Friday, July 17, 2009

time is RIPE for an ASEAN definition of an SME!

( June 2009: Author - on the right,
with ASEAN Secretary-General, H.E. Dr. Surin Pitsuwan)

In most countries, SMEs formed the backbone of the economy be it in terms of the number of people employed, sales generated and other economic indicators.

Hence, I personally find it strange and surprising that despite the existence of an ASEAN SME Blueprint appearing in the ILO Report and the more recent Roadmap for an ASEAN Community, 2009-2015(C.1. SME Development, No.60 ), there is still no single ASEAN definition of what constitutes an ASEAN SME to-date!

Perhaps, the wide array of SME interpretation by different countries makes it difficult for ASEAN to come out with a standardised definition of an SME. For example:-
  • INDONESIA: Different ministries, have "different interpretations" of what constitutes an SME.

  • Singapore: Due to the "Currency Conversion" factor, what is normally considered as an SME company in Singapore DOES NOT qualify as one within the ASEAN context. Singaporean SMEs can be MNCs in some ASEAN countries.
  • MALAYSIA: The policy-makers have defined SMEs within certain parameters. They are sales turnover, no. of employees and/or type of industry. Refer to SMIDEC (now renamed "SME Corp") for Malaysia's definition.

Considering the existence of the Roadmap for an ASEAN Community, I find it even stranger that SME data is NOT readily available when the writer conducted interviews at ASEC & ERIA. Perhaps, the very nature of SMEs i.e. non-availability of published data and its "unsexyness" is a turn-off for most researchers!?

Whatever the situation is, the author hopes that the ASEAN SME definition can be finalised
...the Sooner the Better!

Thursday, July 2, 2009

ERIA, Jakarta VISIT ( 2 July 2009)

Went to the Economic Research Institute for ASEAN and East Asia - ERIA today with my AEI friends i.e. Azrul Shahreen & Zikry Kholil for a 10am appointment.

Purpose of the visit was two-pronged i.e. to understand the functions and workings of ERIA and to gather data on SMEs and Islamic Finance which would be pertinent for my research paper.

Am honoured and very thankful that 2 researchers i.e. Ms. Friska Parulian & Mr. Sothea Oum took time off from their busy schedule to brief us about ERIA and to answer my questions on Economics/Finance generally and on Islamic Finance and SMEs specifically. In addition, we were given copies of the latest Policy Brief on "Global Financial Crisis and Policy Responses in Southeast Asia" and a draft of a future Policy Brief as well. Quite pleased to hear that the researcher "liked" Malaysia's Stimulus Package response to the Global Financial Meltdown.

Thank you again to Mr. Sothea Oum for extending me a copy of the ERIA Research Project Report, No.5 titled "Asian SMEs and Globalization".

My heartfelt thanks to Miss Arlene Taulu of the ASEAN Secretariat for making the visit arrangements and to Ms. Mitsuko Takayanagi for receiving us and bringing us around.

BANDUNG Fact-Finding Trip & SME Data Gathering (29 June - 1 July 2009)

I visited Bandung on Monday, 29th June - 1 st July 2009.

Purpose of the visit was as a fact-finding trip to observe an Indonesian SME and to gather relevant data on Indonesian SMEs pertinent to my research on SMEs & Islamic Finance. Visited the School of Business & Management, Institut Teknologi Bandung (SBM-ITB),Bandung & Central Refill...both for the second time.

Some interesting observations:-
  • There's NO standard definition of an SME in Indonesia. Different ministries will have different criteria. ( In Malaysia, a SME as defined by SMIDEC is mainly based on sales turnover, number of employees and/or type of industry )

  • The government's subsidised micro-credit rate of 6-8% p.a. is similar to Malaysia's commercial lending rate ( Indonesia's commercial lending rate is between 12-18%).

  • Collaboration between Banks and Universities to render micro-credit assistance to deserving SMEs. Thus, adding another layer to the credit vetting process.

  • Slow take-up rate of e-commerce due to security/fraud, technology and other issues.
Thank you to Dr. Dwi Larso of SBM-ITB for the assistance rendered and to Mr. Rohimat Fauzi for sharing the data collected and information on the workings of his own SME(called Central Refill) and also for being such a gracious host. Appreciation to Miss Hiftin Harzanty for acting as our local guide.