Setting an Effective Policy Framework for SME Development in Asia and the Pacific

Masato Abe

United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
Bangkok, Thailand
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Small and medium-sized enterprises SMEs), which constitute the great majority of the business community, have made significant contributions to all the economies in Asia and the Pacific. A vibrant SME sector helps promote competition and a culture of entrepreneurship, which are both conducive to economic growth. In Asia and the Pacific, however, SMEs face multiple obstacles and challenges which may limit the benefits derived from the implementation of various policy options which are often fragmented and scattered among a number of ministries and governmental agencies in a nation. This paper aims to provide practical guidelines for policy formulation for SME development in Asia and the Pacific, outlining policy objectives and their challenges to be considered. It also provides practical ideas on how to establish necessary institutional and fiscal management frameworks for the smooth implementation of the policy options. For this purpose, the paper focuses on an analytical review of existing policy measures, acts, documents, studies and other secondary materials on SME development mainly in Asia and the Pacific. As a major contribution to policymakers, this paper proposes a comprehensive policy framework for SMEs’ growth, specifically suggesting six key areas, namely: (i) business enabling environment; (ii) entrepreneurship development; (iii) enhancement of financing a business; (iv) fostering business development services; (v) technology transfer and adaptation; and (vi) enhanced market access. This paper also suggests that collaboration among the bilateral and international development agencies must be enhanced in most developing countries in the region in order to design larger, coordinated programs alongside robust monitoring and evaluation schemes and specific policy frameworks for the different segments of the SME sector. Policymakers should also facilitate SMEs’ engagement in macro-level policy issues to enhance their participation in policy advocacy for developing enabling external environment. Further empirical and policy studies are expected to be conducted in order to deepen the understanding of the present topics and to come up with practical policy options.

Keywords: Asia and the Pacific, development policy, private sector, SME, startup
JEL codes: K20, L10, L20, L50, M10, O30


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