2000 APEC Small and Medium Enterprises Ministerial Meeting

APEC Ministers responsible for Small and Medium Enterprises (SMEs) met in Bandar Seri Begawan on 22-23 June for their seventh meeting. Representatives of SMEs throughout the APEC region joined them in interactive sessions.

The meetings discussed matters that are concerned with responding to the needs of APEC SMEs, focusing on four main issues:

The discussions between Ministers and the business sector were supported by a Business Forum and participation from the associated Women Leaders Network Meeting, an E-Commerce Workshop and an E-Trade Fair. Ministers and business representatives welcomed the opportunity for their dialogue and highlighted its usefulness and effectiveness in understanding the key policy issues facing SMEs. Ministers also commended the business community of Brunei Darussalam on its initiative to hold a Town Hall Session for Young Entrepreneurs, which was attended by young entrepreneurs from the region.

Ministers were informed of the wide range of issues relevant to SMEs addressed in the work program of other APEC fora as outlined in the APEC Secretariat's report. Ministers further agreed to encourage other APEC fora to take into account these issues in the interest of SMEs within their respective work programs.

Ministers welcomed the report by the Chair of the APEC Business Advisory Council and appreciated its support for APEC's effort in facilitating cross border trade and investments, and in enhancing the capacity building of SMEs. Ministers also welcomed the statements by the Pacific Economic Cooperation Council (PECC), ASEAN Secretariat and South Pacific Forum.

Ministers endorsed the APEC Ad Hoc Policy Level Group on SMEs (PLGSME) Chair's Report and the recommendation to continue the mandate and tenure of the PLGSME for a further three years. In this regard, Ministers also agreed that the PLGSME should also strengthen its focus on policy issues, activities that contribute to the development of policies, and action oriented programs. Ministers also instructed the PLGSME to submit a progress report on new projects at the Ministerial Meeting next year. Ministers stressed the need to develop APEC's business outreach on SMEs and instructed the PLGSME to develop further the interaction between government and private sector.

Ministers also acknowledged that the Framework for the Integration of Women in APEC is the effective means for integrating women into the work processes of APEC. They directed the PLGSME to take steps to implement the Framework and report on the progress to Leaders in their November meeting in Bandar Seri Begawan. Ministers also welcomed Korea's appointment as the Gender Focal Point for the PLGSME.

Ministers agreed that APEC should respond to the needs of SMEs in sustaining the foundations for growth and creating new opportunities. As many member economies are recovering from the Asian economic crisis, Ministers stressed that SMEs should be prepared and be in position to harness the opportunities in the areas of electronic commerce and in knowledge-based economy (KBE).

Ministers reaffirmed the need to enhance efforts in creating a conducive environment for SMEs and welcomed the decision by the APEC Ministers Responsible for Trade Meeting in Darwin, which called for the continuation of APEC's work to improve the environment for doing business in the region. In particular, Ministers supported the call by the Ministers Responsible for Trade for prompt action to intensify work on NTMs, capacity building, and strengthening market infrastructure for SME development. Ministers also supported the call to Senior Officials to consider steps to place government information services on-line. Ministers encouraged member economies to include in IAPs the progress made in identifying the major barriers and compliance costs to SMEs in APEC economies. Ministers also welcomed the New Zealand initiative in developing the methodology for reporting on compliance costs and supported continue work to further develop the mechanism.

Ministers recognized the vitality of the Consumer Education and Protection Initiative (CEPI) and encouraged more member economies to participate, and to organize the CEPI activities.

The Asian economic crisis revealed several weaknesses in the capacity of SMEs and Ministers called for steps to train more experts and managers in the areas of technology, management and international trade. Minister concurred that the long-term strategy for enhancing the HRD of SMEs is to inculcate the culture of entrepreneurship and business skills amongst the young population. Ministers instructed the PLGSME to work with the relevant APEC fora to integrate such values into school curicula. They also encouraged young peoples to set up businesses, where possible.

It is acknowledged that to strengthen markets in the region, APEC member economies need to deepen their cooperation, focus on capacity building for SMEs, and support for new businesses. Ministers welcomed Japan's proposal project on the Evolving Cooperation Initiatives for SME and New Business Support, which focus on cooperation in the development of institutions related to SMEs and in the aspect of capacity building particularly on HRD. The Ministers recognized the usefulness of this approach that would contribute to more effective implementation of the Integrated Plan of action for SME Development (SPAN). Ministers also instructed the PLGSME to encourage Japan and other interested economies to be the joint coordinators, to develop the cooperation programs in accordance with the approach that has been outlined in the project, and submit them at the Leaders Meeting in November. Ministers welcomed the 2000 APEC SME and New Business Support Workshop , which will be held in Tokyo in 5-8 September 2000 to launch this initiative focusing on sharing knowledge on developing methods of supporting new and existing SMEs.

