Sydney [Australia], October 24 (ANI): A recent report by the Asian Development Bank (ADB) highlights the pivotal role that micro, small, and medium-sized enterprises (MSMEs) have played in fostering recovery in Asia and the Pacific during and after the COVID-19 pandemic.
It emphasizes that offering policy and data support is essential to further elevate MSMEs as catalysts of growth in the future.
According to a press release by ADB, the Asia Small and Medium-Sized Enterprise Monitor 2023, unveiled on Tuesday, underscores key factors for enabling these businesses to thrive and contribute to inclusive and sustainable growth.
These factors include the formalization of small businesses, reskilling and upskilling of workers, integration of digital tools and technology, economic diversification, and enhancing access to new and innovative financing options.
According to ADB Chief Economist Albert Park, “Job creation is a critical challenge for Asia and the Pacific. In the Pacific, remittances sent by emigrants to advanced economies can support small businesses and create employment opportunities for women and younger workers. Tourism and agribusiness–where MSMEs actively participate–drive Pacific economies. Their sustainable growth helps strengthen MSME dynamism and raises national productivity.”
The report underscores the continued significance of MSMEs as drivers of growth in developing Asia and the Pacific.
These enterprises comprise approximately 96.6 per cent of all businesses, employ 55.8 per cent of the workforce, and contribute 28 per cent of economic output on average, based on available data from 24 ADB developing member countries up to 2022.
The report emphasizes the importance of promoting innovative and globalized small firms, start-ups, and entrepreneurship in Pacific economies to overcome growth limitations due to low business diversification.
Digitalization is noted as a key enabler, but the Pacific region faces challenges, including underdeveloped infrastructure, limited e-payment options, regulatory hurdles, and insufficient digital literacy among small businesses.
Access to formal financial services is another critical factor in business growth.
Bank lending to MSMEs, based on data through 2022, averaged 10.6 per cent of a country’s GDP and 22 per cent of total bank lending in developing Asia and the Pacific.
However, nonbank and market-based finance options have yet to complement bank credit markets in the region.
Expanding alternative financing avenues, particularly digital financial services, can provide growth capital for innovative small firms and start-ups.
Notably, data infrastructure in Pacific economies remains in its nascent stages when compared to other sub-regions.
The report highlights the necessity of establishing a regularly updated database to map the MSME landscape in the Pacific, enabling more evidence-based policy design for MSME development. (ANI)
