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SMEs need quality upgrade to get funding
Indonesia needs to boost the competence of its small and medium enterprises (SMEs) to prepare for a more integrated regional market and to obtain funding from the planned regional bank for small businesses, a senior Trade Ministry official has said
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Indonesia needs to boost the competence of its small and medium enterprises (SMEs) to prepare for a more integrated regional market and to obtain funding from the planned regional bank for small businesses, a senior Trade Ministry official has said.
The country had to improve the quality of its SMEs, which were scattered across the archipelago, to make them able to compete with those of regional peers, said the Trade Ministry's director for ASEAN cooperation, Donna Gultom.
'Our SMEs are more or less the same as those of the Philippines, but they are still lagging behind those of Malaysia and Thailand,' she said on Monday on the sidelines of the 47th ASEAN Economic Ministers (AEM) meeting in Kuala Lumpur.
Having good quality SME, according to Donna, would also be important for the country to eventually source funding from a regional SME bank set to be established by 2025.
ASEAN, which aims to declare a single economic community by the end of this year, previously devised a road map dubbed the ASEAN Community Vision 2025 to deepen the integration of the ASEAN community.
Under the ASEAN Community Vision 2025, ASEAN plans to form a regional bank to provide funds for member countries' SMEs, among other things.
According to Donna, the bank is to pull funding from respective member countries and SMEs from each member state may request funding from the bank.
There was still, however, a number of challenges facing ASEAN member countries in respect to the plan to establish the regional bank, such as the different scales of SMEs, the different levels of access to bank accounts and the worries that an advanced member like Singapore would be the one that received most of the funding from the regional bank, she said.
Indonesia's SMEs, for example, are referred to as enterprises with annual sales of between Rp 300 million (US$21,431) and Rp 50 billion and asset values of between Rp 50 million and Rp 10 billion.
Singapore's SMEs, meanwhile, are referred to as enterprises with annual turnovers of not more than $100 million or with a workforce of no more than 200 employees.
In a press conference on Sunday, Malaysian International Trade and Industry Minister Dato' Sri Mustapa Mohamed, who is chairing the AEM event, said that ASEAN member countries had come up with a blueprint for regional SMEs, but left the definitions of SMEs in the hands of individual member states.
'There was a broad agreement on this blueprint, action plan, and SMEs, of course, are going to be one of the major driving forces for [ASEAN] growth,' he added.
SMEs play a pivotal role in respective ASEAN member countries, particularly in providing informal jobs for millions of people.
In Indonesia alone, there were 57.9 million micro, small and medium enterprises, comprising 99.99 percent of the total business enterprises in the country in 2013, according to data from the ASEAN Secretariat.
The micro and SMEs employed 117.68 million people, or 97 percent of the total labor force in the country, according to the data.
