31 March 2020
By JAIF Management Team
Over 90% of enterprises in ASEAN countries are micro, small and medium enterprises (MSMEs), accounting for 50% to 90% of employment in the region. MSMEs are important “engines of growth” in ASEAN economies, contributing up to 50% of GDP of ASEAN member states. 1 Although MSMEs contribute significantly to the ASEAN economy, at present, they are often subordinate at the lower layer of the supply chain as subcontractors to major overseas manufacturers. Therefore, the revenue MSMEs receive from overseas manufacturers is often only 20-30% of the product price. The lack of information, access to market, and technology of MSMEs have been the issues hindering development of MSMEs.
The project “ASEAN Training Courses to Build and Enhance Export Capacities for SMEs” consisted of workshop in Ho Chi Minh City, site visit to local MSME and publication of guidebook on export capacities for MSMEs in December 2017. Total of 85 participants attended from 10 AMSs. The project contributed to enhancing the export capabilities of ASEAN MSMEs and related associations, building network among the stakeholders and enabling MSMEs to access global economies.
MSMEs usually focus on domestic markets and developing their business overseas is a challenge. By strengthening the export capacities of these MSMEs, this will realize job creation and sustainable development of the country and the ASEAN region” says Vu Lien Huong, Head of Division for APEC and International Economic Cooperation, Multilateral Trade Policy Department, Ministry of Industry and Trade (MOIT) of Viet Nam, who was both the participant and the proponent of this project. Reflecting on the 3-day workshop, the most practical part was the exercise on Tariff Finder and Rules of Origin (ROO) when the participants were divided into groups according to category of export and studied how to define the Harmonized System (HS) code. She also learned from the training that innovation and digitalization of MSMEs is the key to kick start their business.
The Reference Guidebook for ASEAN SME Exporters published as one of the outputs of the project is a helpful tool for MSMEs that explains step-by-step procedures when they export their goods and services. Huong and her colleagues find the guidebook useful as a training material when MOIT implements similar workshops for the local MSMEs in Viet Nam. The guidebook is currently being translated into Vietnamese under the ministry’s own initiative and will be published on their website in 2020.
Hoang Thi Ngoc Mai, Deputy Head of APEC and International Economic Cooperation Division of MOIT, was impressed the most about the diversity of the workshop participants ranging from government officials to private sector and MSMEs-related associations. She found the session on how to best utilize existing FTAs in export for MSMEs informative. Inputs provided by the Japanese expert on regulations for imports and exports were especially eye-opening to learn about the high standard of quality control and how MSMEs of ASEAN can penetrate into the Japanese market. “MSMEs who participated in the training were very happy for informative sessions and they gave feedbacks requesting for similar workshops covering more technical and specific issues in the future”, she claims.
Dinh Thanh Son , Official of General Policy and Project Division of MOIT, reflects back that “my participation in the workshop gave me the opportunity to join the negotiation table of the Trade in Goods with partners like Japan.” Most notable event was the half-day site-visit to a local MSME that produces processed fruits and vegetables for exports to EU, USA, Japan and other countries. Observing how a local MSME actually operates in the field has broadened his views and changed his day-to-day involvement with his work. He also appreciates the chance to build network among the AMS, which he still maintains to exchange information when meeting with the focal points at ASEAN ministerial meetings.
The participants evaluate the workshop to have positive impacts on the growth of MSMEs. They confidently express that MSMEs’ contribution to the economic growth is undeniable. The highlight of the training was sharing of case studies by the speakers from Japan and ASEAN on how MSMEs can best utilize AJCEP Agreement and other existing FTAs. This enabled MSMEs to expand their business to international markets, especially Japan. After the workshop, more active participation of MSMEs is observed in getting information about tariff reduction using the advantage of FTAs.
🄫 MOIT of Viet Nam
Japan supports development of MSMEs especially to increase MSME’s competitiveness in regional production networks through tailored programmes for AMS based on ASEAN Strategic Action Plan for SME Development 2016-2025 (SAP SMED 2025). Please see our Sector Brief for more information on JAIF support for MSMEs. This project was supported by the Government of Japan through the Japan-ASEAN Integration Fund (JAIF).
1 Overview: SME Development in ASEAN, retrieved from: https://asean.org/our-communities/economic-community/resilient-and-inclusive-asean/development-of-micro-small-and-medium-enterprises-in-asean-msme/
2Part of information in the article was taken from an interview with Mr. Le Xuan Duong, Director of Vietnam leather, Footwear and Handbag Association (LEAFASO). LEAFASO, Ho Chi Minh City branch was one of the participating organizations of the training.