Ministers welcomed Japan's contribution towards human resources development in the APEC Seminar for Management Capacity Building.

Ministers also acknowledged that flexibility in the workplace could improve the management of human resources and raise productivity in SMEs.

Many ongoing training programs in APEC member economies are limited to domestic participants, but could be expanded to include participation from member economies. In this context, Ministers agreed for member economies to consider opening up some of their domestic training programs to participants from APEC member economies on a voluntary basis and to include a list of trainers that are available for conducting training across the APEC region. Ministers instructed the PLGSME to work intersessionally in devising an action program and to liaise closely with Brunei Darussalam in time for the Leaders meeting in November at Bandar Seri Begawan.

It is recognized that the progress of information and communication technology (ICT) has tremendous effect on the existing economic system and that the dynamic changes pressured many SMEs to make structural adjustment. There is broad consensus that governments could assist SMEs to overcome the problem of high initial costs of investment in ICT by creating an environment favourable to E-commerce.

Ministers acknowledged that there are many problems arising from E-commerce and recommended that APEC put in place a framework for the coordination of standards, encouragement of private sector innovation, and to improve consumer confidence and acceptance. This should include self-regulation by the private sectors. Ministers acknowledged that the involvement of governments, private sectors, E-commerce and Internet could turn the world of Digital Divide to Digital Opportunity. Ministers are pleased to note that the Electronic Commerce Steering Group will address consumer confidence and acceptance issues. They urged APEC to give priority to hasten the work on strengthening the regulatory and security measures for E-commerce, removing uncertainties that restrict E-commerce, and encouraging the development of self-regulatory frameworks. In this regard, Ministers instructed the PLGSME to coordinate with relevant APEC fora including the APEC Telecommunication Working Group and the Electronic Commerce Steering Group in expediting the on-going work on reducing the costs of access to the Internet.

Ministers pledged to enhance collaboration and cooperation among the member economies on institutional development and capacity building especially on HRD, to create a global trading environment for E-commerce. Ministers acknowledged the outcomes of the APEC E-Commerce Convention and APEC SME Business Network Promotion Forum , both held in Tokyo, and welcomed Japan's initiative to hold a forum on Internet Businesses next year. Ministers also acknowledged the outcomes of both the World Congress on Information Technology held in Chinese Taipei.

Ministers recognized the importance for SMEs to access information concerning regulatory and administrative requirements on trade and investment. In relation to this, Ministers also welcomed the development of an electronic Individual Action Plans (e-IAPs) system which would make the IAPs more useful to business, especially SMEs, by enabling them to have faster, easier on-line access, and a better understanding of the trade and investment regime of a particular APEC economy. The Meeting also acknowledged that it would be useful for SME related information services to be electronically linked across APEC economies. Ministers welcomed the BizApec.com , a new website which would provide one-stop information for conducting business in the region, and instructed the PLGSME to consider contributing to the further development of this new website. As the use of ICT differs amongst SMEs in different economic sectors, Ministers agreed that future work program on the use of ICT and E-commerce amongst SMEs be focused on specific sector of SMEs. In this regard, Ministers instructed the PLGSME to work with the relevant APEC fora to address these issues.

Ministers agreed that there is a need to exchange information regarding best practices and legal issues on E-commerce including government purchasing and intellectual property. In this respect, Ministers sought greater cooperation among member economies to facilitate the development of E-commerce in the region. Ministers noted the recommendations from the APEC 2000 SME Electronic Commerce Workshop in Bandar Seri Begawan as Annex B, which makes reference to promote E-commerce and to capitalise on ICT. Ministers instructed the PLGSME to implement the relevant recommendations in collaboration with relevant APEC fora including the APEC Electronic Commerce Steering Group and the Telecommunication Working Group. Ministers also agreed to endorse a new initiative by Chinese Taipei, the E-Commerce Symposium on SMEs, to enhance the promotion of E-commerce to SMEs.

Ministers acknowledged that issues concerning SME financing are crucial for sustaining SME growth. It was recognized that in some economies, SMEs access to capital is limited by a number of factors including the lack of market resources, insufficient collateral and guarantees, high costs of financing, and underdeveloped financial institutions. The lack of finance remained a major constraint for SMEs in some member economies, mainly because SMEs lack managerial skills. There was a convergence of views that APEC member economies should enhance the managerial skills and capacity building of SMEs to enable them to gain better access to financial and capital markets. Ministers also commended the outcomes of the Workshop for APEC SMEs Financing and Business Management in Tokyo.

Ministers also recognized that SMEs needed access to information about sources of funds. The APEC Start-Up Companies and Venture Capital Survey conducted by Chinese Taipei indicated that there was interest in establishing an APEC database to disseminate and exchange information on start-up companies and venture capital. In this regard, Ministers instructed the PLGSME to cooperate with the IEG in this area.

