Hong Kong, 7 November 2014
SEANET urges ASEAN countries to ensure small and medium-sized enterprises are included in the region’s growth
The Southeast Asia Network for Development (SEANET), a new initiative of IDEAS aimed at catalysing economic integration and growth of ASEAN countries, today called for ASEAN countries to focus on small and medium-sized enterprises (SME) as the region accelerates towards the ASEAN Economic Community next year. This was the message delivered by speakers at a SEANET-sponsored session on ASEAN in Hong Kong today. The session was attended by almost 200 think tank leaders, business representatives, and politicians from across Asia. Hong Kong’s Financial Secretary Mr John Tsang Chun-wah also joined a special dinner held the night before at the same conference.
Tunku Abidin Muhriz, President of IDEAS, spoke at the session and argued that in order to ensure all segments of society benefits from greater integration, ASEAN should look particularly into policies that drive an inclusive growth, protect property rights, and freer movement of goods, capital and people.
Tunku Abidin Muhriz said: “Inclusive growth is the key to social stability. This should be done by opening up economies to provide opportunities for smaller companies and micro-entrepreneurs. We advocate the eventual elimination of protectionist policies, reduction of regulatory burdens that could dampen innovation, and removal of trade barriers within ASEAN as well as between ASEAN and the wider world.”
He added: “Property rights is the keystone of a prosperous economic system. Proper protection of property rights provides incentives for individuals and firms – including the SMEs – to produce and accumulate capital that can be invested for further development. Additionally, freer movement of goods, capital and people is necessary for strong and sustainable economic growth as well as greater integration within ASEAN. Freer movement means ASEAN can capitalise on the diversity of talent within member nations to develop each country’s comparative advantages. It will also lead to stronger cultural, organisational and personal bonds within the region.”
Specifically on the impact of integration on SMEs, Tunku Abidin Muhriz said: “SMEs can benefit hugely from a liberalisation of business regulations, registrations and licensing, so they can more easily enter the market and compete. If we enforce property rights and contracts, we can give SMEs the incentives to expand and improve their capital. These must go hand-in-hand with enhancing the rule of law and fighting corruption, which are strongly correlated with economic development. By liberalising the financial sector – especially for micro-finance and peer-to-peer lending – we can unlock credit for SMEs. And by opening up to trade and foreign investment, we can help reduce the costs of running businesses.”
Another speaker at the SEANET session was Professor Kriengsak Chareonwongsak, Senior Fellow at Harvard University and President of Thailand’s Institute for Future Studies for Development. He argued that the ASEAN Economic Community will benefit both consumers and entreprenuers.
Professor Chareonwongsak said “Entrepreneurs will benefit from market expansion opportunities that result from a decrease in trade barriers and an increase in investment and FDI inflows as well as more fair competition. On the other hand consumers will be able to get more high quality products and services. As competition among businesses increases, producers will adjust their capabilities to serve consumer needs thereby ensuring consumers will receive more fairness when they spend. In fact consumer protection is among the most important aspects of the AEC Framework”.
Professor Chareonwongsak added that “To ensure SMEs and the smaller players are not left out from this process of liberalisation, it is important to establish specific targets, processes and mechanisms. For example, policies should be put in place to facilitate SMEs gaining access to financial resources. Governments should also help their SMEs access information on production, market expansion, and innovation development, so that they can continue to grow their businesses. These steps will encourage SMEs to compete on product quality and innovation rather than on the basis of price alone.”
The Southeast Asia Network for Development (SEANET) is a regional research and advocacy centre that promotes policy ideas to make ASEAN’s growth more inclusive and sustainable. SEANET conducts research and advocacy to catalyse the adoption of market-friendly principles, particularly by inviting opinion-shapers to analyse evidence of how free trade can speed up national and regional growth. Working with a network like-minded organisations and individuals throughout the region as well as globally, SEANET is a newly established initiative of the Institute for Democracy and Economic Affairs (IDEAS), headquartered in Kuala Lumpur.
Tunku Abidin Muhriz is Founding President of the Institute for Democracy and Economic Affairs (IDEAS), Malaysia. He has previously served at the World Bank, the United Nations Development Programme (UNDP), the Lee Kuan Yew School of Public Policy at the National University of Singapore and is a Fellow at the CIMB ASEAN Research Institute.
Professor Kriengsak Chareonwongsak is a Thai scholar noted for promoting development that is sustainable and democratic. He is a Fellow at Harvard University and President of Thailand’s Institute for Future Studies for Development. He was active in Thai politics, and had previously served as a Member of the Thai Parliament.
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