SME Development in Southeast Asia: ASEAN’s 10-Year Strategic Action Plan

The Association of Southeast Asian Nations (ASEAN) began to cooperate on small and medium-sized enterprise (SME) development in 1995. Since then, strengthening SMEs has become a priority concerning policy formulation and resource allocation.

In January 2016, the ASEAN Coordinating Committee on Micro, Small and Medium Enterprises introduced the 10-year ASEAN Strategic Action Plan for SME Development 2016-2025.

The plan’s five main goals are:
1. Promoting technology, productivity, and innovation
2. Increasing access to finance
3. Improving the policy and regulatory environment
4. Promoting entrepreneurship and human capital development
5. Enhancing market access and internationalization

Promotion of technology, productivity, and innovation

There is a wide gap between SMEs and multinational corporations (MNCs) in terms of productivity and the use of technology. Therefore, it’s part of the ten-year plan to increase the interconnectivity of SMEs and the linkages between SMEs and MNCs. Industry clusters will in future serve as a platform to promote the use of technologies and enhance business-academia cooperation to boost innovation.

Increasing access to finance

ASEAN is working on an institutional framework to enhance SMEs’ access to finance. Governments in the member states have established so-called Credit Guarantee Schemes, which back SME loans and repay banks in case an SME loan default.

Another critical pillar of the 10-year plan is a program to increase financial inclusion and financial literacy. Ways to accomplish this are direct government funding for specific projects and government-funded banks focusing on SME finance.



Improving the policy and regulatory environment

Currently, each nation has its own regional SME development framework and regulations in place. In the long-term, the goal is to align national strategies with regional strategies and introduce transnational regulations that foster regional integration. Part of this is to streamline permit and registration procedures, to enable SMEs to conduct business faster and at a lower cost.

Promotion of entrepreneurship and human capital development

SMEs throughout the entire region faces a shortage of industry-ready skilled workers. Primarily, business and entrepreneurship skills are missing, which are one of the determining factors of an SME’s success. Therefore, the 10-year plan includes the establishment of programs to improve management and entrepreneurship education.

While national programs are essential for SME development, transnational programs are especially aiming at import-export-focused SMEs that operate cross-border. It might take longer to implement measures on a multinational level, but in the long-term, such programs will give a significant boost to international trade within the region.

Enhancing market access and internationalization

SMEs in the region have limited information on how to access international markets and lack a basic understanding of international trade regulations. This lack of technical knowledge prevents SMEs from participating in global value chains.

ASEAN will, therefore, create information platforms and capacity building programs to increase SMEs’ contribution to exports. Third-party trade platforms like Export Portal can provide SMEs with the tools and knowledge needed to engage in international trade, without the need to come up with their systems.

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