It is recognized that venture capital is important for financing start-up companies and ICT industries, and the private sector is the leading source of capital. Ministers acknowledged that venture capital funds will complement the financial sector in providing initial capital to new businesses and recognized that governments had a role in creating a better environment for SMEs and start-up companies to access capital markets. In this respect, Ministers concurred that SMEs that have growth potential could be assisted in accessing financial and capital markets.

Ministers acknowledged the outcomes from the seminar, the Securing Initial Equirt Funding for Start-Up Companies - The Birth and Growth of SMEs in a Knowledge-Based Economy held in Taipei, which is a follow-up to the Economic Revitalization Through Start-Up Companies and Venture Capital proposal by Chinese Taipei, adopted at the APEC Ministerial Meeting in Auckland. Ministers encouraged further work on related subjects in this area. In the context of the KBE, Ministers urged financial sectors to accept intangible assets such as knowledge and intellectual property as economic assets for loan applications. Ministers also agreed to work with APEC Ministers of Finance and relevant APEC fora to promote the development of capital markets including venture capital, equity fund, and IPO for the development of SMEs within their economies.

Ministers recognized the needs of SMEs to form vertical and horizontal alliances among themselves, with larger corporations, and partnership with foreign companies. By banding together, SMEs can improve their operational efficiency and effectiveness. Ministers encouraged SMEs to continue to form business alliances with larger companies including through the Internet. In this regard, Ministers urged APEC member economies to work together for a more pro-SME environment with increasing transparency in rules and regulations, and provide information and business contacts to SMEs. Ministers endorsed the United States' proposal for the Business Partnership Initiative, which is led by the private sector to facilitate strategic alliances between companies in member economies. Ministers also welcomed the on-going APEC Business Matching and Advice Program to better serve the needs of SMEs in business matching among firms across the APEC region.

In recognition that SMEs have an important role in the global supply chain, Ministers encouraged SMEs to embrace modern business technology including bar-coding, Electronic Data Interchange (EDI) and Internet-Commerce to enhance their efficiency. In this context, Ministers requested Thailand to work closely with the PLGSME to build on the idea of facilitating the Strategic Alliances for Better Global Supply Chain Management and report to Ministers at their next meeting. Ministers welcomed Thailand's proposal to host the International Conference/Workshop on Strategic Alliance for Efficient Supply Chain Management and requested Thailand to act quickly in developing a proposal for consideration of the PLGSME.

Ministers also endorsed the following new initiatives to help SMEs establish strategic alliances and business linkages:

Ministers reaffirmed the usefulness of sharing information and experiences of APEC member economies in their implementation of various initiatives, programs and regulatory frameworks undertaken to promote the development of SMEs under the SPAN. Ministers also welcomed the progress reports on the implementation of SPAN by China, Japan, Malaysia, Peru, Chinese Taipei and Thailand at the two PLGSME meetings this year. Ministers encouraged other members to regularly report their work in progress within the Framework of SPAN and to share their experiences on a voluntary basis.

Ministers welcomed the briefings by the business representatives of the E-Commerce Workshop, WLN Meeting, and Business Forum, and commended their recommendations especially on initiatives that would accelerate economic recovery and promote E-commerce in the region as in Annex B, Annex C and Annex D respectively. Ministers agreed to instruct the PLGSME to consider the recommendations from the business sectors for inclusion into its work program. Ministers urged future hosts to continue with this form of outreach.

Ministers called on the private sector to change the mind-set on utilization of ICT and encouraged greater usage of ICT for business transactions. Ministers also requested the private sector to prepare a comprehensive list of needs and key issues including capital and financial facilities, and HRD for the consideration of Ministers and member economies.

Recognizing the desire of APEC 2000 to deliver to the community, Ministers underscored the importance of achieving outcomes that are more substantial. Ministers also affirmed that it is important to heed the capacity building needs of SMEs in member economies. In view of the rapidly changing business environment as a result of economic globalization and ICT development, Ministers urged SMEs to embrace innovative and creative approaches to enhance efficiency and competitiveness. Ministers agreed to request the Senior Officials to note and take appropriate actions on the Ministerial agreed actions at Annex A. Ministers had a very useful and constructive dialogue with the business representatives. Ministers had agreed to examine further the core issues of SMEs in the areas of HRD, ICT, financing and strategic alliances.

Ministers thanked the Chair for his guidance in chairing the meeting, and the Government and people of Brunei Darussalam for the warm hospitality in welcoming the officials, business, and WLN delegates. Ministers also welcomed the invitation to meet again next year in the People's Republic of China.

Representatives from Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Republic of the Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States of America; and Vietnam participated in the meeting. The representative of ABAC and APEC Secretariat were present. The Association of Southeast Asian Nations (ASEAN) Secretariat, the Pacific Economic Cooperation Council (PECC) and the South Pacific Forum also attended the meeting as observers.