Your Excellency Mr. Vo Hong Phuc, Chair of the 13th APEC SME Ministerial Meeting,
Ladies and gentlemen,
It gives me a great honour to present, on behalf of the APEC Secretariat, to you an update of SME related activities taking place in APEC since the last SME Ministerial Meeting in September 2005.
SMEs have long been playing an essential role in the APEC region. Accounting for over 95% of all enterprises and providing more then 60% of private sector employment. SMEs have made a very important contribution to GDP growth, socio-economic development and prosperity. They have also proved their resilience and dynamism in responding to fast changing conditions, even at the times of economic upheaval and crisis. SMEs have become even more important in recent years in advancing our efforts to overcome the socio-economic disparity and achieve the UN Millenium Development Goals. That is why the promotion of SME development has always been given a priority in APEC activities.
As the APEC Secretariat has already circulated Report No. 2006/SMEMM/002 on APEC Fora SME-related Activities during the period from September 2005 to September 2006, allow me just to highlight some main features of these activities.
Recognising the great importance of SMEs and Micro Enterprises (MEs) for socio-economic development in the region, at their meetings in Korea last November, Leaders and Ministers agreed to develop a private sector agenda. This has the aim of creating an enabling environment for small businesses to improve their competitiveness in the marketplace, while at the same time, promoting innovation as the main driving force in creating dynamic SMEs and MEs.
This agenda has since been implemented by APEC Senior Officials with additional input from other APEC fora. This included an "Ease of Doing Business" Symposium on Private Sector Development organized by Canada and New Zealand on the margins of the second ABAC meeting of the year in Montreal. This Symposium concluded that there exists a strong positive link between the quality of an economy's domestic regulations and its sustained economic performance. Delegates agreed that effective and market-friendly regulation is particularly important for SMEs, and that according to the World Bank's report on "Doing Business", APEC is faring well in comparison with other regions of the world. The Symposium warned, however, that APEC must pay continual attention to its regulatory performance to remain competitive.
The outcomes of this Symposium served as the basis of the "APEC Work-plan on Private Sector Development" that has since been endorsed by the SOM and will now be managed by the SME Working Group. The centerpiece of this work-plan is a series of capacity building workshops to be held by the APEC host economy each year from 2007 to 2010. The first workshop on "Starting a Business" will be hosted by Australia on the margins of the SME Working Group and Ministerial Meetings in Hobart in March 2007. The themes for the following two workshops are "Obtaining Business Licenses" during Peru 2008 and "Access to Capital" for Singapore 2009. The fourth theme will be selected in collaboration with Japan and in consideration of progress made in the years between then and now.
At their meeting in November last year, APEC Ministers also called for additional APEC activities to be developed that promote international trade for SMEs and MEs. Ministers agreed that many of these businesses had high export potential but lacked formal channels to export their products and services. Smaller businesses also face difficulties when confronted with impediments to trade, particularly behind the border barriers, as they usually do not have the financial capacity to overcome these problems. Ministers have called for these problems to be dealt with and for continuing efforts in areas such as improving access to formal sector finances, particularly for MEs.
The call by Leaders last year for APEC to create a stronger environment for promoting the activities of SMEs and MEs, has also seen APEC expanding its activities in areas such as improving small business understanding of intellectual property rights issues. IPR issue plays an important role for all businesses regardless of size, and are a key element in innovation. Increasingly, small business is realizing the hidden value of this often untapped wealth. However the problem for many SMEs and MEs is that they feel that the integration of IP concerns into their businesses may be complicated and expensive ventures. APEC is working with Member Economies to develop possibilities for future cooperation on IPR issues for smaller businesses. An "APEC Workshop on Intellectual Property for Small and Medium-Sized Enterprises and Micro-Enterprises" was held in February 2006 in Ha Noi. Organized by the APEC IPR Experts Group, this marked an important milestone in the discussion of IP issues relating to SMEs.
