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2002 APEC Small and Medium Enterprises Ministerial Meeting

Acapulco, Mexico | 23 - 24 September 2002

"EXPANDING THE BENEFITS OF COOPERATION FOR SMES"
  1. APEC Ministers and their representatives responsible for SMEs from Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; the Republic of Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Peru; the Republic of the Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; the United States of America; and Viet Nam met on 24-25 August, 2002, in Acapulco, Mexico, for the 9th Meeting of APEC Ministers responsible for SMEs. The APEC SOM Chair was present. The APEC Secretariat was also present. The Economic Cooperation Council (PECC) attended as observer.
  2. Ministers and their representatives concurred that micro, small and medium enterprises (SMEs) contribute to ensure sustainable economic growth in the APEC region. Within this context, they reaffirmed APEC member economies' commitment to move forward with the common goal of achieving a sound framework in order to bring about sustainable economic growth in the region.
  3. Ministers embraced the importance of facilitating the access to investment among strategic sectors and regions, taking consideration of developing economies' own potentials and opportunities. The strengthening of regional marketplace is also essential to achieve sustainable growth, resulting in a greater job creation and social well being.
  4. To further the development of the Osaka Action Agenda (OAA), Ministers reiterated that SMEs in APEC, including micro-enterprises, could make meaningful contributions towards the expansion and acceleration of trade and investment. Ministers called for intensified development cooperation to attain equitable and sustainable development and domestic stability, keeping a close interaction with the private sector.
EXPANDING THE BENEFITS OF COOPERATION FOR SMES
  1. Ministers held discussions on how APEC SMEs could best contribute to economic growth in the APEC region and respond to the challenges emerging in the new century in order to reach the free and open trade and investment and liberalization goals set for developed economies in 2010 and developing economies in 2020, under the Bogor Declaration. Their discussion focused on the issues of Policy Environment; Sustainable Development; and Regionalism.
I Policy Environment
  1. Ministers agreed to enrich the cooperation and exchange of information among economies on the appropriate policy environment conducive to achieving sound progress towards SMEs development in the region.
  2. Strengthening a supportive environment and fostering entrepreneurial culture is also essential to increase SME competitiveness. Among the ways to strengthen the environment is to provide a sound basis for capital and enterprise formation.
  3. Ministers commended the progress made on the efforts to enhance the exchange and cooperation among APEC economies by the implementation of programs such as business matching programs to foster strategic alliances, training and certification for small business counselors, access to financing, consumer education and protection initiatives, access to electronic information, and innovating entrepreneurship.
  4. Within the priorities of a conducive policy framework, Ministers encouraged economies to continue working on specific efforts to improve the functioning of markets and to enhance SMEs development and called for further attention on the following:
Micro Financing and Capital Markets
  1. SMEs need to first to gain access to financing in their home market. Ministers discussed means of helping SMEs to grow domestically through such approaches as the creation of guarantee funds or the participation of non-banking intermediaries;
  2. Ministers discussed the need to promote a financial system within each economy that fosters cross-border investment and improves enterprises' financial situation, enabling them to participate more intensively in international markets. A legal framework that provides certainty to entrepreneurs is a key factor to assure fair trade practices in the region;
Human Capacity Building
  1. Ministers discussed the need to accelerate the implementation of training and certification programs including management training, administrative and entrepreneurial skills, quality manufacturing process, enterprise and product competitiveness, technological innovation, technical assistance, and competitive start-up enterprises.
  2. Ministers called for the promotion of programs to create competitive human resources for start-up businesses that foster the creation of new SMEs and consolidate the permanence of existing ones.
Access to Information
  1. Recognizing the particular difficulties faced by SMEs in accessing relevant information, Ministers encouraged SMEs to take advantage of initiatives such as the new on-line SME information systems, that provide valuable inputs on enterprises' economic data; business procedures; productivity changes; legal frameworks; and available financial, training, technological and business opportunities for the SMEs in the APEC region.
