APEC 2015: Technology key to developing SMEs
MANILA, Philippines – The success of small and medium enterprises (SMEs) in continuing to drive the global economy and enable inclusive growth lies in the support given to it by both the public and private sectors – something made easier by technology.
On Monday, December 8, experts agreed on the impact of big data in understanding and serving SMEs, emphasizing that while the cost of supporting SMEs used to be expensive, technology has made doing so much easier.
Matthew Gamser, CEO of the SME Finance Forum, said infrastructure in the region will be worth $1 trillion, but said SMEs will be worth almost as much “if we can figure out how to serve it.”
“What's changed is big data. Why is it important for SMEs? It's not only SMEs that use big data, any SME starting to do business with electronic payment instead of cash is creating a potential footprint making our understanding of them much cheaper,” he said.
“The good news is while emerging markets have occupied a relatively small percentage of digital reserves because SMES in most emerging countries have done their business in cash but this is changing rapidly... The total pool of emerging market electronic payment data is going to exceed development countries' payment data.”
Figuring out how to use this big data, he said, will be crucial in developing SMEs and enabling inclusive growth.
Diane Wang, APEC Business Advisory Council (ABAC) China alternate member, agreed, saying it was difficult to collect relevant and accurate information, something that technology has improved. This has paved the way to updating risk management systems as well.
“Financial institutions can now work with e-commerce to make sure risk management systems are in place,” she said, an improvement that would help increase cross-border business opportunities.
While technology can help private and public sectors empower SMEs, Alexander Bohmer, head of Southeast Asia of the Organization for Economic Cooperation and Development (OECD), pointed out the need to address the barriers faced by SMEs in the global market.
Bohmer cited information barriers, low productivity, human resource barriers and financial barriers as internal constraints, and foreign governmental barriers, procedural barriers and home government barriers as external constraints.
While he said “many of these internal constraints can be tackled by private sector,” he said government policies could help break down external constraints.
Possible solutions he brought up include free trade and investment agreements, creating or strengthening the export promotion agency, platforms for exchange for foreign business councils, and strenghtening of SME agencies that support SME export and internationalization activities.
Bohmer proposed discussion points for APEC members such as the inclusion of more APEC members in the OECD SME Financing Scoreboard, exploring the potential for an index measuring SME internalization policy readiness, a good practice manual for SME internationalization support that could be drafted and presented at the end of 2015, and building on the current OECD investment policy review of some APEC members perhaps through a handbook on policies to strengthen SME-FDI linkages.
Gamser brought up another barrier that government must work on to assist SMEs: gender barrier. "Many countries in the world are missing out on major eocnomic growth opportunity because of all barriers they place before SMES... and then another set before women entrepreneurs," he said.
Gamser referred to studies showing women entrepreneurs have higher cross sell, more referral business, and are more loyal to their initial financial insituttion compared to male counterparts. This shows how empowering women can in turn empower SMEs and the economy, he said.
As APEC continues to work on the development of SMEs, John Andersen, chairperson of APEC's SMEs Working Group, announced an upcoming conference on increasing the critical role of SMEs in global supply chains.
“It is precisely because of this potential of our SMEs in increasing scale and scope of the global supply chain that the US and the Philippines will host a 2-day global supply chain event at the OECD working group meeting in Atlanta, Georgia, next June 8, 9,” he announced.
Andersen said there would be free workshops on logistic solutions, financing institutional support, and improving regulatory requirements, among others. The event will also be an opportunity to network, he said, “so participating economies can meet, collaborate, communicate, do some business, and connect with supply chain management groups for sustained support.”
He said the primary sectors that will be highlighted are agriculture and food processing, two of 5 sectors selected by the SME working group as the most crucial to APEC economies and domestic economic development. – Rappler.com