APEC Ministers and their representatives responsible for Small and Medium Enterprises (SMEs) from Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; the Republic of Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Republic of the Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; the United States of America; and Viet Nam, met in Santiago, Chile, on 6-7 October 2004, under the chairmanship of H.E. Jorge Rodriguez, Minister of Economy, Chile.

The meeting was also attended by the Executive Director of the APEC Secretariat as well as by distinguished observers from the Pacific Economic Cooperation Council, the Pacific Islands Forum and the ASEAN Secretariat.

In line with the Chile APEC 2004 theme of "One Community, Our Future", the policy theme was "Opportunities for Entrepreneurial Growth". The aim was to identify the best entrepreneurial practices in the APEC community.

The approach to organize a separate retreat session for the Ministers, prior to the formal plenary sessions, was deemed to be a success. There were lively discussions and meaningful exchange of views by the Ministers on the "Santiago Agenda for Entrepreneurship" and on SMEs as a cross-cutting policy issue within APEC. The retreat format allowed more relaxed and theme-oriented discussions. Ministers recommended that this approach be adopted for future meetings to allow Ministers to fully deliberate issues that are of concern to APEC economies.

Ministers adopted the "Santiago Agenda on Entrepreneurship" which is published in a separate document.

Ministers recognized that SMEs are key generators of innovation, wealth and employment among APEC economies. The future of dynamic knowledge-based SMEs is core to the future of APEC.

The Agenda recognized two significant factors that allow SMEs to flourish.

First, is the enabling business environment that encourages the formation and growth of enterprises. Such an environment is characterized by stable macro and microeconomic policies that are business-friendly; legal and governance systems that uphold the rule of law; a regulatory framework that is facilitative of sustainable business growth; and, a culture that supports and rewards entrepreneurial endeavors.

Secondly, Governments should assist in realizing the potential of the SMEs in their economies by providing support for SME growth and by removing barriers that impede their growth.

With regard to the latter the Agenda identified:

• the need to develop the business expertise of entrepreneurs and to encourage the creation of an entrepreneurial culture that also recognizes the contribution of women, rural and micro-enterprises (MEs), minorities and young people, to business and economic growth;

• a role for Governments and financial institutions in facilitating access to finance for credit-worthy SMEs and MEs on affordable terms and which allows for access to professional advice for business improvement;

• the rapid diffusion of technological innovations and the realization of their value through effective commercialization as key contributors to economic growth; and

• the need for member economies to continue their efforts to strengthen both the local and international markets to which SMEs provide products and services through the removal of regulatory impediments to business development and trade.

Ministers will submit the "Santiago Agenda on Entrepreneurship" to the meetings of the APEC Foreign and Trade Ministers as well as Economic Leaders to be held in November in Chile, as a concrete outcome of the 11th APEC SME Ministerial Meeting. An endorsement by the Foreign and Trade Ministers, and Leaders will underline the importance of the APEC process in developing and supporting the requisite policy environment for the emergence of MEs and SMEs with the region. It will also enhance the linkage between the entrepreneurial process, job creation, and income generation for the wider APEC population.

Ministers welcomed the report of the Micro-enterprise Sub Group (MESG) on the outcomes of the Third Meeting of the Sub Group.

Ministers reaffirmed their commitment to the MESG and commended the progress made by the Sub Group in further strengthening its role. Greater focus on the objectives as outlined in its Terms of Reference will improve the work of this Sub Group.

In recognizing ME is a unique sector of the economy, Ministers noted the need for better participation by ME specialists in the Sub Group. They encouraged economies to invite appropriate ME agencies and experts to be the Sub Group focal points. These experts can contribute to technical and policy development projects undertaken.

The Ministers thanked those economies that provided studies, activities, and papers to better advance the support of ME, both urban and rural, in the APEC region.

Ministers commended Thailand's efforts in raising environmental management issues as one of the critical factors in enhancing APEC ME development. Ministers welcomed Thailand's offer to organize a self-funded seminar on "Environmental Management for APEC Micro-enterprises: Toward Sustainable Development" in 2005. Ministers look forward to receiving recommendations for better ME and SME initiatives which incorporate environmental awareness.