Technology and Technology Sharing
  1. Ministers supported efforts to bridge the digital divide between developed and developing economies through mechanisms that foster appropriate technology sharing, and offering support to SMEs in specific sectors and regions in order to optimize their processes and increase their competitiveness. This may include industrial outsourcing practices and enterprise association schemes.
    Access to Markets
  2. Ministers also called for promotion of balanced regional development and develop productivity chains in strategic industry sectors and implement vendor programs in which both big enterprises and SMEs benefit from a permanent commercial relationship in regional and international markets.
  3. Acknowledging the substantial contribution of SMEs to trade in APEC region and the potential benefits in economic development to be gained through enhancing the participation of SMEs in export markets. Ministers called on APEC working groups and sub fora to develop programs to remove obstacles related to regulatory reform and legal framework, financial services, access to technology and capacity building with the aim to ease the transition into export for SMEs and micro enterprises and to promote the establishment of born global start ups.
Access to Transparent Legal and Regulatory Environment
  1. Ministers recognized the high cost burden imposed on SMEs in meeting the standards and conformance requirements in order to gain access to the overseas market. In this regard Ministers recognized the work being conducted the Committee on Trade and Investment and its relevant sub-for a, including the Sub-Committee on Standards and Conformance and encourage further work applicable to SMEs in these fora.
  2. Ministers instructed the SME Working Group to work closely with the Committee on Trade and Investment (CTI) and its relevant fora in exploring ways to further address the concerns of SMEs in meeting the necessary standards and conformance requirements of APEC economies and to report its progress next year.
  3. Ministers encouraged member economies to step up efforts that contribute towards creating a conducive business environment by eliminating unnecessary bureaucracy red tape and reducing business start-up requirements. Ministers recognized the basic principle of "cutting the red tape and rolling out the red carpet" to start-up businesspeople.
  4. Ministers commended the efforts made by Chinese Taipei in addressing the issues of women's entrepreneur and start-up companies through the APEC Symposium on "Best Practices for Women's Entrepreneurship and Start-up Companies" held in Chinese Taipei in August 2002. Ministers encourage member economies to take further actions to improve the policy environment for the development of women's entrepreneur and start-up companies.
II Sustainable Development
  1. Ministers recognized that innovation and start-up SMEs are key elements of success that shape economic growth. The capability of SMEs to benefit from the new economy relies on innovation, since innovation is both the source of competitiveness and the key to survival in the new economy. New SMEs contribute to economic development by triggering competition through innovation, thus resulting in positive economic growth, technological upgrading, job creation, and overall improvement in social well being.
  2. Ministers recommended consideration of innovation policies that provide channels for start-ups to access a variety of financing resources, research and development, commercialization, and marketing tools. These innovation policies, within a conducive business environment, may include promoting research collaboration, facilitating networking and clustering of firms, encouraging institutional ties, diffusing technology, increasing personnel mobility, creating a stable macroeconomic environment, and considering a greater integration of micro-enterprises, women and young entrepreneurs.
  3. In order to achieve sustainable growth, Ministers encouraged economies to consider initiatives in areas such as:
Micro-finance as a Sustainable Development Tool
  1. Ministers recognized the importance of micro-finance as a sustainable development tool for micro-enterprises. Ministers took note of the performance of Bank Rakyat Indonesia's micro-financing system, which provides an extraordinary example of a commercially viable approach that succeeded during an exceptionally severe economic crisis.
  2. Ministers welcomed the recommendations to (1) develop an appropriate risk based regulatory framework for the commercial microfinance industry; (2) incentivize banks and financial institutions to enter the business of microfinance; (3) provide incentives, training and rewards to commercial institutions that demonstrate excellent performance; (4) limit microfinance subsidies to activities that disseminate information, develop financial tools, and train managers and staff; (5) provide capacity-building initiatives for the most promising institutions entering the micro-financing market; (6) and share lessons across APEC regarding the transformation of non-governmental organizations to commercial microfinance institutions.
