ASEAN SME Index 2014

Small and Medium Entreprises (SMEs) play an important role in ASEAN economic integration, as 95-99% of firms in the region are SMEs. SME development is embedded in the third pillar of the ASEAN Economic Community (AEC) Blueprint, namely, equitable economic development, and its development would directly contribute towards achieving the implementation of the third pillar. SMEs in the region, however, are reported to have difficulties in access to finance, technology, and competitive markets. Entrepreneurship, compliance with 22 standards, marketing and management are also some of the other problems faced by SMEs in ASEAN. Usually, SMEs are in a much weaker position than large firms to deal with the vicissitudes of economic volatility. They will be forced to respond to these developments by implementing risk management strategies, speeding up customer payments, focusing on the retention of skilled staff where possible and critical for high tech SMEs, cutting costs, diversifying into new markets, and improving their corporate governance. These, however, are not likely to be an adequate response and will need to be supplemented by appropriate policies aimed at addressing these vulnerabilities. As such, an appropriate SME policy framework is fundamentally important for the growth of the private sector, in particular, SMEs, as is the need to ensure that the adverse consequences of external or exogenous disturbances emanating from regional trade partners have a minimal disruptive impact on domestic and regional economies.