APEC Young Entrepreneurs’ Summit 2011

Kuala Lumpur, Malaysia, 17 October 2011
  • Remarks by Ambassador Muhamad Noor, Executive Director, APEC Secretariat

Honourable Deputy Minister Dato’ Mukhriz Tun Mahathir
Distinguished guests, ladies and gentlemen:

Please allow me to first express my sincere appreciation and gratitude to Malaysia – and to MITI, SME Corp, the International Malaysian Chamber of Commerce, and the APEC Business Advisory Council – for inviting me to speak at the first-ever APEC Young Entrepreneurs’ Summit.

It’s an honor for me to be at this summit and to speak alongside the Honourable Deputy Minister Dato’ Mukhriz Tun Mahathir on the challenges entrepreneurs face in the Asia-Pacific region and how APEC is working to help create a business environment that is conducive for them to prosper. In this economic climate, start-ups and small businesses face tremendous challenges due to their size and lack of resources – including difficulties in accessing new markets and capital. .

Over the last few years, APEC has taken concerted actions – and concrete steps – to address these challenges by fostering a more facilitative business environment, helping entrepreneurs grow and prosper and bolstering the region’s small, medium and micro-enterprises.

This 3-day summit is an extension of that work. It is also an excellent opportunity for entrepreneurs and small business owners to not only network with colleagues and venture capital companies, but also for APEC to learn about the key issues and concerns that directly impact young entrepreneurs in this region.

I am also pleased to learn about how this summit closely aligned its goals with APEC’s priorities – including the Growth Strategy, APEC’s Regional Economic Integration agenda and the APEC SME Working Group’s 4-year Strategic Plan. This summit brings to the fore APEC’s key priority work areas, giving them prominence and adding significant value to our future work including in the area of inclusive and innovation-driven growth.

Business and the APEC agenda
Engaging business is, and always has been, one of APEC’s top priorities. In fact, APEC is the only organization of its kind that reserves a seat for business at all of its meetings. APEC created the APEC Business Advisory Council – or ABAC for short – specifically to ensure that a business perspective is injected into the APEC process. Through ABAC, the business community can voice business sector concerns.

ABAC presents business-focussed recommendations directly to APEC Leaders in an annual open-dialogue session. One of those recommendations that came from business sector was for the establishment of a Free Trade Area of the Asia-Pacific – or FTAAP. The FTAAP has since become one of APEC’s key priorities and is regarded as “a major instrument to further APEC's regional economic integration agenda.”

More recently, ABAC has put a strong emphasis on food security. After discussions about its direction, the APEC Policy Partnership on Food Security was created in September 2011, which brings together private and public sector representatives. APEC’s approach to food security is based on the commitment to market-led economic growth, free and open trade and investments, and sustainable development of the region’s agricultural sector. And it is clear that without food security, it will be very difficult to sustain a “Conducive Business Eco-system.”

The Economic Situation and Outlook
Amidst concerns about a slowdown in the US economy and a sovereign debt-crisis in the Euro-zone, the IMF in its most recent World Economic Outlook published in September has lowered the global growth rate to 4% from 2011 from 4.3% in its last report in June. The US economy is expected to expand by just 1.5% in 2011, down from 2.5% in its earlier forecast. Europe is also predicted to slow considerably with 2011 growth downgraded from 2% to 1.6%. Developing economies, on the other hand, are expected to expand by 6.4% in 2011 and 6.1% in 2012.

It should be noted that unemployment has increased in many important markets. Indeed, growth is not as robust as it once was in some of the most important markets in the world such as Japan for some time, and the EU and the US more recently. As the global economy becomes more inter-twined, shocks and imbalances in other markets affect this side of the world.

Exacerbated by high unemployment rates in the United States, we have seen people demonstrating on Wall Street in New York and demanding for more equitable distribution of wealth. While food and commodity prices have somewhat eased to 14% below the most recent peak in July 2008, prices are still 9% above levels recorded in December 2010 and the high costs continue to pose a threat to lower income households, adding to rising social and economic tensions.

APEC 2011 Priorities
This year, APEC is focusing on three priority areas: (1) strengthening regional economic integration and expanding trade; (2) promoting green growth; and (3) advancing regulatory cooperation and convergence in the region.

Significantly, APEC Trade Ministers at their meeting in Montana in May this year also identified three “next generation” trade and investment issues on which to focus this year. They are: (1) facilitating global supply chains; (2) enhancing SME participation in global production chains; and (3) promoting effective, non-discriminatory and market-driven innovation policy.

Work has been done in these areas to improve the flow of goods and services within the Asia-Pacific and to help SMEs internationalize. A recent workshop was conducted in Montana last May where participants shared strategies on how SMEs can better engage in cross-border trade – for example, by banding together to seek overseas opportunities. APEC’s small businesses and entrepreneurs will no doubt be among the main beneficiaries.

Furthermore, APEC has recognized the role that women play in the economy. Just last month, headlined by US Secretary of State Hillary Clinton, the APEC Women and the Economy Summit brought together the region’s senior private and public sector representatives for a dialogue on fostering women’s economic empowerment in APEC economies.

The summit resulted in a declaration that seeks to improve women’s access to capital and markets, build their capacity and skills to better accrue the benefits of global trade, and boost their representation in leadership roles in both the private and public sectors. Indeed, Minister Y.B. Senator Dato’ Seri Shahrizat Abdul Jalil, Minister of Women, Family and Community Development got a huge round of applause after her intervention when she spoke about Malaysia’s progress in this area.

With these priorities and actions in mind, APEC resolved to ensure that future economic growth in the region is more inclusive and balanced, and that its benefits are spread more widely across gender and economic lines.