Seed and Venture Capital Business, and Guarantee Funds
  1. Seed and venture capital investment firms, together with the fast growing portfolio firms in which they invest, and the professional services firms that support them, are powerful sources of job creation, innovation and globalization in economies around the world. Even though they and their portfolio firms comprise a tiny percentage of total SMEs, venture capitalists and private equity investors can play a vital role in accelerating the development of the economies.
  2. Seed and venture capital businesses have the potential to alleviate the situation of asymmetric information facing start-ups and integrate them into industrial networks, especially high-tech start-ups. Venture capital policies established by SME Administrations within economies can supplement existing sources of funds and reduce administrative obstacles to the set-up and operation of venture capital firms.
  3. Ministers recognized the need to have a capital formation legal and regulatory landscape which will promote the formation of angel networks, venture capital enterprises, and investment banks with open financial markets. Without these prerequisites it will be difficult to attract capital and the formation of adequate capital markets.
  4. Ministers agreed to consider:
    • Undertaking a review of their legal and regulatory structure to determine the constraints for the formation of individual and enterprise capital, including investing in and exiting from enterprises. Revise those laws and regulations that form barriers to the formation, growth and dissolution of SMEs and capital.
    • Explicitly authorizing and encouraging its private sector banks, institutions, pension funds, investors and corporations to allocate a prudent percentage of their investment portfolios to limited partnerships in successful venture capital enterprises, with the goal of developing their own economy's capital capabilities.
    • Review annually the growth of its capital and SME communities and provide APEC with this report. APEC in turn could consider summarizing and distributing these findings to its member economies.
Incubation Policy Towards Start-up SMEs
    1. Incubators can provide individuals or small enterprises the support of space, equipment, technology, professional manpower, business services, and information. In incubators, SMEs are allowed to develop new products and new technology to establish a new business and conduct enterprise transformation and upgrades.
    2. Incubator centers have the potential to be an important platform for cross-industry collaboration within the innovation system and a center to disseminate knowledge within and among APEC economies. It is important that incubator centers carefully choose participants and develop methodology to measure their performance.
    3. Ministers acknowledged the importance of incubators and industrial clusters to the enhancement of the innovative capacity of SMEs and micro-enterprises. Through these two mechanisms, new forces can continuously inject into economies to sustain the economic growth. Ministers noted that the project, "From Income Generation to Patent Creation: Incubating Innovative Micro-enterprises" proposed by Chinese Taipei this year, is an effort to establish the mechanisms in the APEC region. Ministers look forward to receiving deliverables from this project.
Knowledge Platform for Business Start-ups
  1. In order to create a conducive environment for business start-ups, a platform may be designed as a mechanism to facilitate entrepreneurs to build up a new enterprise. A knowledge information center for business start-up and a window for consultation are encouraged to be established within member economies. Such centers could provide entrepreneurs channels to establish new ventures among APEC economies by taking advantage of APEC regional, bilateral and domestic information portals available.
  2. A number of mechanisms are needed to improve the functions of the platform such as assistance in technology consultation, education, financing, and minimizing the administrative obstacles for new firms and ventures. Ministers acknowledge that relying solely on domestic efforts is at times not enough to foster innovative start-ups and maintain sustainable growth. International cooperation is an important mechanism.
Access to Information and Communications Technology
  1. Ministers acknowledged the crucial cross cutting role that information, communications technology (ICT) fulfilled in allowing SMEs and micro enterprises opportunities to gain a wider global audience for their products and services.
  2. Ministers recalled the objectives that were launched in Brunei Darussalam to provide greater universal access to ICT and the internet for APEC economies. Ministers also acknowledge the need to increase the human capacity aspect for entrepreneurs to utilize technology to better conduct their businesses and improve greater ability to penetrate international markets. In this regard, Ministers called for human capacity building efforts to be continued with the involvement of all stakeholders towards building institutional capacity and achievement of social development goals.
