Korea, along with the United States and Peru, has been picked as a champion economy in the SME innovation area, according to a joint statement of the 2009 16th APEC Small & Medium Enterprises Ministrial Meeting held in Singapore Oct. 8-9.

Commending Korea for the initiatives undertaken by the APEC SME Innovation Center in facilitating SME innovation in the region, APEC SME ministers recognized the importance of the Daegu Initiative and supported the need for a self-assessment of members' innovation activities to provide best practice examples for the Daegu Initiative.

Ministers noted the relevance of the Daegu Initiative to the innovation priority area of the Strategic Plan.

In this regard, ministers acknowledge that co-champions Korea, Peru and the United States, in working jointly to review and plan for future initiatives, would achieve more effective outcomes for SMEs in member economies. And this will serve as the basis for determining whether to pursue a second cycle of the initiative. The move followed Korea's presentation of a proposal at the SMEWG Oct. 5-6, calling for organizing a Daegu Initiative Review Committee as the next SMEWG action.

Furthermore, ministers commended "SME Innovation Seminar on Innovation in SME Financing and Marketing" as an initiative to help position SMEs for growth after the crisis.

The APEC SME Innovation Seminar was part of the report on APEC-supported projects unveiled at the 29th Meeting of the APEC SMEWG, which took place Oct. 5-6 in Singapore. The series of APEC meetings this year focused on “Inclusive & Sustainable” SME growth. Innovation was a core element of the forwardlooking program. Innovation was also consistent with this year’s APEC Ministers’ Meeing theme, “Helping SMEs to Access Global Markets and to Overcome Trade Barriers.”

Below are the highlights of the priorities and action program of the strategic plan (2009~2012) that the APEC SME Working Group has developed under six priority areas.

Business Environment

Actions in this area are focused on facilitating the ease of doing business by improving the legal and regulatory framework and by promoting cost efficiency and uncomplicated and transparent administrative procedures. These efforts would help foster a more conducive environment for businesses, particularly SMEs, to thrive and grow.

Best practice seminars targeted at SMEs have been conducted, covering areas like starting a business, licensing, taxation and trading across borders. These are part of a capacity building series that will also cover other indicators used by the World Bank to measure the Ease of Doing Business in various economies.

Management Capability and Entrepreneurship

This priority aims to improve the information and guidance available to business owners. It also seeks to increase opportunities for entrepreneurs to learn new skills and to start new businesses. A key feature of 'Inclusive Growth' is the emphasis placed on employment. Gainful employment is a more productive option than providing support, as it leads to more income and demand and helps to build human capital. As SMEs are a major source of employment, development of management and entrepreneurial talents will contribute to job creation and sustainable growth.

Market Access and Internationalization

APEC has long been promoting liberalization in trade and investment. But more can be done to increase access to information on market opportunities both within and outside the APEC region, and to enhance skills in market access and development. Members can also work together to identify and address trade barriers that curb SMEs' access to global markets.

Towards this end, two projects are being undertaken to help SMEs that are looking to expand overseas but face difficulties in understanding their target markets and export requirements. The first project is the APEC Business Fellowship, which will provide the framework for in-market executive training programmes to expose APEC SMEs to business practices and networking opportunities in target markets.

The second project is a Study on Export Technical Assistance Models, which will be undertaken by the Committee for Trade and Investment's Sub-Committee on Standards and Conformance. It will provide insights into best practices among APEC economies in providing advisory services in export technical regulations and assistance to companies.

Innovation

Innovation and technology are key enablers of development, yielding significant productivity increases that drive growth. For SMEs, innovation and adoption of new technologies give them a leg-up and help to level the playing field with large competitors. Often, SMEs themselves are also sources of innovation.

In APEC, much has been achieved under various initiatives driven by several economies over the past years. These include the SME Innovation Centre set up to facilitate innovation among SMEs, and seminars on Technology Innovation and Technology Entrepreneurs to educate and promote innovation and adoption of emerging tools like Information and Communication Technologies (ICT) as a key competitive advantage for SMEs.

Financing

As with all businesses, SMEs need financing to fuel their growth. Increasing awareness and availability of financing to SMEs is, therefore, critical. APEC seminars such as the Ease of Doing Business Seminar on Access to Credit have helped by highlighting best practices for developing government policies and programmes that encourage financial institutions to provide credit to SMEs, and by building SMEs' capacity to access financing.

Sustainable Business Practices

Any discussion of 'Inclusive Growth' will focus on ensuring the sustainability of growth. Often, the pursuit of economic development impacts both environmental and social sustainability. Therefore, for sustainable growth, economic development needs to be balanced with environmental and social sustainability. For example, to address the impact of industry on the environment, enterprises could adopt business practices that will limit, or even reduce, the amount of greenhouse gas emissions.

A more pressing issue is rising inequalities, leading to increasing concerns that the benefits of growth have not been equally shared. Persisting inequalities - both income and non-income, such as access to healthcare and education - could lead to social and political tensions. This could undermine social cohesiveness and stall reforms, resulting in lower growth and higher inequalities. For the growth process itself to be sustainable, policies and practices will, therefore, have to address not only reducing poverty but also improving the living standards of a much larger group.