Mr Lee Yi Shyan at the APEC SME Summit 2009, 12 Nov 09

MINISTERIAL KEYNOTE ADDRESS BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND MANPOWER AT THE APEC SME SUMMIT 2009 ON 12 NOV 2009, 9:15AM AT RAFFLESCITY CONVENTION CENTRE

Mr Tony Chew, Chairman

Singapore Business Federation

Mr Teng Theng Dar

Chair, ABAC 2009

Distinguished Guests

Ladies and Gentlemen

Good morning, I would like to extend my warmest welcome to all the participants at the APEC SME Summit 2009.

The important economic role of APEC SMEs

SMEs play a pivotal role in APEC economies. They account for approximately 90% of all businesses and employ as much as 60% of the total work force. They contribute to about half of the GDP of their respective economies, but account for only 30% of total exports. This profile shows that APEC SMEs’ growth potential is enormous if the right structure is put in place to empower them to grow. An APEC study published in 2003 indicated that SMEs could potentially add about $1 trillion in trade and about $150 billion in annual foreign direct investments (FDI) to APEC economies if they operate in a more conducive and business-friendly environment at home, and a more frictionless and integrated markets abroad.

Challenges faced by APEC SMEs

The operating landscape for SMEs in the Asia Pacific region is varied and uneven.In some economies, funding is abundant; in others micro-credit is badly needed. There are markets that are growing 8-10%, and yet there are those which suffer still from depressed demand. While a number of economies are half way through implementing the various stimulus packages, there are from time to time domestic pressures to “buy local” in a bid to “save jobs”. While we might have moved out of the worst of the financial crisis, but the foundation of recovery is still fragile and can be weakened if we allow protectionism to creep in. Our collective goal should therefore be open and free trade - one in which we maintain and improve the resilience of our economies by integrating our markets and strengthening our SMEs.

So how could we help SMEs do more business with each other across borders? In a 2006 APEC-OECD Paper entitled “Removing Barriers to SME Access to Internationalization”, both policy-makers and SMEs identified the top 3 difficulties faced by SMEs in foreign markets. Firstly, identifying foreign business opportunities. Secondly, limited access to market information and thirdly, the inability to reach out to potential overseas customers. The same report also concluded that SMEs tend to underestimate the barriers they will face in overseas ventures due to insufficient market knowledge or understanding.

Steps taken to assist the internationalization of SMEs

One key solution to overcome these difficulties is for APEC economies to help their SMEs connect and immerse themselves in overseas markets. A number of APEC economies are already pursuing this strategy by supporting their own companies on overseas missions, business feasibility studies or setting up operations in foreign markets.

In the spirit of APEC cooperation and information-sharing, Singapore has proposed the setting up a market knowledge center which can help to augment market research and the market access capabilities of APEC SMEs. This center will also serve as a regional enabler for APEC economies to assist SMEs in accessing global market opportunities in an integrated fashion.

Singapore, together with the partners has also proposed two new initiatives this year, namely, the Study on Export Technical Assistance Models and the APEC Business Fellowship. The first initiative proposes to study effective models for Export Technical Assistance in APEC. The aim is to provide advice to SMEs on export, regulatory and technical issues. The study seeks to share best practices across various APEC economies.

The second new initiative is to launch the “APEC Business Fellowship” (ABF). Co-sponsored by Chile, New Zealand, Peru and Russia, the ABF is an in-market executive training programme designed to expose visiting APEC SMEs to practical business norms in the local markets. The 5-day programme covers a series of recommended market-related topics structured for easy understanding and learning aimed to help participating SMEs gain knowledge on doing business in a particular economy. The programme if sustained, we believe, would increase trade and FDI into the host economies by SMEs.

Singapore will take the lead to implement the first run of the ABF in 2010 in Peru and Thailand. I strongly encourage our SMEs to participate in this Fellowship programmes and would like to thank Peru and Thailand for supporting us. I look forward to seeing more APEC member economies co-organizing ABF programmes for mutual benefits.

Conclusion

Today’s gathering is a great platform for APEC business leaders like yourselves to set the direction and the pace of cooperation amongst the business communities in APEC economies. The vision of an integrated APEC economy, an enlarged market, a pro-business environment for start-ups and small businesses have to come from within.Your continual champion and advocate for free trade is therefore critical.

Today’s summit is therefore significant. It presents to us an opportunity to shape the world we want our SMEs to thrive in. Together, we can render the next 20 years of APEC SMEs cooperation a rewarding one.

Thank you.