    Ministers endorsed the proposal to hold a Seminar on Sharing Best Practices for SMEs Business Development Centers, including micro-enterprises, and commended Mexico, Thailand and the United States for taking the leadership in organizing this event and report its result to the next SME Ministerial Meeting.
III Regionalism
  1. As to regionalism, Ministers noted that while APEC itself is a region, there are also distinct region within most APEC economies. Building a strong economy for APEC as a whole, begins with building strong region within each economy. This is important for economic and social development and SMEs have a key role to play. The challenge in dealing with SMEs is to ensure that they are provided with appropriate and coordinated services at the regional level most suitable for them. At the same time, SMEs should be encouraged to participate in the opportunities created in the whole APEC region.
  2. Ministers stressed that efforts must be directed to strengthen productive chains through the promotion of enterprise association schemes, to create formation and development of industry and commerce vendor programs, and the facilitation of access to trade and investment among strategic sectors and regions, taking advantage of developing economies' own potentials, strengths, and opportunities be considered.
  3. Ministers recognized that strengthening regional market is key to achieving sustainable development envisioning the expansion to other markets, resulting in a greater job creation and social well being.
  4. As stated in the Osaka Action Agenda, Ministers reiterated that market access is critical to the globalization efforts of SMEs and their ability to take full advantage of the post-Bogor environment.
  5. Ministers expressed the willingness that by the year 2020, SMEs should be increasingly globalized and internationally competitive as a result of being better able to identify and meet demands for goods and services across APEC economies, and having improved access to timely and quality information about market opportunities.
  6. Member economies are encouraged to expand SME economic opportunities by further liberalizing and facilitating trade and investment to enable SMEs to fulfill their potential. SMEs need coordinated business support services in their home region and accurate and timely information on foreign markets, market opportunities, cultural and business practices, and regulations.
  7. In this context, Ministers welcomed the efforts made to finalize the APEC SME Profile 2000 and the SME Portal Hub, which provide valuable information on the SMEs situation and opportunities to facilitate access to international markets, trade and investment within APEC economies.
  8. Ministers welcomed as well the progress made on updating the Integrated Action Plan for SME Development (SPAN) to establish a generic policy framework and guidelines to help SMEs adjust to policies that support regionalism. SPAN helps participating economies benefit in three ways:
    • Allows for international comparability of policies, programs and best practices;
    • Assist all APEC fora identify specific policies and programs which may foster the development, growth and competitiveness of micro-enterprises and SMEs (MSMEs) across the region; and
    • Situates the assessment of specific MSME policies and programs in the context of regional trade and investment policies.
SMALL AND MEDIUM ENTERPRISE WORKING GROUP REPORT
  1. Ministers welcomed the report made by the Working Group on the follow-up tasks given by the SME Ministerial Meeting, the Joint Ministerial Meeting and the Leaders Meeting in 2001, as well as work progress derived from the 2002 tasking statements.
  2. Ministers took note of the report on the implementation of Shanghai Accord, and endorsed the establishment of a task force to study the development of a monitoring mechanism and information exchange on MSMEs on a voluntary basis.
  3. Ministers also received reports on progress on the broadening and updating the OAA; promoting the adoption of appropriate trade policies for the New Economy; and the initiative on the strengthening ECOTECH and capacity building efforts. The Ministers welcomed the establishment of the APEC IBIZ in its contribution to the capacity building of micro-enterprises and SMEs.
  4. Ministers endorsed a set of action plans to be carried out by the SMEWG to implement the E-APEC Strategy. The Action Plan touches upon the elements of: Facilitation for access to information for SMEs through ICT; Consolidation of Infrastructure for ICT Applications; Electronic Commerce; e-Learning; and Application of ICT to Business Management.
  5. Ministers encouraged member economies to make full use of services offered in the Virtual Classroom and Cyber Forum of the HCB Promotion Program Website and promote more effective sharing of best practices on human capacity building in APEC, as part of the Beijing Initiative.
