Agility and adaptability emerged as some of the top traits that micro, small and medium enterprises (MSMEs) need to develop to allow their successful transition to the new normal, according to a new report.
The report, “ASEAN MSMEs in a COVID-19 World,” underlines the best insights culled from the recent series of talks conducted by the Economic Research Institute for ASEAN and East Asia (ERIA) on how MSMEs can navigate the pitfalls of the pandemic.
“Being agile and able to rapidly adapt to the changing business landscape is key to overcoming challenges in the short and medium term, including disruptions of global value chains (GVCs) and traditional regional supply networks,” it said.
“Agility and adaptability also allow MSMEs to quickly seize opportunities presented by COVID-19, for instance, by the increased speed with which ASEAN consumers are adopting digital technologies.”
The report, written by Giulia Marsan, ERIA director of strategy and partnership, and Lina Sabrina, program officer, also underscored how the pandemic has accelerated the trend toward digital economies, offering both opportunities and challenges.
“MSMEs need to be ready and able to compete in the (often global) digital marketplace. For example, the adoption of e-commerce is an opportunity for many ASEAN MSMEs to connect to global customers and to increase profitability,” it added.
But the borderless world of e-commerce platforms also means greater competition, so MSMEs need to find their niche to be successful.
“ASEAN MSMEs therefore need to combine strategic development with new skillsets for the digital economy, which requires a combination of technical skills, interpersonal skills, and problem-solving skills,” the report said.
They will also have to understand and undertake digital data analytics to anticipate future trends and attract new customers.
The report also observed the importance of supporting women entrepreneurship for an inclusive post-pandemic recovery.
According to some recent estimates, a scenario in which women play an equivalent role in labor markets as men could contribute to up to US$28 trillion to global gross domestic product (GDP) by 2025.
Within ASEAN, the number of women entrepreneurs has increased steadily, with more than 60 million women across ASEAN operating businesses, the majority of which are SMEs.
The paper added that digitalization has empowered many women able to access Internet connections to start small businesses from their own homes.
However, women entrepreneurs have been severely hit by the pandemic and the subsequent economic crisis is jeopardizing their progress.
“Despite these positive trends, women are still under-represented as entrepreneurs in general and as high-tech entrepreneurs active in the digital economy in particular,” said the report.
“ASEAN women need access to better skills, training, and finance to start their own businesses,” it continued.
Women must also be made actively part of the acceleration of ASEAN digital economies “as many of the new jobs of the post-pandemic future will be linked to or enabled by the digital economy.”
Finally, the report pointed to the growing importance of sustainability practices for MSMEs to eradicate waste, develop new relationships, and meet the growing preference of ASEAN consumers for sustainable products and goods.
ERIA urged governments to provide incentives for MSMEs to become more innovative and equipped with better skills that would enable more widespread sustainability practices.
“The implementation of sustainable practices might vary depending on the MSMEs’ business sectors itself, but it can significantly contribute to better livelihoods, communities, and economies in the region,” said ERIA.
“MSMEs need to think holistically and in a multi-dimensional way when developing sustainability practices-environmental, human, social, and economic sustainability.”