Micro, small and medium enterprises (MSMEs) in the Association of Southeast Asian Nations (ASEAN) are highly interested to export within the region and are dramatically increasing the use of digital tools and technologies to gain fresh markets, an ongoing research has found.
The new survey being conducted by the International Chamber of Commerce (ICC) and Google regarding MSME digital exports in Southeast Asia has so far received at least 1,500 responses, according to Charly Gordon, global policy lead at ICC, who shared preliminary research insights during a recent e-forum.
The research found that 60% of the surveyed enterprises in the ASEAN are planning to export to markets in the region, notably Southeast Asia and Northeast Asia. Nearly half of the respondents from the Philippines in particular are already exporting within ASEAN and a little more than half have yet to export in the region but have plans to do so.
The survey outcome also showed that 80% of MSMEs in ASEAN have drastically increased their use of digital tools and technologies in the past two years to support exports amid the devastating impact of the lockdowns and restrictions related to the COVID-19 pandemic.
Moreover, MSMEs see digital tools and technologies as a way to access new markets, with 68% reporting they leverage digital tools for this purpose. Other reasons provided for the uptake of digital tools include cost reduction and productivity increase.
After COVID-19 struck, Gordon said a notable growth has been recorded in the use of online commerce platforms and digital tools among MSMEs in the 10 ASEAN countries to support exports. The usage of digital technologies in the Philippines saw a 14% expansion in the past two years, while other countries registered growth ranging from as high as 38% (Cambodia) to about 6% (Myanmar).
Social media platforms such as Facebook, Instagram, WhatsApp, Weibo, and YouTube are the top digital tools used by MSMEs to export their products and services. Other key tools and technologies utilized are the enterprises’ own website, Google and digital ads, digital payments, and online sales.
However, Gordon said online selling has not been easy for MSMEs, which continue to report significant export barriers, including Internet connectivity issues, reported by 44% of respondents, and affordability issues, reported by 22%. Among other Internet issues raised were the lack of a skilled workforce and the lack of technical support.
Asked about the other challenges of e-commerce in the ASEAN, most of the regional respondents said the main hurdle was the high cost of delivery or return. Other difficulties include issues centered on resolving complaints or disputes, finance and payment collection, trade rules and regulations, the inability to maintain long-term online sales, and the lack of market intelligence.
Other major hindrances to exporting cited include foreign regulations/licensing rules, regulatory environment, logistics costs and delays, and high competition in markets.
Although they form the backbone of all ASEAN economies, many MSMES continue to lack the necessary tools and resources to participate in the digital economy and seize new market opportunities through international trade, Gordon remarked.
The surveyed MSMEs said they are seeking support in the areas of digital marketing and access to market information, with some 75% expressing an interest in developing these capabilities.
Respondents said the training support for new digital skills they want to receive the most is on digital marketing (49%). This is followed by access to information on new market opportunities, data analytics, cloud technologies, and user experience design.
Asked about their familiarity with technological tools for exporting their products and services, 50% of Filipino MSMEs said they were only somewhat familiar with them.
The COVID-19 pandemic and the risks arising from the current macroeconomic environment further underscore the importance of digital technologies as well as market diversification through exports.
“Crucially, MSMEs must harness the full potential of digital technologies to reach new markets and ensure continued growth and resilience,” Gordon stressed.
The ICC-Google research aims to map export barriers that impact MSMEs, assess MSME use of digital technologies, and analyze the linkage between exports and digital technologies. The outcome is expected to help policymakers in crafting policy initiatives and designing tailored training opportunities.
The final results of the project are set for release in the coming weeks.