The ASEAN economic integration – now in progress and supposed to be complete by 2015 – can be a boon or a bane, depending on how prepared an economy or a business is.
Small and medium enterprises in particular should be on their toes as they face the challenge and opportunities of one, single, barrier-free ASEAN market. SME’s role in nation building has, after all, been recognized as crucial. Philippine enterprises make up 99 per cent of the economy but account for only 32 per cent of the gross domestic product or GDP. They also generate 61 per cent of total employment.
Much has been discussed and written about how government can give SMEs the much-needed push to make them stronger as they face tougher competition brought about by integration. Already new programs are in place or existing programs intensified to help small businesses hurdle age-old barriers to growth: lack of finance, low technology, shortage of raw materials, lack of access to markets, lack of bargaining power due to low production volume, among others.
SMEs, however, should also help themselves, that is, take a pro-active role in getting themselves ready for an ASEAN where goods freely flow, without tariff barriers.
Inquirer columnist and former NEDA chief Cielito Habito, in his recent column “Small Business and ASEAN integration” urges SMEs to do their homework.
Doing their homework
Basic to this, he said, is putting their business planning and management and financial record-keeping in order.
“It’s a common lament that banks do not lend enough to SMEs despite a great abundance of loanable funds in the system. But one can’t fault the banks when small firms that seek their loans are unable to demonstrate a minimum of responsible business and financial management. Targeted capacity-building in these areas for SMEs would be a worthy service that government (especially local governments) and non-government organizations (including banks themselves) could provide, as direct contribution to inclusive growth.”
- More stable SMEs should learn about documentary procedures and requirements for taking advantage of trade and investment concessions under the AEC. A venue for such learning is the DTI’s Doing Business in Free Trade Areas program, conducted around the country.
- SMEs should consider clustering and working together to meet volume orders of big export buyers.
- Groups or organizations of accountants and bookkeepers may do public service to struggling SMEs through the provision of record-keeping services which “which could after all turn into sustained business relationships later.”
Another prescription for SMEs to prepare for the upcoming regional integration is by adopting ICT tools and solutions.
PLDT Executive Vice President Eric Alberto said that the borderless economy requires a more robust ICT and e-commerce framework for small enterprises.
He urged small businessmen to re-examine traditional business models and manual systems and consider adopting ICT to keep pace with the changing times. ICT solutions, he said, will enable them to harness technology, expand their businesses, and introduce more innovative products and services to the market. Such tools will also facilitate collaboration within their respective industries that will build up the nation’s standing in the Asean economic community.
Photo: from www.mb.com