SME Development: Narrowing the Development Gap in the ASEAN Economic Community

This paper evaluates the implementation of the 2010–2015 ASEAN Strategic Action Plan for Small and Medium Enterprises (SME) Development and the 2004–2009 ASEAN Policy Blueprint for SME Development. The initial interviews and survey results yielded low average effectiveness scores for the ASEAN Strategic Action Plan for SME Development. The scores ranged from without- to no- or little concrete impacts on the implementation of various programs covering access to financing, facilitation, technology development, promotion, human resource development, and other regional SME initiatives. Results for the ASEAN Policy Blueprint for SME Development also indicated low average effectiveness scores on the implementation of programs covering human resource development and capacity building, enhancing SME marketing capabilities, access to financing, access to technology, and creating a conducive policy environment. In the last decade, manufacturing SMEs have not substantially generated sufficient value added and employment to increase the country`s overall manufacturing growth. This weak performance of SMEs has been largely attributed to barriers particularly access to finance, technology, and skills as well as information gaps and difficulties with product quality and marketing. Within this light, the government can facilitate SMEs` gainful participation in the ASEAN by designing a coherent set of policies and programs that are aligned with regional SME development initiatives to address financing issues; improve the technological capabilities and strengthen supply chains (to enable SMEs to move up the technology scale); and create an enabling environment for SMEs to survive and realize their potentials to grow. To improve the effectiveness of SME program initiatives at the ASEAN level, it is important to complement the implementation of these regional initiatives with domestic or within-the-country policy reforms and programs.