Strategy for Reinvigorating Economic Growth with Dual Engine: SMEs and the Asia Pacific Economy

Organised by The Small and Medium Enterprise Agency of the Ministry of Economy, Trade and Industry (METI), Japan

Honourable Ministers, Chair,
Distinguished Guests, Ladies and Gentlemen,

Please allow me to express my sincere appreciation and gratitude to Minister Ohata and to Japan for hosting this Ministerial Meeting. On behalf of the APEC Secretariat, thank you for the warm and generous hospitality extended to us here in Gifu City.

This morning's Ministerial Meeting is important and timely. It is important because SMEs make up more than 90 percent of businesses in APEC and employ as much as 60 percent of the region's workforce. For those reasons, it is necessary that APEC continues its support for the development of SMEs.

The meeting is timely because the business environment is changing. The global economy is recovering after a difficult couple of years, and yet there are some questions as to the strength of the recovery. We need to take account of these changes in the business environment and consider how the growth of Micro Enterprises and SMEs should be fostered. It was under changing economic circumstances that APEC Economic Leaders at their meeting in Singapore last November expressed that we can no longer return to "growth as usual."

Accordingly, as you hear from this year's APEC Senior Officials meetings Japan - as APEC's 2010 host economy - has taken the lead in developing a New Growth Strategy incorporating the attributes of balance, inclusiveness, sustainability, innovation and human security.

The ongoing work of the New Growth Strategy shows that there is greater consciousness today of the centrality of inclusiveness in the APEC agenda which translates into the necessity of spreading the benefits of economic growth more widely. Supporting the development of SMEs is a key component for this objective to take hold, given that in APEC the majority of businesses and employment opportunities are driven by the region's entrepreneurs.

SMEs are also often the "vehicle" through which new ideas and innovations are translated into products, including services, for the benefit of society. In other words, SMEs are also relevant to realising innovation-based growth.

The APEC SME Working Group has made great strides in its endeavour to support the development of the region's small businesses. Among other projects, the working group has held a series of capacity building seminars since 2007 that dealt with important issues affecting SMEs, including access to credit, trading across borders, and employing workers. These seminars are organised in the context of implementing APEC's Ease of Doing Business Action Plan.

To help SMEs embrace the culture of innovation and maximise the benefits of technology, the Daegu Initiative was launched back in 2005. Under this initiative, an APEC SME Innovation Centre has been established in Korea to offer consulting services to small businesses and provide opportunities for economies to share innovation policy experiences. The "Green Initiative" is not doubt the right next step.

The APEC SME Crisis Management Centre was launched earlier this year in Chinese Taipei to help SMEs monitor emerging crises and take steps to mitigate against them. Electronic newsletters have since been distributed and workshops have been conducted by the Centre to provide SMEs advice on how to deal with the potential challenges of economic shocks.

These SME-related 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. In a related context, APEC's Policy Support Unit is monitoring these projects' outcomes and evaluating their impact for the purpose of learning what future strategies might be deployed in this area.

Apart from the many SME-specific initiatives, APEC's broader agenda on trade liberalisation and facilitation also benefits small businesses. Since APEC was established in 1989, APEC member economies' average tariffs have been reduced from 17 percent to 6.6 percent tariff reduction translates into wider markets including for SMEs. Furthermore, under APEC's Trade Facilitation Action Plan covering the period between 2002 and 2006, member economies achieved a 5 percent reduction in business transaction costs. Moreover, the Second Trade Facilitation Action Plan, currently being implemented, aims to achieve a further reduction in transaction costs.

Efforts in the area of structural reform undertaken by APEC pertaining to regulatory policy, competition policy, public sector governance, corporate governance and economic and legal infrastructure have no doubt also benefit SMEs.

I am confident that this Ministerial Meeting will contribute significantly to the development of the SMEs as well as the APEC Growth Strategy - particularly by deepening the inclusive growth agenda as well as foster innovation.

The APEC Secretariat looks forward to the direction that Ministers will set at this Ministerial Meeting; and to the continued implementation of an ambitious yet practical agenda to make APEC even more supportive of SMEs in the region and businesses generally.

Thank you.