Opportunities for ASEAN SMEs

Of the 650 million ASEAN citizens, 143 million are SME workers. There are hundreds of millions of others working as partners and suppliers to SMEs.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Peluang untuk UKM ASEAN

KOMPAS/KRIS MADA

The Director of ASEAN-US Business Council Regional Manager, Brian McFeeters, presented on the ASEAN-US relationship on Monday (27/11/2023) in Jakarta. The presentation marked the launch of the 6th edition of ASEAN Matters for America, America Matters for ASEAN.

ASEAN and the United States recorded a trade balance of 508 billion US dollars per year. ASEAN also becomes the main investment destination for the United States in the Indo-Pacific. In order for the benefits to be felt more widely, there needs to be access for ASEAN SMEs in the economic relations.

Referring to the sixth edition of ASEAN Matters for America, America Matters for ASEAN, there are 71 million small and medium-sized enterprises (SMEs) across ASEAN. Out of the 650 million ASEAN citizens, 143 million are employed by SMEs. There are hundreds of millions more who find employment by becoming partners and suppliers to SMEs.

"This figure reflects the significant importance of SMEs for ASEAN," said Brian McFeeters, Regional Managing Director of the ASEAN-US Business Council (US-ABC), during the launch of ASEAN Matters for America, America Matters for ASEAN, on Monday (27/11/2023), in Jakarta."

Also read: Indonesia has not yet received optimal benefits from the US

The US-ABC has partnered with the East-West Center in Hawaii and the ISEAS-Yusof Ishak Institute in Singapore to compile the report. The first series of the report was launched in Washington DC, USA, a few months ago. The report highlights the interactions and economic, political, and cultural impacts of US-ASEAN relations. Analysis is conducted at the national and local levels in the US and each ASEAN member respectively.

Digital economy

In a study by US-ABC, ASEAN SMEs can play a local role in several ASEAN member states. Unfortunately, if they want to enter the export market, SMEs face various obstacles.

Kompas

Business actors from G20 member countries are calling on heads of state who will meet at the G20 summit next week to push for a solution to end the geopolitical disputes that have been impacting economies in many countries. On the other hand, the theme of inclusive recovery raised by the Indonesian presidency is expected to not just remain a mere slogan.

McFeeters stated that one of the solutions to help ASEAN SMEs is to integrate them into the digital economy. Currently, only 17 million out of 64 million Indonesian SMEs are involved in the digital economy. However, Indonesia has a potential digital economy worth tens of billions of US dollars per year.

In a survey of 1,500 ASEAN SME players, only 33 percent utilized local markets. However, 80 percent of respondents claimed that they had tried to enter the digital economy. They have driven integration during the Covid-19 pandemic. The main obstacle in entering the digital economy is internet access. This is because the internet has not yet reached some areas of ASEAN.

This figure shows the importance of SMEs for ASEAN.

Therefore, in collaboration with several other parties, US-ABC strives to assist ASEAN SMEs in adapting to local markets and the digital economy. This support is one of the main objectives of the ASEAN Connectivity 2025 Plan. Its manifestation is in the form of the ASEAN SME Academy, which US-ABC is involved in managing. So far, 4,200 ASEAN SMEs have utilized the facility.

Integration into the digital economy is crucial as the market continues to grow. By 2025, the value of Southeast Asia's digital economy is estimated to reach 330 billion US dollars. That value could soar to 1 trillion US dollars by 2030. Up to 11 percent of retail sales in the six largest ASEAN economies are estimated to be conducted online. In 2019, the proportion was only 5 percent.

Internet development

The development is supported, among others, by 460 million internet users in the region. Local market managers and various digital marketing players are also steadily increasing. At least, there are now 20 million traders recorded in various Southeast Asian marketplaces.

In addition, there is ease of digital payment. The increase in digital payment transactions reflects that ease. From 100 billion US dollars before the pandemic, the value of digital payment transactions in Southeast Asia is now at least 800 billion US dollars.

ASEAN, according to McFeeters, is one of the centers of innovation in the digital economy. Regulators continue to adapt to market developments in order to further boost market growth. ASEAN has created a policy framework, recognizing the importance of interconnectedness in the digital economy. Various policies have been made to drive that growth.

Also read: Digital Economy Tends to Be Fake, Dominated by Imported Commodities

The United States definitely plays a role in that market. Currently, 97 percent of internet searches are done through Google, which is a giant American technology company. Another American technology company, Apple, dominates 25 percent of the smartphone and gadget market in Southeast Asia.

Meanwhile, Meta dominates 52 percent of the social media market share in the region. Aside from being used for interaction and communication, social media is now also used for marketing various things. Facebook also provides a marketplace.

McFeeters stated that 120,000 ASEAN entrepreneurs have been supported by the United States in the last 12 years. The forms of support are diverse, ranging from capacity building to training in order to access the market.

KOMPAS/KRIS MADA

Regional Manager of the ASEAN-US Business Council, Brian McFeeters (third from the left), and the Deputy Secretary-General of ASEAN, Michael Tene (fourth from the left), participated in the ASEAN-US Business Council event on Monday (27/11/2023) in Jakarta.

McFeeters stated that there are many opportunities offered by Indonesia and other countries in ASEAN. Therefore, the US is committed to continue its presence in ASEAN.