APEC’s work on bolstering SMEs
If you would allow me to share some history with you, over a decade ago, APEC established the SME Working Group to promote small business development and to help SMEs better engage in international trade. The group has made great strides in its endeavor to support the development of the region’s small businesses.

Among numerous projects, the APEC SME Working Group has held a series of capacity building seminars since 2007 that dealt with access to credit, trading across borders, and employing workers. These projects are implemented under the SME Working Group’s Strategic Plan, and this Plan will continue to guide the work of the Group through 2012. APEC’s Policy Support Unit monitors these projects’ outcomes and evaluates their impact for the purpose of learning what future strategies might be deployed in this area.

APEC’s work on facilitating a “Conducive Business Ecosystem”
Structural Reform
Over and above helping SMEs directly, APEC is also helping to create a more favorable environment for small businesses to thrive. In the words of today’s roundtable session, we have been working to promote a “Conducive Business Eco-system.” In fact, APEC addresses these structural changes and reforms because they are essential to achieving sustained economic growth and advancing regional economic integration.

In 2004, an ambitious 5-year work programme called the Leaders' Agenda to Implement Structural Reform (LAISR) was put in place. The agenda covered five areas including: regulatory reform, competition policy, public sector governance, corporate governance, and strengthening economic and legal infrastructure.

Progress on these areas was reviewed last year in the context of developing a new structural reform agenda that expands on earlier work.

In 2010, APEC Leaders endorsed the APEC New Strategy for Structural Reform (ANSSR) that aims to promote balanced and sustainable growth by fostering transparency, competition and better functioning markets in the Asia-Pacific. In addition, this new strategy emphasizes a social dimension that includes enhancing opportunities for women and pressing for more education and SME development.

An APEC Policy Support Unit study found that structural reforms in key infrastructure industries resulted in lower prices, increased consumer choice, and improved efficiency and productivity. It projected that more competition could lead to gains that would be almost twice the size of the gains from further liberalization of merchandise trade. The study also estimated that further reform in the energy, telecommunications and transport sectors of the APEC region will generate US$175 billion a year in additional income.

APEC Ease of Doing Business (EoDB) Action Plan
Fostering a favourable business environment is especially important for SMEs because inefficient trade rules negatively impact small scale operations. To help SMEs, APEC adopted the Ease of Doing Business Action Plan to make doing business in the region 25% cheaper, faster and easier by 2015, with an interim target of a 5% improvement by the end of this year.

To do this, APEC is focusing on five priority areas: (1) starting a business; (2) getting credit; (3) enforcing contracts; (4) trading across borders; and (5) dealing with permits.

Awareness-building workshops have been conducted on each of the priority areas. Through these workshops, APEC economies are strongly encouraged to undertake regulatory reforms to reduce the cost and complexity of doing business, from modifying taxation to simplifying licensing procedures. Currently, APEC is providing more customized capacity building measures in economies that have sought specific assistance on their reform efforts.

A quantitative assessment on APEC’s progress towards the 5% target by the end of 2011 is currently being finalized. The study is based on the World Bank’s Doing Business indicators from 2009-2010 – the latest data available. The assessment shows that APEC’s improvement is equivalent to 2.8%, exceeding the pro rata benchmark. It appears that APEC is therefore on track to meeting the 5% target by the end of this year, which is big accomplishment given the state of the global economy.

Advancing regulatory cooperation and convergence
Just as important, APEC is promoting greater regulatory cooperation and convergence among its members – a key priority for APEC in 2011.

Together with the Organisation for Economic Cooperation and Development, or OCED, we developed the APEC-OECD Integrated Checklist in 2006 which served as a voluntary tool that member economies could use to assess their respective regulatory reform efforts – for example: regulatory quality, competition policy, and market openness.

In 2011, APEC commissioned a baseline study that provided a snapshot of where APEC economies’ regulatory systems are today with regards to their adoption and implementation of Good Regulatory Practices – or GRPs. The study reviewed how GRPs are applied across the APEC region in 3 areas: (1) Internal coordination of rule-making activity; (2) Regulatory impact assessment; and (3) Public consultation mechanisms. The study identified patterns where practices meet good international practices and areas they did not.

The study indicates that all APEC economies have made visible progress in applying GRPs in domestic regulatory activities – and about half of APEC economies have adopted explicit strategies for regulatory reform. Significantly, all APEC economies have some kind of regulatory review underway. However, more work needs to be done to merge trade and competition authorities with mainstream regulatory policy making.

In Malaysia, for example, one program offers businesses the ability to apply online for licenses and permits in all sectors of the economy. The Business Licensing Electronic Support System (or, BLESS) enables the applicant to track progress, making the regulator accountable to the public and expediting the application process. In its current phase, BLESS covers the manufacturing, construction and hotel sectors.

Another structural reform enacted by Malaysia reduces the time it takes to resolve commercial disputes. With added human resources and the adoption of information technology, the courts can process cases in less than half the time it took prior to 2007.

These examples and others from around the region demonstrate APEC members’ intent to create a higher quality regulatory environment that reduces the emergence of unnecessary technical barriers to trade and creates favorable business conditions.

APEC takes myriad actions to support business, in particular SMEs and young entrepreneurs, to facilitate a more conducive and favourable business environment. What I have shared with you today is just a glimpse of the on-going work that APEC is undertaking to advance its free and open trade and investment agenda.

APEC shares the business community’s concerns about sustained economic growth in the region and we continue to work towards our mission of advancing free trade for Asia-Pacific prosperity. The outlook for the APEC region remains a positive one; and there are tremendous opportunities that lay ahead of us for success in the globalised world.

I am confident that this Summit will be of great benefit to you, and to us at APEC as well. This is indeed a great opportunity for all of us to share our knowledge and to work closely together towards a more integrated and prosperous region.

Thank you.