Think out of the box to meet pandemic challenges, MSMEs told

Micro, small and medium enterprises (MSMEs) must evolve, diversify and adapt to the new challenges spawned by the COVID-19 pandemic in order to continue to grow and expand in the new normal, according to a panel of entrepreneurs and economists.

MSMEs have to be “fluid, nimble and flexible” by studying new markets, looking out for new opportunities, and taking advantage of digitalization, advised Dennis Leu, managing director of Singapore-based DLE Steel International, and Ooi Tiat Jin, founder and principal consultant at Curated Connectors, a Singapore-based startup.

The two were part of a panel of speakers during a webinar on how MSMEs in the Association of Southeast Asian Nations (ASEAN) region can think out of the box to overcome pandemic curveballs.

Jin stressed the need to diversify and go online to expand market sources and market channels. He warned that being stuck in a certain model can also become a hindrance. “What worked for you yesterday, half of it probably doesn’t work today.”

Dr. Pavida Pananond, associate professor at the Thammasat Business School in Thammasat University in Thailand, stressed that MSMEs will have to strive not just for efficiency but also resilience.

“The efficiency that results from putting all your eggs in one basket to get cost efficiency and to get just-in-time efficiency and to get inventory control-that kind of model might be at risk when there are such big disruptions like what’s happened now,” she said.

This has highlighted the importance of diversification-both in terms of demand and supply source, she added. She also observed a shift among MSMEs whose demand has been disrupted to look more at the domestic demand.

Pananond identified two notable trends-automation and online technology-and how these pose risks and opportunities alike for MSMEs.

Automation puts some jobs at risk, “but it is necessary if we are to become more efficient and resilient,” she said. Meanwhile, online technology for a lot of MSMEs has been a game changer in finding other channels of distribution.

Tri Suhartini, founder of Ecovivo Social Enterprise in Indonesia, said going online was something they had to learn to do quickly because of the pandemic. They began to market their products online when lockdowns and travel restrictions affected their business and income.

Finally, the panelists suggested ways the government can support ASEAN MSMEs affected by the pandemic.

Pananond said that in the shorter term, governments should focus on sustaining the livelihood of MSMEs, which have absorbed the greatest impact of the pandemic.

In the longer term, governments must help business upskill the labor force so workers have the capacity to adapt to automation and digitization in the new normal.

Dr. Doan Thi Thanh Ha, an economist at the Economic Research Institute for ASEAN and East Asia (ERIA), said the immediate task for the government is “to keep the SMEs alive” through social protection especially for the informal sector.

In addition, production networks should be sustained by keeping foreign direct investment (FDI) firms in the country. This can be achieved through improving the business environment and regulatory framework to make the country more attractive to FDIs, which are the ones that actually create strong linkages and develop the global value chains (GVCs).

Ha also recommended the creation of industrial clusters in the region, as they are one of the key determinants in foreign investors’ choice of location. She likewise suggested setting up a national innovation scheme and enhancing the infrastructure system.

Another area of priority is human resource development. Governments should ensure that workers are trained and retrained to have the necessary skills for the workplace of the future, said Ha.

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