Taiwan is beefing up its contribution to the Asia-Pacific Economic Cooperation forum with the establishment of a center to help member economies’ small and medium enterprises strengthen their crisis management capabilities.
Muhamad Noor, executive director of the APEC Secretariat, was in Taipei May 24 for the opening ceremony of the APEC SME Crisis Management Center.
“Given the importance of SMEs to the region’s growth and prosperity, and given the challenges SMEs face in the current economic environment, it’s a very timely initiative,” he said.
Taiwan has been very active in APEC recently, with the crisis center’s opening coming on the heels of the APEC Business Advisory Council’s meeting May 17 to 21. The event was organized by the Chinese Taipei APEC Study Center and hosted by Taiwan for the third time, with more than 170 delegates attending the gathering, according to a CTASC source.
SCMC Executive Director Robert Sun-quae Lai pointed out that the newly established SCMC is the first APEC center set up in Taiwan by the ROC, which proposed the center in 2009 and obtained support from participants in the Small and Medium Enterprises Ministerial Meeting and the APEC Ministerial Meeting in Singapore. The 2009 Leaders’ Declaration issued after the 17th APEC Economic Leaders’ Meeting also endorsed the center.
“It is our earnest hope that the center will be able to work for the benefit of all APEC member economies and help SMEs in this region strengthen their crisis management capabilities,” said Lai, who is also director-general of the Small and Medium Enterprise Administration under the ROC Ministry of Economic Affairs.
“Our goal is to provide warning signals to SMEs so they can take preventive measures against crises,” Lai added.
Noor pointed out that SMEs are critically important to the region. “They make up more than 90 percent of all businesses and employ as much as 60 percent of the region’s total workforce,” he noted. “At present, however, SMEs account for only 30 percent to 35 percent of exports and they are vulnerable to economic crises and shocks.”
APEC has already taken great strides to assist SMEs, Noor said, particularly in the areas of market access and SME policy development. It has also gone beyond the policy level to directly build capacity at the business level, with the creation in 2001 of the International Network of Institute of Small Business Counselors to provide training and certification for consultants, counselors and other professionals who advise small businesses across the region.
According to Noor, the SME Working Group’s new Strategic Plan will guide SME-related projects up to the year 2012. The plan will cover six priority areas, including enhancing the business environment, building crisis management capability, promoting market access, accelerating innovation, improving access to finance and encouraging sustainable business practices.
Political observers said the Taipei-based SCMC is in line with the APEC mission, as SMEs, which the center is devoted to helping, are also crucial to Taiwan’s economy.
“There are 1.24 million SMEs in Taiwan, accounting for nearly 98 percent of all enterprises,” Lai said. “They create 77 percent of the job opportunities here and their production value amounts to around 42 percent of the total.”
But SMEs have faced difficulties adapting to the rapid changes in the global business environment over the past two years, Lai continued. They need to improve their ability to effectively utilize internal resources, while monitoring the external business environment and adjusting their business strategies when needed.
The SCMC is manned by Lai, Deputy Executive Director David Hong and 12 experts from APEC member economies. Hong doubles as president of the local think tank Taiwan Institute of Economic Research.
The center has five major functions. It will monitor emerging or existing economic crises and analyze their potential impact. Seminars and workshops will discuss global economic challenges and response measures. The center will train SMEs in managing crises and provide consulting services concerning crisis preparedness and management. In addition, the SCMC will study global economic crises and strategies for managing new challenges.
Even before the official launch of the SCMC, work got underway with a workshop involving 17 local and international experts in Taipei May 21-22 to facilitate the production of a monthly “APEC SME Economic Crisis Monitor” report. They discussed a related crisis monitoring mechanism, as well as the scope and editorial policy of the publication. Starting in July, the report will appear on an official website at www.apecscmc.org.
Meanwhile, the SCMC and the MOEA’s SMEA put on a symposium May 24-28 to discuss trends in international economic development and crisis management strategies. Some 200 people attended the workshop, including keynote speaker Kenneth Waller, director of the Melbourne APEC Finance Centre.
“SMEs are affected by financial system stability, or the lack of it, fluctuations in the availability of credit, factors causing major currency fluctuations, interest rate increases and rises in sovereign debt around the world,” Waller told the symposium May 24. “These are some of the consequences of a world in which capital markets are integrated and part of the globalization process.”
Waller, also director of the Australian APEC Study Centre at RMIT University, said the establishment of the SME Economic Crisis Monitor is an important development in APEC’s structures. “It does reflect concerns that APEC should coordinate in a specialized way to monitor and propose actions to ameliorate potential threats to SMEs as a major and fundamental component of all our economies.”
Suh Jung-dae, senior research fellow at the Korea Small Business Institute, noted that the SME sector is not only the most dynamic in each economy, but is often one of the first impacted by any serious external shock.
“SMEs are now considered the most sensitive sector and worst affected by the economic environment,” he said. “Economic crises have adverse impacts on most SMEs, reducing the volume of sales and increasing the number of bankruptcies or closures.”
Suh pointed to the need to focus on SMEs and their performance during times of crisis. With the scope and severity of the current economic downturn extending well beyond the capability of any one government, cooperative action by both developing and developed economies is required, he added. (HML-THN)
Write to Adela Lin at adela2009@mail.gio.gov.tw