MANILA, Philippines – While there are small and medium enterprises (SMEs) already connected to the global value chains, the globalization and integration focus of the Asia-Pacific region is the “harder stuff” that the Asia-Pacific Economic Cooperation (APEC) needs to attend to.
APEC Executive Director Dr Alan Bollard said that cottage industries are local and not globalized.
“They often don’t have the money, human capabilities, sometimes, the technical capabilities to scale up and access those,” Bollard pointed out in an exclusive interview with Rappler.
In his speech during the opening of the APEC 2015 Informal Senior Officials’ Meeting (ISOM) on December 8, Trade Secretary Gregory Domingo distinguishes those SMEs that are part of the global value chains already, but there are those which still operate as cottage industries, which are smaller than SMEs and may also include some micro-enterprises.
Domingo further defined cottage industries as those “smaller business people who have one, two, 3, 4, or 5-person type of operations that have.”
“Some of them produce very good quality products. They are mainly in food processing. They are also in handicrafts. They are also in furniture and also in the production of smaller items. And these are the ones that really need the most help,” Domingo said.
Bollard said that those “globalized” SMEs are already “taking a bigger and bigger role already.”
More than 90% of businesses in APEC economies are SMEs.
“We see that in the global value chains. Actually, East Asia leads the world in global value chains. So until 10 years ago, you had to be a multinational or a very big government enterprise if you want to trade in a major way across borders. It’s changed,” Bollard pointed out.
Globalized SMEs are not only built in one country, he said. “They are built in a whole bunch of different economies and components and services going in and out of economy. That’s well underway.”
As the Philippines hosts APEC next year, one of the priorities identified is the mainstreaming of SMEs in regional and global markets, NEDA director general Arsenio M. Balisacan said in his keynote speech at the Symposium on APEC 2015 Priorities-Informal Senior Officials’ Meeting (APEC-ISOM) on December 8.
The SME agenda is very critical not only to APEC but to the forward movement of global trade in general, Domingo said.
“SMEs are one of the stronger voices now opposing global trade and that is because they hardly feel the benefits of global trade. Many of the SMEs see the influx of goods and services in their own markets but find it very cumbersome and difficult to take advantage of the free trade agreements because of the very cumbersome rules and procedures,” the trade chief said.
As such, APEC will look into projects to help not only the SMEs, but the cottage industries.
“The Philippines is going to propose a number of projects to help them improve and to make use of that Filipino experience on that,” Bollard said.
He declined to give details of the project as they have yet to be unveiled, but added that APEC delegates will be in Clark Freeport in Pampanga in late January or early February to talk about some of those very specific things, and what other economies can offer as well.
Introducing and spreading new business opportunities to SMEs will help support growth in the sector, Balisacan said. (READ: Technology key to developing SMEs) – Rappler.com
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