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ICT and Small, Medium and Micro Enterprises in Asia Pacific - Size Does Matter
 

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Article 2: ICT and Small, Medium and Micro Enterprises in Asia Pacific - Size Does Matter

By James George Chacko and Glen Harris

All of us are more than familiar with the hyperbole of how investments in technology have generated unprecedented gains in productivity and increased the levels of connectivity between Asia Pacific companies. It is without a doubt that ICT has enabled the Small, Medium and Micro Enterprises' (SMME)[i] networks to become more integrated, and more effective across longer distances, operating with more efficiency and conducting transactions in greater volume. However, it must be noted that in reality the small businesses that constitute the bulk of developing economies have yet to reap these benefits evenly as obtaining such opportunities rest largely upon the ability of its SMMEs to engage in the regional and global economic business networks which, in turn, demands provision of a pre-requisite level of access to and use of ICT.

In Asia Pacific, SMME activities are poorly connected and initiatives to provide an environment of self-empowerment and sustainability have been slow to develop primarily attributed to inadequate information, high adoption costs, and a poor understanding of the dynamics of the knowledge economy. In short, SMMEs in many developing countries are unprepared and are struggling to adapt to the complex demands of the New Economy as they lack the resources to take full advantage of the wave of opportunities to begin their transition into the New Economy. All this and more is slowly setting the SMME sector in Asia Pacific further apart from their counterparts in developed nations.

The question that begs to be answered is why should emphasis be placed on ensuring that SMMEs are ICT enabled and plugged into the digital economy? In essence, digital opportunities provided by ICTs are fundamental to the improvement of all aspects of developing economies and their entry into the global marketplace. The answer primarily lies in the fact that ICT has the potential to assist SMMEs to instantaneously connect to vast networks of SMMEs across great geographic distances at very little cost. By enhancing the potential, effectiveness and reach of the SMMEs by harnessing the benefits of ICT, SMMEs can play a key role in national economic development strategies by facilitating flows of information, capital, ideas, people, and products. A strong SMME sector that is integrated into the global digital economy can lead to job creation, increased public revenue and a general rise in the standard of living. In addition, the uses of ICT to enable SMMEs to participate in the knowledge economy offers enormous opportunities to narrow social and economic inequalities and thus help achieve broader development goals.

The use of e-business techniques has emerged as an efficient gateway for SMMEs to take greater advantage of opportunities in global markets. Most SMMEs are still lagging behind large companies in using the Internet as an efficient business tool. To stimulate usage of the Internet by SMMEs, developing countries have deployed a wide range of policies and instruments and have launched many different actions and initiatives based on them. However, a more collective and more co-ordinated approach is sadly lacking.

Policies on ICT should take into account other policy areas where ICT plays an important and complimentary role, such as in trade and investment, education, infrastructure, legal, and security environment. A coherent and comprehensive host of e-strategies should be developed for use by SMMEs that are in the final analysis, conducive, achievable, and above all practical. A comprehensive e-strategy must therefore consist of a holistic framework that identifies actions, priorities, and implementation, resources and capacities of SMMEs on a cross-sectoral basis. Perhaps one of the biggest challenges of ICT policies and e-strategies will be to mould the various cross-sectoral issues into agenda that concentrates on SMMEs, and to harmonise these policies within a larger framework of economic development.

Policies effecting SMME-ICT issues should ideally be carefully promoted through the government as in the long run ICT policies for SMMEs assist in the creation of opportunities for the community in terms of job creation and the development of social capital. To cite just one example?????, understanding 'Intellectual capital' should also be encouraged, as it is a combination of human capital (knowledge, skills, insights and potential of those in an organization) and structural capital (capital wrapped up in customers, processes, databases, brands, and systems).

On a broader scale, within and among countries in the Asia Pacific region there are growing rural-urban disparities in terms of policy support, access, affordability, and absence and relevance of practical content. The rural-urban digital divide is widening because of geographic locations, lower literacy, and lack of knowledge and awareness. Urban populations seem to be benefiting more than the rural areas from new infrastructure, applications, and services. Supporting SMME as a vehicle of self-empowerment, capable of working in both the urban and rural environment, can effectively act to connect the two environments together, facilitate knowledge transfer and encourage collaboration.

In short, developing countries have the potential to achieve rapid and sustainable economic and social development by using the potential of ICT and applying it within SMMEs. An economy that is based upon an ICT enabled and a networked SMME sector have the potential and capacity to apply affordable yet effective ICT solutions for bridging the digital divide. A productive SMME sector across the Asia-Pacific region can form the foundation upon which national and regional socio-economic development goals can be attained and utilized to benefit the wider community.

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[i] The definition of what constitutes an SMME varies widely across the world and within the Asia Pacific region from country to country, according to the number of employees and the amount of invested capital or turnover. For example, 'SMEs are defined to have less than 200 employees with invested capital of less than K1 million for Myanmar, less than 20 million Baht for Thailand, less than 5 billion VND for Vietnam and less than P15 million for Philippines, ' (in The DatumXchange SME Definition By Andy Hor (Updated June 2002) http://www.datumxchange.com/articles/smearticle.htm). According to SMIDEC, in Malaysia an SMI is defined as industrial based companies or companies providing manufacturing related services with annual sales turnover not exceeding USD 8 million and with full-time employees not exceeding 150 individuals. However, there is less substantial definition for SMEs, which naturally covers a much broader range besides manufacturers and so leaves a certain amount of ambiguity as to a conclusive definition.

By James George Chacko and Glen Harris
James George Chacko
Programme Specialist
UNDP Asia Pacific Development Information Programme
James is the Programme Specialist for Access and Partnership Development at APDIP. His work includes developing strategies for APDIP's equal access program and he focuses on ICT and Millennium Development Goals, e-government and e-governance, learning and literacy, regional ICT policies and e-strategies, ICTs and gender, rural area connectivity and sustainability, new methods of access, open source, and ICT and SMEs. He is also engaged in research and documentation of best practices from the region in specific thematic areas related to access, governance, and sustainability. He is a recipient of several awards, including the British Chevening scholarship and the Liam Holden Memorial prize.
Glen Harris
UNDP Asia Pacific Development Information Programme
Glen has undertaken extensive research work on ICT and SME in the Asia Pacific region with specific focus on areas/applications where SMMEs most stand to benefit in terms of applications of ICT. He has also been involved in initiatives in identifying ICT tools and technologies that are known to have worked best in increasing productivity, efficiency, and marketing in SMMEs. In addition, Glen has also undertaken an extensive mapping exercise and review of ICT and SMMEs in the selected sectors in the Asia-Pacific region, generally, mapping out their ICT-related needs and opportunities. Glen has an International Masters in Information Management (University of Malaya - Leeds Metropolitan University, UK) and a Masters of Law Degree (Keele University Staffordshire)

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