Small business is the foundation of economies in Southeast Asia

DNHN - Regional economic growth plays an important role in the continued development of Southeast Asia. The local economy in most parts of the region is dominated by micro, small and medium enterprises (SMEs), said Ramesh Subramaniam, Director General of Southeast Asia Department of the Asian Development Bank (ADB).

SMEs account for 97% of all businesses in the region, employ about two-thirds of the total workforce and account for about 40% of gross domestic product.

Unlike large enterprises which are often located in urban areas, 80% of MSMEs operate in provincial towns or in rural and remote areas, where they offer a wide range of products and services. essential services for local communities, especially creating jobs for women.

However, SMEs face a number of unique challenges. They have low capital and limited resources to innovate. Many businesses are in the informal sector with a low level of understanding of government programs and supports.

Across Southeast Asia, SMEs have suffered massive losses in income and capital due to the Covid-19 pandemic. MSMEs also face new challenges, such as higher costs of doing business, growing debt and management uncertainties, which necessitate structural reforms to improve the local business operating environment.

Speaking at the workshop, Mr. Ramesh Subramaniam - Director General of ADB's Southeast Asia Department emphasized that small businesses are the foundation of economies in Southeast Asia. Understanding how the business environment affects the viability of businesses during this challenging period is key to unlocking policy interventions to support post-pandemic recovery and possibly help achieve progress towards the sustainable development goals.

Small businesses are critical contributors to economic success, experts say, so any economic recovery plan or attempt to transition to a low-carbon economy will require planning business conditions among local economies to understand the key factors, strategies and behaviors that can enhance SMEs development and support local economic growth.

Therefore, a better, more business-friendly environment across Southeast Asia is critical to the recovery of businesses hit hard by the Covid-19 pandemic. Prominent government policy responses are recommended including the need for a holistic ecosystem approach that can seamlessly connect various sectors with the responsibility of creating a local flourishing economy with small businesses and dynamic entrepreneurs.

Huyen Tram