  6. Ministers commended the efforts made by SMEWG on the implementation of the Framework for the Integration of Women in APEC and welcomed the offer of the United States to continue to act as the Gender Focal Point for the Working Group for the next year and to oversee the study on the Economic Contributions of Women and Men in APEC Economies: The Need for Sex-disaggregated Data.
  7. Following the Ministers' instruction to the SMEWG to have closer interaction with the business community, the Working Group reported that it had been agreed to have the ABAC SME Task Force to report to the SMEWG regularly on action taken in ABAC on SME issues.
  8. In response to the APEC Ministers' instruction for the identification and invitation of the participation of outside groups, which could contribute, to their work, the SMEWG agreed to invite the OECD to attend the 15th SMEWG Meeting in Acapulco, to brief the SMEWG on its activities on SMEs. The Ministers instructed the Working Group to continue exploring potential collaboration with the OECD in line with the relevant existing APEC guidelines.
Enhancement and Deepening of SPAN
  1. Ministers welcomed the efforts made to advance in the SMEWG amendments to the priority areas and SME-related actions of Osaka Action Agenda (OAA), jointly with the Integrated Plan of Action for SME Development (SPAN); and directed SMEWG to continue encouraging the implementation of relevant and joint activities derived from the document.
  2. Ministers approved the proposed enhancement of SPAN (Annex 1). The New SPAN contains:
    • guidelines for economies to develop SMEs polices and strategies;
    • a suggested framework for economic cooperation concerning SMEs within APEC; and
    • a six priority area that represent the focal points for APEC SME initiatives as drawn from the OAA - which now include: policy environment, in addition to human resource development, financing, technology and technology sharing, access to markets, and access to information.
  3. The new SPAN included an Evaluation Framework which describes three elements required to assist APEC fora and economies to identify and analyze policy issues, including the review of best practices:
    • Efficiency Criteria
    • Relevance to Priorities and Objectives
    • Cost Effectiveness
  4. Ministers instructed APEC economies to further the development of SPAN's Policy Framework including the policy issues relating to the formation and growth of micro-enterprises.
Improving Coordination and Focus of the SME Working Group
  1. Ministers recognized the importance of the need for the work of the SME Working Group to focus more closely on policy development and also to improve coordination both between the Group and the SME Ministerial Meeting and the other relevant fora throughout APEC
    Completed, On-going and New Projects of SMEWG
  2. Ministers welcomed reports on several successfully completed projects, including:
    • China's Seminar on Opportunities and Challenges for APEC SMEs after China's Accession into WTO Accession (China)
    • USA's Voluntary Visitors Program for APEC SME Officials (USA)
    • Training and Certification for Small Business Counselors (Canada/Philippines)
    • Ministers also noted continued progress in assisting SMEs in the region under the SMEWG's on-going projects, including:
      Russia's Innovation Forum "International Business Cooperation in the Sphere of Innovative Entrepreneurship" (June 2002)
    • Chinese Taipei's APEC SME Profile 2000
    • Japan's Evolving Cooperation Initiative for SME and New Business Support
    • Philippines and Canada's Small Business counselors
    • USA's Business Partnership Initiative for SME Strategic Alliances
    • USA's Consumer Education and Protection Initiative
    • Canada and PECC's Portal Hub
    • Japan's APEC Business Matching and Advice Program
  3. Ministers also welcomed the following new project proposals and instructed the SMEWG to further develop the proposals:
    • From Income Generation to Patent Creation: Incubating Innovative Micro-enterprises (Chinese Taipei)
    • Enterpreneurs Consortium (USA and PECC)
    • Seminars on "Growing the APEC Small Business Exporter Community" (Australia)
    • Implementation and Program Enhancement APEC-IBIZ (Mexico and APEC IBIZ)
    • The Need and Availability of Micro-Finance Services for Micro-enterprises: Bringing Multi Level Good Practices into Local Context (Indonesia)
HIGH LEVEL MEETING ON MICRO-ENTERPRISES
  1. Ministers recognized that APEC is well suited to play a leading role in contributing to the integration of micro-enterprises in the globalization process. Ministers welcomed the efforts undertaken during 2002 to explore ways to assist people engaged in micro-enterprises reap the benefits of economic growth and development that are created by open markets and globalization.