Ministers took note of the USA paper on International Financial Institutions (IFIs) and instructed the MESG to maintain an open dialogue with IFIs to study ways to develop and advance joint initiatives that would specifically benefit MEs in the Asia Pacific region. Ministers welcomed the MESG proposal for such a dialogue during the 2005 meeting in Korea. These activities can be undertaken independently from any future APEC/IFI Round Tables that may take place.

Ministers commended Viet Namīs proposal for a project to better quantify the contributions of IFIs and other international organisations in building capacity for the ME sector. They also welcomed Viet Namīs project on enhancing the business environment in the APEC region.

Ministers noted that in 2005, Peru will take forward its project "Micro and Small Enterprise Financing: A Tool for Mainstreaming the Informal Sector" with the purpose of analyzing the different aspects of formalization including the regulatory framework and how they affect the financing of micro, small and medium enterprises in APEC economies.

Ministers discussed the importance of creating a sound regulatory environment for ME development and called on economies to share information and best practices as well as to make an inventory of regulatory best practices. To this end, Ministers encouraged economies to support Indonesia's initiative to hold a workshop on this issue in 2005.

In enabling the creation of an entrepreneurial society, Ministers emphasized the need for promotion of technology-based incubators, as well as incubators for the resources-based economy, especially in agriculture.

Recognizing the work done by the Women Leaders Network (WLN), Ministers noted the recommendation that the MESG and WLN jointly conduct a research project on the participation of women in MEs. In capturing such sex-disaggregated data, economies can better understand the participation and economic contribution of women, including indigenous women, in MEs in the APEC region.

Ministers reiterated the importance of coordinating APEC efforts and activities directed towards promoting the growth and competitiveness of SMEs across all fora. This echoes the objectives approved by SOM, as outlined in the "APEC SME Coordination Framework".

Ministers applauded the work of the SMEWG in this regard. They noted that early progress had been made towards the proposed measures to improve coordination, including:

• a joint initiative by the SMEWG and the Committee on Trade and Investment (CTI) Sub-Committee on Standards and Conformance in addressing compliance with standards and conformance for SMEs;

• the Trade Policy Dialogue (TPD) on market access impediments facing SMEs held with experts from the Market Access Group (MAG) and the collaborative activities to develop strategies to overcome challenges faced by SMEs' access to Government Procurement Markets with the Government Procurement Experts Group (GPEG); and

• the first annual meeting of the signatories of the MoU on Cooperation Among APEC Financial Institutions Dealing with SMEs hosted by Thailand on 28 July 2004 and the APEC Conference on Promoting APEC Entrepreneurs: The Financiers' Perspective.

Ministers encouraged the SMEWG to continue its coordination role and to make efforts to further publicize/promote the Framework across all APEC fora. The SMEWG should also request that other fora communicate on a regular basis on proposals that will benefit SMEs and seek the input of the SMEWG as necessary. This will give recognition that the SMEWG has expertise in SME matters and that it will provide direction and add value to the efforts undertaken by all fora regarding SMEs.

Ministers noted the concerns raised in the report of the SMEWG Chair about the current management arrangements. Ministers looked forward to receiving a firm proposal to address that matter in 2005.

Ministers welcomed the report of activities being undertaken by the OECD Working Party on SMEs & Entrepreneurship. The SME Ministerial Meeting acknowledged the recent creation of the OECD Centre for Entrepreneurship; the celebration of The 2nd OECD Conference of Ministers responsible for SMEs held on 3-5 June, 2004, in Istanbul, Turkey; and "The Istanbul Ministerial Declaration on Fostering the Growth of Innovative and Internationally Competitive SMEs".

Ministers encouraged the SMEWG to continue to cooperate with the OECD through sharing of information, and to explore opportunities for further collaboration.

Ministers thanked APEC Business Advisory Council (ABAC), WLN, Pacific Economic Cooperation Council (PECC) and Inter-American Development Bank (IDB) for the ongoing contributions to the SMEWG and the MESG and noted the importance of the private sector perspective.

