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Jakarta Post

Minding the (information) gap

A few weeks before world leaders gathered at the Asia-Europe Meeting in Vientiane earlier this month to pledge a “strong rejection of protectionism”, a much smaller forum was held in Jakarta

Ibrahim Almuttaqi (The Jakarta Post)
Jakarta
Thu, November 22, 2012

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Minding the (information) gap

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few weeks before world leaders gathered at the Asia-Europe Meeting in Vientiane earlier this month to pledge a “strong rejection of protectionism”, a much smaller forum was held in Jakarta.

At a roundtable discussion on Southeast Asian foreign economic policy hosted by The Habibie Center, many problems were identified for ASEAN medium-, small- and micro-enterprises (MSMEs) as they look for market access and to facilitate trade. Indeed, one of the participants jokingly referred to the famous London Underground warning sign: “Mind the Gap.”

The comment instantly conjured an image of a fast, modern and efficient train. It served as a wonderful symbol of what the ASEAN Economic Community (AEC) 2015 — an important element of any Asia-Europe equation — is striving to become. And just as passengers boarding the train must beware of the platform gap, so too must MSMEs in the region solve many problems as they confront the 2015 deadline, which is fast approaching.

One major issue highlighted as a challenge ti market access and trade facilitation confronting ASEAN MSMEs was a lack of comprehensive up-to-date data, or, in other words, an information gap.

Participants at the discussion, which heard presentations from Tulus Tambunan of the Center for SMEs, Industry and Business Competition Studies at Trisakti University and Didi Diarsa Adiana from the Tangan di Atas business community, agreed that the information gap was apparent not only in data about ASEAN MSMEs, but also in the information available to them, especially in Indonesia.

For example, while it was noted that the majority of Indonesian MSMEs operate in rural areas, largely carrying out agricultural activities, recent government statistics only cover those operating in the industrial sector. One has to go back to 2009 to find any data on rural Indonesian MSMEs operating in the agricultural sector. Even then, the 2009 statistics focused generally on all sectors, rather than specifically on the agricultural sector.

Similarly, except for a small research on the impact of the ASEAN-China FTA on the garment industry in Tanah Abang in Central Jakarta last year, there is little concrete data to validate the common belief, held by both among academics and the public, that the ASEAN-China FTA has had a negative impact on Indonesian MSMEs.

In other areas, data on Indonesian MSMEs’ access to trade facilitation is severely lacking. This includes data on access to trade insurance, technical assistance, trade information, bank funds, etc.

This situation contrasts starkly with that in the Philippines, India and Sri Lanka, where data is more widely available.

The findings of Tulus Tambunan’s research, conducted in May in Yogyakarta and in Surakarta, Central Java, revealed a large number of respondents who demonstrated a lack of awareness of the many trade facilitations available.

The survey found 20.5 percent of MSMEs listed “access to information on markets, trade policy and regulation and others” as the main constraint in exports and 84 percent of MSMEs surveyed cited “not knowing” as the main reason for not accessing available trade facilitations.

Meanwhile, for those that were aware of the opportunities, respondents cited procedural problems where information was either difficult to find or were too difficult to understand.

This was evident with 96.6 percent of MSMEs surveyed that cited difficulties with procedures. This finding was backed up by government statistics from 2010 that said of the MSMEs surveyed, 17.5 percent did not borrow money from financial institutions because they did not know the procedures.

The consequences of this information gap leaves Indonesian MSMEs poorly placed as the 2015 deadline for the AEC fast approaches. Not only are they lagging behind the “big boys” of China and India but also with their ASEAN counterparts. Moving forward, more must be done to close this information gap. This should start with those in the government, who must ensure that data both on and for MSMEs are comprehensive and up-to-date.

Better information on MSMEs will allow the government to devise the best possible and most effective strategies for MSMEs’ market access and trade facilitation. Better information for MSMEs will require the government to place more effort in promoting the opportunities available and socializing the procedures required for Indonesian MSMEs. Only then will Indonesian MSMEs be able to “Mind the Gap” and board the train toward the AEC with all the riches and prosperity it promises.

The writer works at The Habibie Center in Jakarta.

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