues, Seo recommends looking at the European Union’s experience in crafting policies for financing SMEs.

PIDS Senior Research Fellow Marife Ballesteros will discuss how to better prepare SMEs for natural disasters through business continuity planning. Ballesteros’ paper underscores that micro, small and medium enterprises (MSMEs) are highly vulnerable, and have weak adaptability and limited access to a broader set of coping strategies. Thus, it recommends that disaster risk reduction and management be embedded into the business sector. It also examines the role of APEC in promoting MSMEs’ resilience.

The paper of ADMU Economics Professor Alvin Ang completes the lineup of presentations on SMEs. Ang highlights the advantages of having a local economic development and competitiveness indicators system for SME locators. According to Ang, establishing a competitiveness index ranking for cities and municipalities provides a critical decision information on locating a business and, at the same time, addresses the issues of productivity, efficiency, facilities, and interconnectivity.

For more information about the ASCC Conference, visit www.ascc2015.org.

pids.gov.ph

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