PARIS/BANGKOK, 12-15 March 2019 – A new report, titled “Integrating Southeast Asian SMEs in global value chains (GVCs): Enabling linkages with foreign investors”, developed by the Organisation for Economic Co-operation and Development (OECD) and the United Nations Industrial Development Organization (UNIDO), was launched at two high-level events in Paris and Bangkok.
The report offers insights into research-backed strategies to support the growth and development of SMEs in developing countries. It provides important lessons for developing and emerging economies – the experience of ASEAN countries making a convincing case for GVC integration through foreign direct investment (FDI).
In Paris, the 2019 Forum of the Southeast Asia Regional Programme was opened by the OECD Secretary-General, Angel Gurría, who highlighted the fruitful collaboration between UNIDO and OECD and praised the report as an important contribution to the ASEAN Strategic Plan for Small and Medium Enterprise (SME) Development 2016-2025.
Cecilia Ugaz Estrada, Director of UNIDO’s Department of Policy Research and Statistics, added that: “This report offers novel insights into proactive policies supporting SMEs to link with multinational enterprises which is key factor for SME integration into the global economy.”
The launch event in Bangkok was organized as part of the UNESCAP Trade and Investment Week, which gathered stakeholders from across Asia.
“SMEs play an integral role in creating an inclusive economy. They are a major job creator within their local communities and represent a key mechanism for raising rates of female employment and women’s entrepreneurship, among others,” said UNIDO Regional Director Stein Hansen. “Boosting SME growth and productivity by tackling targeted barriers can play a critical role in reducing poverty and ensuring that economic development reaches all segments of society.”
Mia Mikic, Director of UNESCAP’s Trade, Investment and Innovation Division, said: “There is evidence that the impediments to SMEs’ development remain similar even in more integrated economic areas, such as the European Union. It is therefore important to identify what are the factors that make these barriers persistent.”
Madhurjya Kumar Dutta, Director of Trade and Investment Facilitation of the Mekong Institute, added that: “There are high entry barriers in terms of quantity, quality, consistency and timeliness. The competition has shifted, and is based on standards rather than cost, but SMEs in the region aren’t aware of that.”
Participants agreed that FDI can create positive spill-overs such as increased overall investment and productivity levels.
“Participating in GVCs is linked to large productivity premiums as well as performance improvements and international certifications increase the likelihood of integration into GVCs,” said Iris Mantonavi, Policy Analyst at OECD.
Matthew Stephenson, Policy and Community Lead of the World Economic Forum, added: “SMEs can be born global and link with outward foreign direct investment from the beginning, especially in digital markets, but in Southeast Asia they are often going the traditional way of establishing a stronger presence domestically first.”
Related press release: UNIDO, OECD launch report on Southeast Asian SMEs integration into GVCs
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