|Speakers at the “APEC Workshop on Free Trade Agreement Utilisation for Micro, Small and Medium Enterprises (MSME)” held on June 7 in Ho Chi Minh City discuss how MSMEs can join global value chains.
Pham Quynh Mai, deputy general director of the MoIT’s Department of Multilateral Trade Policy noted that MSMEs account for over 97% of all enterprises and employ over half of the workforce across APEC economies.
They contribute significantly to economic growth, with MSMEs’ share of GDP ranging from 20% to 50% in most APEC economies, she added, affirming MSMEs were the engines of growth and innovation in the APEC region.
However, only a limited percentage of MSMEs engage in overseas activities due to limited awareness of how to make full use of FTAs to join regional and global supply chains.
She held that trade facilitation, partnerships and capacity-building activities are needed for MSMEs in APEC-member economies so they can take advantage of FTAs.
In addition, one of the key pillars under an APEC initiative is improving knowledge sharing about trade facilitation, business support, partnerships, and capacity-building activities for MSMEs, according to Mai.
MSMEs need to study inclusive business models, examples of successful export MSMEs, and lessons extracted from successful experiences in internationalisation and cooperation among economies.
Vietnam can benefit from its strategic geographical location in a dynamic Asia-Pacific region and its proximity to global manufacturing value chains, participants said at the workshop.
Sixty-five percent of the country’s population is under 35 years old, and there are also affordable labour costs as well as an emerging middle class.
However, they also warned that costs and risks of international integration can be significant for Vietnamese MSMEs, and as such, improving the overall business environment continues to be key.
Dr Rajan Sudesh Ratna, economic affairs officer at the UN’s Economic and Social Commission for Asia and the Pacific, said FTAs provided MSMEs with access to markets, creating value chains, bringing in FDI inflow and technologies, reducing trade costs, and enhancing linkages among industries.
FTAs also provide technical assistance, capacity building and assist FTA member economies in improving their overall capacity to benefit from trade, harmonising procedures and rules of different agreements among common economies, he said.
The workshop also discussed trade in services, including issues such as market access, schedules of commitments, and most favoured nation (MFN) treatment in addition to intellectual property and competition.
On June 8, the workshop focused on successful uses of FTAs by APEC member economies.
The outcomes of the workshop will be reported to the APEC SME Working Group for consideration and will serve as input for the working group to develop action plans to facilitate MSMEs’ integration in global value chains.
Last year, leaders of 21 APEC-member economies met in Da Nang to discuss ways to promote regional trade agreements and move towards the realisation of a Free Trade Area in the Asia-Pacific region.