Ministers welcomed the continued participation of the WLN in the MESG and commended its commitment to the advancement of women and gender issues throughout APEC. They noted that the WLN is seeking support and requested SOM and APEC Secretariat to explore how this can be achieved. Ministers agreed that APEC needs to formulate and implement policies that promote the development of women-managed SMEs and MEs and business development services for those firms. Ministers also encouraged the sharing of best practices across APEC and welcomed the participation of WLN in the SMEWG and Ministerial Meetings.

Ministers welcomed the results of the Third APEC Education Ministers' Meeting, and especially their work on best practices for the teaching of English and other languages as business tools. Ministers requested that their officials cooperate with the Education Network (EDNET) in order to identify specific actions towards the collective development of a Strategic Plan for English and other Languages in the APEC Region. This will encourage greater mobility and assist SMEs and MEs in meeting the challenges posed by globalization.

Ministers recognized that terrorist attacks in the APEC region have engendered new requirements to secure the movement of people and goods. These are affecting the business environment for SMEs in the region. They supported APEC's commitment to undertake security measures related to trade, but recognized the need to address the business community's concerns about the increasing costs generated by security-related measures.

Ministers commended the progress and implementation of APEC funded and self-funded projects which offer valuable contributions to understanding the elements needed for entrepreneurship to flourish. Projects are listed below.

• The two phases of Chinese Taipei's project "From Income Generation to Patent Creation: Incubating Innovative Micro-enterprises", which focused on entrepreneurship promotion through incubation of innovative new ventures, and the "Symposium on Industrial Clustering for SMEs" were also commended. Ministers expected the industrial clustering symposium to develop best practice guidelines.

• Russia's International Conference on "Small and Big Business Interaction", which offered a valuable exchange and networking opportunities.

• The second stage of the Canada/Philippines APEC-IBIZ project on "Implementation and Program Enhancement" has been successful in expanding the network of business counselors and national institutes.

• The Bank Rakyat Indonesia (BRI) International Visitor Training Program implemented by Indonesia exemplified of how developing economies advance their role in international cooperation. Ministers thanked the Indonesian Government and BRI for funding, hosting and implementing a very professional and advanced training program, which focused on the benefits of commercial microfinancing.

• Indonesia's project "The Need and Availability of Micro-Finance Services for Micro-Enterprises: Bringing Multi-Level Good Practices into Local Context" was also commended.

• Korea's multi-phased project "Enabling e-Micro-enterprise Environment: Through Survey and e-Community Based Capacity Building", which involved a survey, forum and training workshop was commended for initiating a new model of cooperation to promote SME informatization among the APEC economies.

• USA's Voluntary Visitors Program for APEC SME Government Officials, which included a Standards Training Program module, was welcomed as an example of public-private sector cooperation in capacity building.

• Brunei's workshop for SME Managers on Reducing SMEs Compliance Cost, which will address issues related to the cost of compliance to Standard and Conformance processes for SMEs to gain access to overseas markets, and Australia's SME Impediments Monitoring System, were welcomed as steps to ease barriers to SMEs in international trade.

• The 7th APEC SME Business Networking Promotion Forum and the APEC Meeting for Cooperation among SME Policy-Implementing Agencies, both hosted by Japan External Trade Organization (JETRO), to be held in October in Sendai, Japan are commended as practical steps to improve networking among agencies, SME organizations and SMEs themselves.

• Ministers welcomed China's efforts to host the 3rd APEC SME Technology Conference and Fair, and the 2nd APEC SME Service Alliance Forum (SMESA) in Ningbo. Ministers recommended China to further coordinate the efforts of the SMESA with the SMEWG and the APEC process in general. The SMESA is able to play a valuable role in the APEC process, especially enhancing the place for SMEs in it.

Ministers welcomed Korea's theme for 2005 "Promoting Innovation of SMEs". The theme recognises that innovation is a practical response to the fast-changing international business environment. There will be three sub-themes:

• Human resources and technology development through industry and academia linkages

• Enhancing availability of capital to innovative SMEs

• Networking and clustering for innovative SMEs

Ministers took note that the next SME Ministerial and related meetings, such as the WLN and the business forum will be held in Daegu, Korea, from 28 August to 3 September 2005. In conjunction with the meetings, the "Innovative Technology Show 2005" (Inno Tech Show 2005) will be held as a showcase for innovative SMEs to open new business opportunities and enhance public awareness of their state of the art technology.