In the area of dealing with corruption, SMEs are particularly vulnerable. While larger businesses have the resources to defend their businesses from threats of corruption, SMEs and MEs often do not have the time, knowledge of government systems, connections and other resources to deal with corrupt official or companies. The APEC Anti-Corruption Task Force has undertaken a number of initiatives that strengthen the capacity of small businesses and clarify the options open to them if confronted with corruption. It must be stated though that while APEC is building capacity to increase technical knowledge and promote the greater use of information technology, these will not in themselves reduce corruption. As such APEC is combining this knowledge with improvements to public sector performance, by enhancing competent and clean political and managerial leadership and strong civil society, and increasing news media involvement in exposing corruption.
Since the last meeting of SME Ministers in Korea, APEC has held a number of sectoral ministerial meetings. These include two meetings of APEC Finance Ministers, a meeting of APEC Ministers Responsible for Trade, a meeting of APEC Ministers on Avian and Influenza Pandemic, and a Ministerial Meeting on Oceans.
The Finance Ministers' process has already produced significant results for SMEs, particularly with the MOU on Cooperation Among APEC Financial Institutions Dealing with SMEs which was signed in 2003. This was further enhanced through an APEC seminar on "APEC Financial Institutions Dealing with SMEs: Sustaining SME Development through Banking Knowledge Sharing" that was held earlier in the year.
The Ministerial Meeting on Avian and Influenza Pandemics in May adopted the APEC Action Plan on Fighting Avian and Influenza Pandemic, in which Ministers also considered the importance of preparedness planning for smaller businesses. In the event that a pandemic did strike our region, as was the case with SARS in 2003, it is often the smaller operators that suffer the most. As part of preparations, Ministers called for improved collaboration between small and medium sized businesses with large corporations to assist in sector-wide preparedness and response planning.
Considering that most businesses in marine industries are run by smaller operators, APEC Oceans Ministers meeting in Bali last September set in place a course of action that seeks to enhance market opportunities while protecting marine resources for the future. Ministers adopted the Bali Plan of Action that seeks to provide a permanent and sustainable foundation for the economic and social well-being of people employed in marine-related industries. The plan also calls for increased attention to ensure adequate scientific and economic information, data, and earth observations on which future planning decisions can be based. Greater capacity building and technical assistance are also being planned to ensure that all economies in the region share the benefits of oceans resources.
Finally, the Meeting of APEC Ministers Responsible for Trade in Ho Chi Minh City earlier this year echoed the call by the APEC Ministerial Meeting last year in Busan for APEC to make greater efforts to promote international trade for SMEs and MEs. It is obvious that our smallest businesses have rather high export potential but lack channels and capacity to conduct export.
Over the past years, APEC has carried out important activities to promote the development of SMEs and MEs. Nevertheless, there are still many challenges to be overcome in order to utilize the full potential of SMEs and MEs in the APEC region. Among the challenges, the following factors have attracted great attention of the stakeholders:
To create a truly enabling environment for the development of SMEs and MEs through the improvement of legal, policy, macro-economic infrastructure and tackling all other "behind-the-border" problems;
To provide more favourable conditions for SME and ME activities through diverse programs of human resources development, financing, and technical assistance;
To encourage and facilitate the business activities of SMEs and MEs through creating more access to international markets, enhancing export opportunities, and effectively reducing transaction costs;
To strengthen the international competitiveness of SMEs and MEs through further promotion of capacity building and innovation activities.
In this context, the theme of the SME Ministerial Meeting this year as "Strengthening SME competitiveness for Trade and Investment" and the three sub-themes "Business enabling environment for SME"; "SME capacity building for trade and investment"" and "Facilitating linkages for SME" are highly appropriate and timely. The issues being discussed and expected outcomes will certainly help in realizing one of the priorities of the APEC Viet Nam Year to "Enhance the Competitiveness of Small and Medium Enterprises" in our efforts towards "a Dynamic Community for Sustainable Development and Prosperity".
We have high expectations that the Ministerial Meeting will be a great step forward in creating an environment that is conducive to further developing and enhancing the competitiveness of SMEs and MEs so that they can more effectively play their role as an important contributor to the socio-economic development and prosperity of our region.
I thank you and wish the Meeting great success.