SME development in the Asia-Pacific

When I came back to Singapore in 1986 I was 19 and probably the most unusual looking person in Singapore at the time. I had purple hair and wore pointy toe shoes in two different colours. Did I think a bank would lend me money to start my own salon?

About twenty years ago, a young woman, fresh out of hairdressing school and with hair dyed purple, decided to put down US$665 to open a salon and to sell fashion and accessories to youth and young adults. Few people believed that her business could survive, let alone thrive. But it did. Today, Elim Chew has built a multi-million dollar street wear company called '77th Street' with 14 shops in Singapore and a booming mall in the heart of Beijing, China to call her own.¹

Her story is not uncommon. In the Asia-Pacific, small businesses like Chew's are abundant; and they have become drivers of the region's growth. Her story is also part of a recent World Bank report on the "Economic Opportunities for Women in East Asia and the Pacific," which showcases successful SMEs started by women and considers individual economies' business climates based on the World Bank Ease of Doing Business Index and sub-indices.²

Forging an enabling business environment is also an APEC priority. To this end, last year APEC set an ambitious target to make it 25 percent cheaper, faster and easier to do business in the region by 2015, with an interim target of a 5 percent improvement by 2011.³ To achieve these goals, APEC is using the World Bank's sub-indices as benchmarks to build members' capacity for reform and to ensure that tangible (and equitable) benefits ensue.

What this means is that APEC economies are strongly encouraged to undertake regulatory reforms to reduce the cost and complexity of doing business, from modifying taxation and superannuation arrangements to simplifying licensing processes.

Already there have been marked improvements in APEC economies' ranking in the World Bank's 'Doing Business 2010' report. For example, under the 'starting a business' sub-index, Chinese Taipei has climbed 90 places between 2009 and 2010 (from number 119 to number 29), and Korea has climbed 80 places in the same period (from number 133 to number 53).

Peru's ranking, under the 'employing workers' sub-index, has climbed 49 places between 2009 and 2010. This led to Peru being presented as a case study for other APEC members to consider at an 'Employing Workers Seminar' that was held in Hong Kong, China on 9 June 2010. These reforms have in turn contributed to improvements in Peru's economic performance, with Peru's growth since 2007 now the highest in Latin America.

In a broader way, efforts to make it easier to do business also bolster local entrepreneurs and SMEs. Much has been done in APEC to enhance SME performance and sustainability, especially during times of crisis. A landmark APEC SME Crisis Management Centre was established in Chinese Taipei in May, and back in 2001 APEC created the International Network of Institutes of Small Business Counsellors to train and certify consultants who provide sound business advice to SMEs.

APEC's Small and Medium Enterprises Working Group is now undertaking a series of ten capacity building seminars based on the World Bank Ease of Doing Business Index and sub-indices to improve SME competitiveness and to expand entrepreneurship. To date, seminars on seven of the ten sub-indices have been conducted. Three more are planned for 2010 and 2011.

Says Chew, "When I came back to Singapore in 1986 I was 19 and probably the most unusual looking person in Singapore at the time. I had purple hair and wore pointy toe shoes in two different colours. Did I think a bank would lend me money to start my own salon? Of course not!"

Today APEC is making it easier for SMEs to access finance. A workshop targeted at government and SME representatives was held in Singapore in 2009 that showed participants how to reduce the compliance costs of getting credit. Other similar capacity building workshops are slated for 2010 and 2011 and will focus on developing the region's microfinance institutions.

For an SME to be as successful as Chew's '77th Street', it requires a certain degree of luck, a high level of ingenuity, and a whole lot of support at the local level.

During a series of SME-related activities held at the margins of the 30th APEC SME Working Group Meeting in June, numerous APEC economies came forward to present domestic initiatives that have benefitted their SMEs.

Korea's Small and Medium Business Corporation (SBC) provides financial and non-financial assistance to develop SMEs. Malaysia talked about its SME Corp. that provides market access and business advisory services to spur SME development, and Canada presented its Industrial Research Assistance Program (IRAP) that provides expert knowledge and technical and business advice to encourage SME innovation.

Indeed, a lot is currently being done to develop and enhance SMEs within individual APEC economies at the local level. APEC provides the necessary platform to bring together government and SME representatives to gain practical insights and to share best practice.

According to Anne Pigeon, seminar presenter and Senior Policy Advisor at Industry Canada, "The greater strength of APEC is information sharing. The fundamental problems facing SMEs are similar across economies and there is a lot to be learnt from each other."

SMEs account for the majority of businesses and employment within the APEC region, and contribute significantly to output. Supporting activities that promote small businesses is therefore a necessity for creating and sustaining long-term growth. APEC's SME working group continues to encourage the development of SMEs to build their capacity to engage in international trade.