AEC, Initiatives in SME Cluster Development and Export Consortia Formation

1. AEC, Initiatives in SME Cluster Development and Export Consortia Formation Dr. NittanaSouthiseng Trade and Investment Facilitation Program Mekong Institute KhonKaen, Thailand

2. Overview of GMS countries • Linking the Mekong region members of ASEAN (Cambodia, Laos, Myanmar, Thailand and Vietnam) with two provinces of the People’s Republic of China • GMS • Population - 300 million people - Geographic spread - 2.6 million square kilometers • Gross Domestic Product - US$ 300 billion - • Substantial population living in poverty on less than the equivalent of one dollar a day (50 million people out of total population of 300 million • GDP growth rate 8% - Increased FDI – Growth of exports – Growth of tourism industry - Dramatic increase in the interregional trade

3. Diversity of GMS Countries Pop: 90.5 mil GDP per capita: 2,300$ GDP per capita in PPP: NA Pop: 45.9 mil GDP per capita: 2,320$ GDP per capita in PPP: NA Pop: 90.5 mil GDP per capita: 1,191$ GDP per capita in PPP: 3,129$ Pop: 48.3 mil GDP per capita: 742 $ GDP per capita in PPP: 1,197$ Pop: 6.5 mil GDP per capita: 1,004$ GDP per capita in PPP: 2,300$ Pop: 69 mil GDP per capita: 4,613 $ GDP per capita in PPP: 8,086 $ Pop: 14.2 mil GDP per capita: 901 $ GDP per capita in PPP: 2,100$

4. Role of SMEs in ASEAN • SMEs are the backbone of ASEAN and SME development is integral to achieving long-run sustainable economic growth of the region. • SMEs comprise about 99% of all enterprises, • Account for 50% of manufacturing outputs • Employ 44%-70% of employment • Contribute19%-31% to exports • Contribute between 30%-53% to the country GDP

5. Per Capita GDP – US$ Source:–AEC Chartbook 2010

6. “One Vision, One Identity, One Community” ASEAN GMS Countries - 2010 Land area: 1.94 M sq Km Population: 232 M ASEAN Countries - 2010 Land area: 4.48 M sq Km Population: 614 M

7. AEC 2015 Goal :Regional economic integration by 2015. AEC envisages : a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.

8. AEC 2015 To transform ASEAN into a region with free movement of goods, services, investment, skilled labour, and freer flow of capital. Areas of cooperation include : • human resources development and capacity building; • recognition of professional qualifications; • closer consultation on macroeconomic and financial policies; • trade facilitation measures • enhanced infrastructure and communications connectivity; • development of electronic transactions through e-ASEAN; • integrating industries across the region to promote regional sourcing; • enhancing private sector involvement for the building of the AEC.

9. ASEAN Community in 2015 ASEAN Political- Security Community (ASC) ASEAN Charter ASEAN Economic Community (AEC) ASEAN Socio- Cultural Community (ASCC)

10. AEC ASEAN Economic Community:AEC 1. A Single Market and Production Base 2. A Highly Competitive Economic Region Free flows of goods e-ASEAN (e-commerce) Taxation Free flows of services Competition Policy Free flows of investment Intellectual Property Rights Free flows of skilled labors Consumer Protection Freer flows of capital Year 2015 Infrastructure Development 3. A Region of Equitable Eco. Development 4. A Region fully integrated into Global Narrowing Development Gap Arrangement of FTAs with non-ASEAN Involvement in global supply chain Development of SMEs

11. Identified Issues of SMEs Major issues faced by CLMV countries that hinder narrowing development gaps and economic integration into AEC include: Lack of industry clusters and facilities that can provide SMEs access to regional and global value chains Underdeveloped public human resource capacities and institutional support systems to develop and implement trade and investment policy and regulatory framework

12. Small and Medium Enterprises

13. Capacity Development Issues Limited entrepreneurship development Limited SME ability to integrate into RVC and GVC Limited capacity to implement FTAs and trade and investment policies

14. Capacity Development for Integrating CLMV Economies into AEC 2015 • Outcomes: • Increased Understanding of Value of SME Clusters and Export Network • Increased understanding and utilization of FTAs by SME exporters • Capacity development of business development services (BDS) providers and SME exporters Duration:3 years (2012-14)Partners: Ministry of Industry, Commerce, Industry and Trade associations, SME associations in Cambodia, Lao, Myanmar and Vietnam. 5 Components:A. Gap and Postharvest Practices B. Agriculture Policies and CBCF C. SME Cluster and Export Network D. FTAs and Trade Policies F. Capacity Building of Young Professionals C. SME Cluster and Export Network D. FTAs and Trade Policies

15. Learn to Do Approach: Modular Capacity Development Share to Learn Do to Learn

16. Implementation Strategy C. SME Cluster Development and Export Network a. Modular Training Programs • Training on SME cluster and Export consortia b. Action Plan • Implementation of action plan to form cluster and export consortia c. Action Research • Process documentation of action research • Policy Briefs on SME cluster development Investor Forum d. Investor Forum • Market access to SME consortia

17. SME Cluster and Export Consortia Formation Implement Action Plan on SME cluster development Consortia Identify Sector/Product Capacity Building Group Export Consortium Formed Coaching for Export Consortia Formation Action Plan Preparation for Capacity Building Market Linkage Investor Forum Value Chain Actors Identification Implement Action Plan Coaching Value Chain SME Consortia Group Export Consortium Formed Action Plan Preparation for Export consortia

18. Action Plans

19. C. SME Cluster Development and Export Network MI Initiatives of TF ………………... Needs Assessment of SME status, SME export status and FTA utilization in CLMV …Jan-Feb 12 Training on SME cluster development and Export Consortia …14-25 May 2012 Implementation of action plans in CLMV to conduct national workshops on SME cluster development Provide coaching and hand holding support by national teams to form SME Export consortiums Aug-Oct 12 Action Research …Oct 12-Feb 13

20. Action Research: SME Clusters and Value Chain Integration in CLMVT Analyze Data on SME Cluster and VCI on identified SME Clusters 14-18 Jan Field Action Research and Document Process of the Identified SME Clusters and VCI as per research plan National Dissemination Workshop CLMV: Findings Dissemination Training on Action Research Methodology on SME Clusters and Value Chain Integration (VCI) Round Table Meeting: Findings Presentation 22 Jan Policy Brief 23 Jan Write Report on each of the Product Cluster 19-21 Jan 12-16 Nov12 17 Nov-31Dec 13 14-18 Jan 13 19-21 Jan 13 22-23 Jan 13 24 Jan-5 Feb 13

21. TF Team Action Research Team Mr. Madhuriya Kumar Dutta (India) Program Manager Dr. Nittana Southiseng (Laos) SME Development Specialist Ms. Huyen Nguyen (Vietnam) Program Facilitator Ms. Sweety Soe Nyo Nyo (Myanmar) Program Facilitator Ms. Hyun Ah Yi (Korea) Intern

22. Thank You