Support thy neighbour
SMEs are integral to any economy and form the majority of a given country’s business establishments. The next step is to bring these SME development policies to a wider scale and put in place a network that will allow SMEs to grow. A sustainable SME regional ecosystem requires a cohesive structure through which government policies and multinationals can work in tandem to support SME growth. How can multinationals include SMEs in their value chains? What policy changes are needed in building a sustainable system?
As important as they are, SMEs need the most help and support in an economy. Assistance benefits the economy at large, particularly through job creation. Governments should pay heed to this and its effects on unemployment, but ultimately successful governments and economies are the ones that pay close attention to their SMEs.
‘Successful economies are those economies paying a lot of attention to the SMEs,’
In order for an SME to thrive, it must exist in an ecosystem that is friendly not just towards entrepreneurship and startups but also towards growth and sustainability. With the establishment of the ASEAN Economic Community, a regional organisation to look after the needs of SMEs and entrepreneurs will be very useful.
A united body gives more weight to the voices of entrepreneurs and enables them to be heard more clearly. For this to work, top levels of leadership must understand the importance and needs of SMEs and entrepreneurship development.
Existing bodies such as the GCC Union of Entrepreneurs have proven that it is unnecessary for SMEs to wait for governments to organise on their behalf—entrepreneurs and business-owners have the capabilities to network on their own.
Building the ecosystem
A sustainable SME regional system is an important structure that supports government policies that promote growth, employment and income. The contribution of large multinational companies and investors is important in enriching the system. If taken advantage of, their involvement will provide opportunities for SME growth.
There are three important questions to ask. First, how can multinationals include SMEs in their value chains? Secondly, what policy changes are needed to build a sustainable system? Thirdly, how do we enrich the ecosystem and link innovation, enterprise and jobs? The answer to these questions lies in the formation of linkages across sectors, which falls under four categories.
Greater linkages for a better SME ecosystem
Linkages that generate ideas and turn them into market-ready enterprises: Ideas and innovation usually come from academia or from entrepreneurs themselves. This type of linkage accelerates the conversion of those ideas into market-ready enterprises. This can be accomplished through improved connections throughout knowledge sources, entrepreneurs and support systems.
Linkages between small enterprises and large companies: When large investors such as multinationals look to invest in an area, the supply chain will always be a consideration. Local SMEs can tap into that potential. For example, an SME that aspires to supply to a large foreign company can bring its products up to international standard, allowing itself to become part of the supply chain. Furthermore, if the local SME environment is not conducive to a complete supply chain, the multinational may consider developing that environment itself.
Linkages between education and jobs: University graduates need to be able to match the demands of real-world industries and form a job-ready workforce. This can be done through programmes such as apprenticeships and other education-industry cooperation. This way, SMEs can be more quickly connected to a skilled and innovative talent pool.
Cross-sector linkages among leaders to develop ecosystem strategies: Strengthening the infrastructure for collaboration will connect leaders across all sectors, helping to create strategies that build on the local supply chain and make the region more attractive to investors. Business leaders can also be engaged as advisors to innovators and institutions.
Common purpose
Regional ecosystems are the next step to promoting the growth and development of SMEs. This, of course, does not apply just to regions within a single country. It is essential to look beyond borders and to find ways to connect SMEs in neighbouring countries. Although there will be differences in culture, these countries can work together for a common purpose ‘Successful economies are those economies paying a lot of attention to the SMEs,’ said Dr Abdulhasan Al-Dairi, Chairman, Bahrain SME Society, Kingdom of Bahrain.
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This is based on a session from the 11th WIEF in Malaysia.
