How to fire Asean progress
GIL H. A. SANTOS
HOW do you ignite the rocket booster for the Southeast Asian region to fulfill international financial institutions’ predictions that it will be the world’s fastest growing area in the next 25 years?
At this point, and global economic competition among sovereign nations led by the superpowers, the 10 members of the Association of Southeast Asian Nations (Asean) are busy working towards their own—and collective—industrialization and elevate themselves to middle-income economies/countries from their developing status.
The region’s population is officially counted to be 650 million, young and still growing at an average rate estimated to be at least 2.8 percent. That will be a lot of mouths. Enough for the Asean governments, especially for Indonesia and the Philippines, to be concerned about food and water security, and environmental and biodiversity sustainability.
Except for Singapore and Brunei, they are predominantly agricultural and fisheries-focused. Everybody is obviously pushing for modernization and industrialization which depend largely on the “disruptors” (interchangeably called “innovations,” reinventions and improvements of old systems—including computer hardware and software).
From the latest figures of World Fact Book and the Central Intelligence Agency, the following are the Asean, Asian and World rankings of sovereign Asean members, based on the population size their per capita income, and their buying power:
But industrialization, specifically the extractive and heavy industries, require huge amounts of funds, technical knowhow, costly education of people and management savvy, which the A members—except for Singapore and partly, Brunei—are sadly, short of. And corruption, inherited mostly from different past European colonizers and Chinese traders, discourage foreign investments.
Successful business management, case studies show, is dependent on the cost-benefit factors, innovations which are now largely brought about by application of new technologies—the disruptors—and minimized (if not totally absent) corruption.
Last week, I was invited to participate in the Philippine MSME Summit 2018 conference-workshop in the Clark Freeport Zone in Pampanga, and learned some helpful facts about the industry sector.
The solution: Public and private support for the Asean movement to enhance, strengthen and apply modern technologies on the management of traditional individual or family-owned small businesses of the region, now commonly known as micro-small-and-medium enterprises (MSMEs).
The region has from 88.8 percent to 99.9 percent of the total listed enterprises, accounting from 51.7 percent to 97.2 percent of the jobs in the rural areas. But the economic sector’s contribution to the area’s export trade is only 10 percent of the total. Most likely, these figures are lower than the existing unlisted number because data is difficult to access, particularly in the rural distant coastal areas and islands.
In almost all the Asean 10, these are the small retail stores of assorted goods, food stalls on the highways and provincial bus stations, corner drugstores, car or footware repair shops, or stall renters selling fish, meat, vegetable, grains, etc. in public markets. Most of these are not even formally registered, do not pay taxes nor issue official receipts to buyers.
By the Asean figures, 65 million or 40 percent of the formally registered MSMEs in the developing countries have insufficient capital or are suffering from financial handicaps.
Due to their different colonial histories, levels of education and development, religion and languages (despite the use of English as a common trading language), accurate economic data are unavailable in some countries.
The World Bank lends to sovereign governments to enhance, strengthen and modernize MSMEs with an allocation of $3.2 billion. These include partial credit guarantees which help open fund resources of government banks and other private financial establishments.
It will also help share financing risks through advisory support, training services for governments’ regulating agencies, and development of any assistance to boost MSMEs. The reader or MSME owner should consult their banks or nearest government financial institutions for detailed information.
This WB move is in recognition that MSMEs will definitely help boost Asean economic cooperation and hasten the economic integration of the region into a unified supplier and market. The MSMEs will close—or at least narrow—the development gap among the 10 Asean members.
From last week’s MSME Summit 2018 in Clark, in line with Asean action plan to convert these enterprises of the region, also emerged the major problems (challenges) of the economic sector. Among these:
1. The government must change public mindsets to make it faster and simpler to start and do business. (The Department of Trade is now implementing the steps towards this direction but MSMEs complain civil servants in the local government units, especially in the provincial and municipal levels, still prioritize the big investors.
2. Scientific management and financial literacy are very rare among the MSMEs.
3. There is the urgent need to revise the mentality of the MSME sector to be more conversant on cost-benefit and fiscal management and to cultivate the younger generations to take over the business in a globally competitive state.
4. They will adopt modern management systems only if they understand, appreciate and apply these because they know what the future holds for them.
5. They will realize their value if their mentors or explainers communicate with them in simple terms they understand—better in their mother language.
6. Most important for them to be globally competitive is to join the digital world, invest in modern machines of production, increase productivity and apply it in their businesses
7. They must keep themselves informed daily of the different markets, the supply chain and its values and the
geopolitical factors that affect the markets.
8. They can keep up with these by upgrading their information and data bank—and themselves to be in cadence with the march of this age of disruptors.
9. Ergo, learn to efficiently manage change management.
Putting these solutions in words to attain the Asean—and our national inclusive growth—goals for economic integration fast and raising the MSMEs in the international supply chain is easier to accomplish because cultural changes take time. The time lapses between the industrial revolution up to this current knowledge revolution, took centuries. Revising traditions takes generations to accomplish.
But certainly the changes will come. As the adage goes, nothing is sure in life except death and changes!
Comments and reactions to gilsmanilatimes@yahoo.com
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