ASEAN e-Commerce during COVID-19Understanding the role of digitally-enabled trade in the resilience of small businesses in the Asia-Pacific
Small businesses and women entrepreneurs are the backbones of Southeast Asia’s growing economy. Between 97 percent and 99 percent of all firms and between 60 percent and 80 percent of all employment across Association of Southeast Asian Nations (ASEAN) countries are represented by micro, small and medium-sized enterprises (MSMEs).
In a year like no other, with disruptions across every segment of the global economy, the pandemic has proven especially damaging to ASEAN MSMEs. COVID-19 has disrupted production, altered demand for goods and services, fractured supply chains and forced businesses to reduce capacity or shut down operations altogether. Due to a traditional reliance on in-person transactions and limited access to capital, MSMEs in ASEAN have been particularly vulnerable to these obstacles.
The pandemic has had a particularly severe impact on women business leaders, threatening recent growth in the number of women leading small businesses in the ASEAN region.
At the same time, COVID-19 has accelerated the use of digital tools and reliance on digitally-enabled commerce and trade. By one estimate, the economies of Southeast Asia experienced five years of digital transformations in 2020 alone.
Faced with these challenges and opportunities, small businesses in Southeast Asia are turning to digitally-enabled trade to survive, become more resilient and recover.
This project, published with the support of the UPS Foundation, is a follow up to an earlier report and series of roundtable discussions exploring the role of ASEAN Women in E-Commerce hosted by the Global Innovation Forum, and is focused on exploring the challenges and opportunities ASEAN small businesses face in light of the COVID-19 pandemic with a particular focus on the needs of women-owned businesses.
ASEAN Small Business Stories
While the ASEAN region is the fastest-growing digital market in the world, much more can be done to encourage the ability of small businesses to access and benefit from digitally-enabled global markets, as well as to address the specific needs and challenges women entrepreneurs face operating and growing their businesses. The countries of ASEAN can play a vital role in supporting the post-pandemic recovery and global success of small businesses and gender equity in Southeast Asia.
By supporting an enabling framework for e-commerce and addressing the needs and challenges of small businesses and women-owned businesses in particular, ASEAN and its members can play a critical role in fostering an inclusive global economy.
Enabling access to the global e-commerce ecosystem
The digital economy allows small businesses to reap the benefits of the global marketplace. Governments can ensure that the smallest firms can access these opportunities by:
- Modernizing procedures to facilitate the digitalization of trade and customs clearance. By authorizing paperless procedures, automated systems, electronic data, e-payment and risk management processes to facilitate contactless customs clearance, governments would improve the regulatory framework for small businesses and encourage global engagement. Simplifying, digitizing and streamlining border processes, would ease administrative burdens for small businesses.
- Committing to high-standard digital trade rules and enable non-discriminatory market access for services sectors critical for e-commerce. Governments must ensure that economies are “digitally ready” by supporting the international functionality of essential sectors including payments, logistics, and computer and related services, through services market access commitments and robust digital trade rules.
- Promoting the flow of data across borders, while ensuring appropriate standards of data protection, privacy, and security. The ability to access technology and transfer data internationally is critical to businesses of all sizes, in all sectors. When data flows are restricted, small businesses lose access to the digital tools that are keeping their businesses running. Governments have a responsibility to enable the flow of information that enables businesses to thrive and reach global markets.
- Investing in effective trade promotion, training and digital-enablement support programs for small businesses. Traditionally, trade promotion programs were aimed at larger companies. Governments have an opportunity to reposition national trade promotion efforts towards small businesses and develop best practices and shared approaches to training SMEs to utilize digital tools to access global markets. For example, ASEAN can serve as a forum to enhance the training of small businesses, making them aware of the private and public sector resources available to help them succeed.
- Increasing government support to help SMEs adopt digital tools: Countries should deepen efforts to assist small business’ adoption and use of digital tools. Officials should explore best practices and new opportunities to create funding pools to offset the cost of SME adoption of digital tools, building on programs like the Singapore Government’s efforts to assist SMEs with digital transformations amid COVID-19, and the U.S. Small Business Administration’s State Trade Expansion Program (STEP) grants to help small businesses globalize their digital presence.
Addressing the needs and challenges of women entrepreneurs
Governments also have the opportunity to contribute to a more sustainable, inclusive global economy by maximizing support for women’s entrepreneurship in economic recovery initiatives. They should seek to:
- Prioritize the inclusion of women entrepreneurs in trade promotion programs, consultations and communities. Women entrepreneurs are significantly underrepresented as clients of government trade promotion organizations and as speakers at International Organizations. Governments should place emphasis on the participation of women-owned businesses and advisors in international conferences and panel discussions, including by adopting — and compelling International Organizations to adhere to — gender parity pledges.
- Explore the use of trade agreements and initiatives to improve equity and support the global journeys of women-owned businesses. Governments, including Canada, Chile and New Zealand, are beginning to use trade agreements to set best practices and commitments for supporting women and regulating with respect to gender. Governments could go further, using digital economy agreements and platforms including ASEAN to develop digital initiatives to expand access to capital, networking and resources for women and minority-owned businesses across the region.
- Drive public-private partnerships to increase capacity building for women-owned businesses. Governments should work with private sector partners to develop training programs, modules and networking opportunities to equip women-owned small businesses with the skills needed to succeed in the digital economy. As one example, the Global Innovation Forum has partnered with the U.S. Department of Commerce in the United States to accelerate the Startup Global Initiative. Through Startup Global, GIF and the Commerce Department have worked to elevate the experience of women and minority-owned businesses in digitally-enabled global markets and to help them understand the public and private sector resources available to help them succeed internationally.