SME Business Pavilion: Opening Address by The Hon. Dato’ Seri Dr Ahmad Zahid Hamidi, Deputy Prime Minister, Malaysia


Nov  4th

The Honourable Tun Musa Hitam,
Chairman of WIEF Foundation,

Yang Berhormat Dato’ Seri Mustapa Mohamed,
Minister of International Trade and Industry of Malaysia,

Distinguished delegates and guests,
Members of the media,
Ladies and gentlemen,

Assalamualaikum Warahmatullahi Wabarakatuh – and a very good morning to all present here today.

First and foremost, I want to thank the WIEF Foundation, and in particular Chairman, Tun Musa Hitam, for inviting me to speak at the opening of the 11th WIEF SME Business Pavilion. At the outset, let me commend the Foundation, for allocating time and space at the Forum, that is dedicated to the development of SMEs, both within ASEAN, as well as outside the region.

As you may already know, by the end of this year, the ten ASEAN members will move into a full regional economic integration. As an entity, ASEAN has a population of more than 630 million people, and a rapidly expanding middle class, which is estimated to represent about 50 per cent of total middle class in the world by year 2020. ASEAN is also projected to account, for more than 2 trillion US dollar of new consumption by the same year. With the region’s huge economic potential in sight, SMEs, especially those operating in ASEAN are presented, with a vast multitude of unprecedented opportunities for growth beyond their current boundaries.

I would like to share with you this morning, some perspectives on the role of SMEs in ASEAN, the challenges faced, and some recommendations that I believe, would serve as catalysts for the development of SMEs in the region.

Ladies and Gentlemen,

The SME sector has long served as the backbone of the respective ASEAN economies. Rather similar to the global trend, SMEs make up more than 95 per cent of total business establishments across ASEAN, and they are generating about 50 to 85 per cent of total domestic employment. In addition, SMEs also make significant contribution to GDP, accounting for 20 to 50 per cent of GDP across ASEAN nations. Overall, the SME sector can be concluded, as a key determinant of a country’s economic performance.

Nonetheless, despite their central role in a nation’s economy, the SME sector is extremely vulnerable to the global economic environment, due to their size and limited resources, in particular financial, human and information resources. Slower growth in China, declining oil and commodity prices, as well as the uncertainty over the United States interest rate hike, has contributed to additional pressure to the currencies of most ASEAN nations.

The weakening of the currencies or rather, the rise of the US dollar against the rest of the world’s currencies, has brought mixed fortunes to ASEAN. Indeed, the depreciation of the region’s currencies, has largely affected consumers and business sentiments, thus negatively impacting SMEs due to higher cost of imports, and cost of doing business, as well as weaker demand for SME goods and services.

Ladies and Gentlemen,

I must say that 2015 has been both, an exciting and challenging year for the SME sector in Southeast Asia. On the one hand, SMEs players are given an unprecedented growth prospect, with the realisation of the ASEAN Economic Community. On the other, they have to battle with a chain of external economic shocks.

The complexity of our current global economic environment, has made it more important than ever for the ASEAN SME sector, to develop capabilities, that would allow them to respond promptly to any external economic uncertainty. In essence, the SME sector needs to build their own resilience. This is a prerequisite to survive, and to emerge stronger in today’s highly globalised, interconnected business and economic landscape.

One apparent path towards greater resilience for SMEs, is certainly through internationalisation, which in turn will open up more opportunities for resources such as investment, innovation and diversification. Research suggests that, SMEs with greater internationalisation, tend to report higher turnover growth, and to demonstrate higher employment growth. Even for SMEs that are designed to serve only their domestic market, it is still, very important for them, to have a global perspective in order to gain the competitive edge.

While there is no doubt that, becoming internationally active is good for business, I am also aware of the various challenges facing SMEs aspiring to internationalise. Apart from access to funding, the top five barriers to SME internationalisation have been information-related, such as access to new market, and identifying foreign business opportunities.

Ladies and Gentlemen,

All these have led us to one key conclusion – and that is, in order for us to effectively facilitate and accelerate the process of SME internationalisation, it would be useful to develop a comprehensive Global Business Match-Making Network for SMEs. Such a network must be able to perform match-making in the following four areas namely, new market information, including identifying potential markets and reliable business partners; technology and innovation; financing and human capital.

Earlier this year in Malaysia, we launched a similar but smaller network called, the ASEAN Market Place. It features a robust directory of ASEAN SMEs to help catalyse strategic partnerships, and foster business relationships within the ASEAN SME community. However, we understand that in our quest to boost SME performance in ASEAN, we must reach out to the wider community in other parts of world.

As Tun Musa Hitam stated earlier, the 11th WIEF SME Business Pavilion is aimed at building a strong, robust network for all SME players to exchange ideas, galvanise support, and foster greater cross-border collaboration. Global Business Match-Making Network for SMEs is proposed, exactly for this same reason.

The congregation of SME owners and SME experts from around the world at this SME Business Pavilion, is indeed a great achievement. However, it is also imperative that, we build a sustainable platform, where ideas and business collaboration can continue to take place as all participants return to their respective countries.

Ladies and gentlemen,

The future of ASEAN is very much dependent on the productivity of the region’s SME sector. And the success of the SMEs is, in turn dependent on the ability of SMEs to compete in this highly competitive and globalised world. I hope, this WIEF Business Pavilion would be helpful in contributing to the growth of SMEs, by enabling participants to benefit from the economies of scale, to tap into new growth opportunities, with appropriate support mechanism, and to broaden and deepen their business frontiers, and involvement in this fast-developing ASEAN economy.

With those words, I wish all participants every success in your deliberations.

I now have the great pleasure in opening the 11th WIEF Business Pavilion.

Thank you.