  2. In that regard, Ministers considered the outcomes of the High Level Meeting on Micro-enterprises (HLMME), held on 17-18 August 2002, in Acapulco (Annex 2). Among the main findings of the HLMME, Ministers acknowledged that attention to micro-enterprises is an organic part of promoting progress towards APEC objectives in terms of gender equity, poverty alleviation, and the strengthening of social safety nets. At the same time, Ministers confirmed the overarching objective of shared prosperity and the aim to empower micro-enterprises through access to information, training and capital.
  3. Ministers stressed that it is necessary to improve the focus of APEC's objectives and develop visionary strategies to achieve them. Moreover, Ministers recognized the need for innovative strategies to access greater funds by building partnerships to mobilize the financial resources of APEC member economies, the private sector and development agencies.
  4. In recognition of the unique challenges faced by micro-enterprises and their immense importance for employment and income creation in APEC economies, Ministers endorsed the creation of a sub-group within the SMEWG to address micro-enterprises development. Ministers instructed the Working Group to develop terms of reference for the sub group as soon as possible, and instructed that an action plan for micro enterprises be develop through the sub group, taking into account the result of the High Level Meeting on Micro enterprises and the work being conducted by relevant APEC fora and other APEC stakeholders, such as ABAC and WLN, and that such action plan is presented to the next SME Ministerial Meeting.
  5. Furthermore, Ministers instructed the SMEWG to coordinate, through its new sub-group, work with all APEC fora and sub-fora involved in issues pertaining to micro-enterprises development, such as capacity building, financing, gender integration, information and telecommunication technologies, and infrastructure, among others. (See Annex 2 for executive summary of HLMME).
COUNTER TERRORISM
  1. Recognizing that micro, small and medium enterprises are particularly sensitive to economic disruption, Ministers agreed that APEC economies cooperate fully to ensure that international terrorism does not disrupt economies and markets, through close communication and cooperation among economic policy and financial authorities.
ABAC AND WLN REPORTS
  1. Ministers welcomed the reports from the APEC Business Advisory Council and from the Women Leader's Network (see Annex 3) on their priority recommended actions, and instructed SMEWG to incorporate them into the group's work, as appropriate.
  2. Ministers reiterated the Leaders'calls to economies to appoint an SME representative as one of their ABAC members.
ASIAN SME AND ENTREPRENEURSHIP SUMMIT
  1. Ministers welcomed Hong Kong, China for inviting all member economies to attend the Asian SME and Entrepreneurial Summit, jointly organized by Hong Kong Productivity Council and the Mansfield Center for Pacific Affairs of the U.S. Experts, academics and officials from non-governmental organizations exchanged ideas and experiences, in order to help identify best practices of nurturing the development and success of entrepreneurs and SME's in the Asian economies.
RESULTS FROM THE JOINT SESSION WITH BUSINESS DELEGATES
  1. Ministers held a joint session with representatives from the Business Forum. Ministers welcomed the extensive involvement of SMEs and both sides welcomed this opportunity for dialogue and supported continued efforts toward producing mutually desired results. During the Ministerial Meeting, representatives from SMEs in the APEC region held a concurrent Business Forum and Exhibition in Acapulco.
  2. Ministers welcomed the results derived from the Business Forum discussions on how to trade and invest in various sectors.
STATEMENTS FROM OBSERVERS AND 10th APEC SME MINISTERIAL
  1. Ministers appreciated comprehensive statements provided by the Pacific Economic Cooperation Council (PECC).
  2. Ministers look forward to successful implementation of SMEWG activities and participation in the 10th APEC Ministerial Meeting for Ministers Responsible for Small and Medium Enterprises in August 2003 in Chiang Mai, Thailand.