Jakarta, 17 October 2009

“Entrepreneurship and ASEAN SME Development”

Honourable Mr. I Wayan Dipta, Deputy Minister of Research and Development for Cooperatives & SME Resources, Indonesia

Honourable Ambassador Artauli RMP Tobing, Head of Policy Planning and Development Agency, Ministry of Foreign Affairs, Indonesia

Honourable Mr. Hassan Jauhari, Senior Advisor to the Minister for International Cooperation, Indonesia

Distinguished Guests, Speakers and Participants

Ladies and Gentlemen,

Good morning.

At the outset, let me congratulate the Ministry of Cooperatives and SMEs for organising this very important workshop on Entrepreneurship Curriculum in ASEAN and for inviting me to address this gathering.

As you already know, the project on ASEAN Common Entrepreneurship Curriculum is targeted for completion this year. The project will develop a framework for entrepreneurship education, utilising regional universities as the region’s centres of excellence to invigorate local traditional industries and SMEs. With the regional curriculum, we hope to develop a culture of entrepreneurship and innovation within the SME sector in ASEAN and churn out more budding entrepreneurs.

Such a workshop that brings the governments, policy makers, and academia together to discuss the Common Curriculum for Entrepreneurship in ASEAN is indeed a very effective way to exchange views and ideas on entrepreneurship which has a direct impact on the development of micro, small, as well as medium sized enterprises in ASEAN.

Current Situation

The recent global financial and economic crisis has impacted negatively on economic development in the region. The forecast from IMF’s World Economic Outlook of April 2009 shows that the real GDP growth rates in 2009 for ASEAN Member States will shrink around 3% to 11%.

The current crisis has also affected the demand for labour in the formal sector of ASEAN economies. Job recruitments have slowed down or are at a stand-still; working hours have been reduced; and there is a downward pressure on wages. Recently, significant job losses have been recorded in some sectors in ASEAN Members States. For example, around 50,000 to 100,000 garments sector workers have been laid off in Cambodia, Indonesia and Viet Nam. Unemployment has also increased due to the crisis. The unemployment figures stood at 16 million in 2008 and have resulted in the expansion of the informal economy where nearly 60% of workers are now employed where there is limited job security.

In a way, this crisis has brought about a “rethinking” in governments in ASEAN with due policy attention being given to promoting SMEs and development of SMEs.

Entrepreneurship and SME Development

Micro, small, and medium sized enterprises in ASEAN, accounts for more than 96% of the total number of enterprises and employs up to 95% of the total workforce. However, the contribution of SMEs to GDP is only around 30-53%. This reflects substantial productivity gaps between SMEs and large enterprises, and boosting productivity of SMEs is essential in increasing overall productivity of the ASEAN economies.

Entrepreneurship is the foundation for gainful progress in a market economy and is an investment for the development of highly competitive SMEs. Higher levels of efficiency, quality, cost and punctuality in delivery are other determinants of sharpened competitiveness at the domestic and external levels. The upgrading process, largely determined by innovation, can be further leveraged through the formation of inter-firm networks and linkages within and across borders.

Strategically, therefore, the SME sector must have, or must be assisted to possess the critical attributes that I have mentioned earlier. These characteristics of healthiness and dynamism of SMEs, in turn, provide the main reference points for two of the following operational directions in the ASEAN Policy Blueprint for SME Development or APBSD. One is the promotion of a culture of entrepreneurship, innovation and networking within the SME sector and, by extension, the domestic and regional economy at large. The other is to ensure that SMEs become and remain a learning organisation – one in which productivity is constantly improved through knowledge-based and innovation-driven practices.

In this connection, entrepreneurship development and capacity building measures at the national and regional levels feature prominently among the recommendations suggested in the APBSD. These measures include, notably, the proposed distribution of toolkit packages for self-diagnosis and trouble-shooting of problems by SMEs themselves. Identifiable problems prevail, for example, in production processes, enterprise management, ICT-skills, and financial reporting and business plan preparations.

Furthermore, there are two sides to entrepreneurship training, which need to be considered. First is the managerial/management and financing dimension such as the preparation of business plans. Second is the technological and marketing dimension such as upgrading technologies, participation in supply and production networks, understanding quality control and assurance and benefits from free trade arrangements. Both sides are important in the context of competitiveness in a knowledge-based economy and need to be addressed in the development of the Entrepreneurship Curriculum.

Concluding Remarks

In conclusion, ASEAN has placed great importance in fostering entrepreneurship in the region, as it is part of the priority actions spelt out in the ASEAN Economic Community Blueprint, which will transform ASEAN into a single market and production base by 2015.

A strong, dynamic and efficient SME sector will also ensure sustainable, inclusive and broad-based economic and social development. It is also a critical requirement in supporting closer regional integration through the establishment of the ASEAN Community, particularly the ASEAN Economic Community (AEC). Thus, encouragement and promotion of competitive and innovative SMEs is necessary in contributing to greater economic growth and social development as well as for a more inclusive and broad-based integration of the ASEAN region.

The ASEAN Leaders fully recognise the role of the SMEs and have called for regional actions to further strengthen the efficiency and competitiveness of SMEs. An SME Council comprising high-level public and private sector representatives to oversee regional SMEs development and provide appropriate policy recommendations to governments of ASEAN Member States is being developed. This reflects the commitment of the ASEAN Leaders towards the development of SMEs as the backbone of the ASEAN economies.

Lastly, let me wish the Ministry of Cooperatives and SMEs of Indonesia and you a successful workshop. I hope all of you will actively participate in the deliberations and benefit from this workshop.

Have a pleasant stay in Jakarta and a safe trip home. Thank you.