APEC Wants Small Businesses ‘Front and Center’ in Global Trade

They are said to be responsible for driving innovation and competition in many economic sectors. This is why a plan has been crafted to put micro, small and medium enterprises (MSMEs) at the “front and center” of regional and global trade by making them direct exporters of goods and services.

This policy recommendation is part of the draft implementation plan for the Boracay Action Agenda to Globalize MSMEs (BAA-MSME) introduced at the Asia-Pacific Economic Cooperation (APEC) 3rd Senior Officials’ Meeting held here.

This plan is called the APEC Implementation Plan for the BAA-MSME and it seeks to identify policies and reforms that would boost MSME integration in international trade.

According to the plan, APEC 2015’s agenda to make small businesses “front and center” in international trade can be achieved by making them part of the global value chain, that is, part of the end-to-end production of goods and services — from conception to usage.

The plan is a “living document”, according to Department of Trade and Industry Assistant Secretary Ceferino Rodolfo, as this would guide officials in the implementation of BAA-MSME, which was endorsed by APEC ministers during the APEC Ministerial Roundtable in the island resort of Boracay earlier this year.

The proposal further demands that MSMEs should be afforded better access to information to open them up to global market trends and finance opportunities.

Micro, small and medium enterprises are businesses whose personnel numbers fall below certain limits. They are generally defined as one with at least 100 and fewer than 500 employees. Today, statistics show that MSMEs outnumber large companies by a wide margin.

But why should MSMEs be integrated in global trade?

Dean of the University of the Philippines School of Economics, Ramon Clarete, explained that such a move would bring “more exports, diversified products, and increased productivity, and increased firm competitiveness” in the Philippine economy.

“Like many developing countries, the Philippines will need to work to achieve the integration of MSMEs in global trade,” said Clarete.

He noted that the meetings held here led to “specific, concrete, and practical initiatives” that member economies could implement to provide their MSME sector more opportunities to participate in the global trade.

Clarete explained that an MSME sector with a wider scope would bring a bigger variety of products, raise the average productivity of a country, and intensify competition in the global market.

He also said these would lower the average cost of products.

A modeling study published by the Asian Development Bank (ADB) on MSMEs’ effect in the overall economic welfare agreed with Clarete’s analysis.

The ADB study said that having more MSMEs in the export market increases the opportunities for economic growth.

Ateneo de Manila University Economics professor, Dr. Alvin Ang, meanwhile, stressed that increased competitiveness in the market and lower prices of goods are long-term results of policy change.

Ang, currently a board member of the Philippine Economics Society, said that in the short term, there is no immediate difference because the MSMEs need to participate first, and they have to improve what they produce.

“They have to improve their cash flow,” he said, adding that the earliest changes could be felt within six months after the implementation of policy reforms.

Ang said the Philippines has not been remiss in crafting policies encouraging MSMEs to participate more in the economy.

“The challenge is that MSMEs are not doing their part,” he pointed out.

“They are not participating. They are not producing new products. They are not inventing. We need something new in the market,” he said. (PNA) LGI/PND/SSC