APEC Small and Medium Enterprise (SME)
First Ministerial Meeting
Osaka, Japan
22-23 October 1994
JOINT STATEMENT
The Role and Importance of Small and Medium Enterprises
1. The first APEC SME ministerial meeting was held on October 22-23, 1994,
in Osaka, Japan, consistent with the November 1993 Informal Leaders' Meeting's
call for strengthened APEC dialogue on SMEs and in the firm conviction that
enhancing the vitality of SMEs is of pivotal importance in maintaining Asia-Pacific
dynamism into the 21st century.
2. Ministers welcomed the participation of representatives of the private
sector, including the members of the Pacific Business Forum, who were invited
so that APEC's work on SME issues would reflect private sector needs and support
its objectives in expanding regional trade, investment and economic cooperation.
Ministers also noted the valuable report of the Pacific Business Forum, which
clarifies a number of critical issues before APEC, including those concerning
SMEs.
3. Healthy SMEs not only stimulate domestic economies but also play an increasingly
important role in cross-border economic activity. As such, SMEs are increasingly
important both as a cause of and a means of heightening economic complementarities
and development in the region.
4. Rapid technological innovation and diversification in market requirements
are generating significant shifts in industrial activity and dramatically transforming
many economies from primary output to the manufacture of high value-added products
and from the production of goods to the provision of services. As a consequence,
all economies, regardless of their stage of development, need to develop and
produce an increasingly diverse array of high value-added goods and services.
This is an area in which the capability of SMEs to respond flexibly works to
their advantage, and SMEs can provide the locomotive power for further structural
sophistication and sustained economic growth.
5. The accelerating globalization of industry, particularly in the manufacturing
sector, creates a prime opportunity for every economy to encourage the establishment
and growth of domestic industry and to nurture a highly efficient and productive
industrial structure. Such industrial development must, however, be premised
upon the presence of SMEs with appropriate managerial and technological know-how.
It will also depend upon the development of suitable financial infrastructure
for SMEs. Supporting industries constitute an essential part of the industrial
infrastructure needed for expanding foreign direct investment, stimulating the
formation of regional production networks, and contributing to domestic and
regional economic growth.
6. SMEs in the Asia-Pacific region at the dawn of the 21st century are well-positioned
for business expansion. Sustained economic growth and new employment creation
in the region depend to a great extent upon SME growth and development.
7. The ability of SMEs to adapt effectively to this emerging environment is
crucial not only to their continued viability and competitiveness but also to
that of member economies. Ministers agreed that APEC's role in support of SMEs
should focus first on addressing the areas where SMEs face the greatest handicaps.
These include human resource development, access to information, technology
and technology sharing, the availability of finance and market access. They
are of even greater significance in economies where the industrial infrastructure
is wanting. Discussion centered on how APEC could broaden cooperation in the
Asia-Pacific to address these important issues.
8. Ministers also solicited and received the advice of representatives of
the private sector, who held concurrent meetings focused on the same issues,
and Ministers appreciate their efforts in rendering the overall discussion more
fruitful.
9. Ministers applauded the Uruguay Round's achievement in securing the alleviation
or elimination of many formal barriers to trade and investment. They called
for the full and speedy ratification of the Uruguay Round's results as essential
in strengthening the business environment for SMEs. Ministers agreed that further
efforts toward deregulation and trade and investment promotion would significantly
facilitate SME development and would serve to enhance regional economic interdependence.
Direction of Policies
10. While Ministers recognized the diversity among SMEs which reflects the
specific economy and economic sector in which they operate, they nonetheless
believed it imperative, given the importance of SME growth in furthering the
APEC region's dynamic growth, that the characteristics APEC-region SMEs share
should be emphasized so that APEC members can cooperate more effectively on
SME issues. Furthermore, the diversity among SMEs should be explored and utilized
to attain complementarities that would bring about more efficient production,
greater employment opportunities and mutual benefit among APEC economies. These
beliefs underlie the direction of the following policies.
Fostering SME Growth
11. Free market mechanisms can provide the most favorable environment for
SME growth, and it is essential that the APEC economies work out and implement
market-oriented SME policies to help SMEs maximize their responses to market
mechanisms.
12. While the policy mix deployed in each economy will necessarily differ
depending upon the economy's stage of development and other special circumstances,
addressing problems in the areas of human resources development, access to information,
technology and technology sharing, the availability of financing and market
access should be priorities of all APEC member economies. Ministers stated the
belief that APEC members should cooperate to the maximum extent in dealing with
these and other issues affecting SME development.
13. In this respect, Ministers believed that APEC members should support Leaders'
initiatives and the SME-related activities of the CTI and the various Working
Groups within the APEC framework.
14. Ministers discussed a range of initiatives, including human resource development
(APEC Center for Technology Exchange and Training for SMEs= networking of SME-related
HRD initiatives), access to information (private/business sector networking=
EDI and electronic commerce), technology and technology sharing (APEC Technomart=
networking among SME promotion organizations related to technology) and financing
(APEC Venture Capital Workshop=investment scheme to facilitate the globalization
of SMEs in the region).
Promoting Trade- and investment-Conducive Deregulation and Infrastructure
Provision
15. Further deregulation can level the playing field and allow SMEs to take
full advantage of their special characteristics of fulfill their potential.
Ministers urged all APEC members to facilitate freer SME activities in their
respective economies. Ministers also urged all APEC members to improve market
access and to participate positively in the World Trade Organization (WTO) and
other activities intended to promote trade and investment liberalization.
16. In addition, it is imperative that trade and investment facilitation efforts
be accelerated to enable SMEs to fulfill their potential. The establishment
of non-binding investment principles is one such concrete measure that would
reduce SME investment risks and expand investment incentives. Other measures
integral to facilitating SMEs' offshore expansion include provision and mutual
recognition of standards and conformance, and simplification of customs procedures,
and Ministers urged the CTI to step up its efforts in these areas.
17. It is axiomatic that all SME-related APEC policies should be WTO-consistent.
Recommendations for APEC Action
APEC Industrial Outlook Study
18. Facilitating SME development demands a sound grasp of the growing economic
interdependence within the Asia-Pacific region, and SME policy-making would
benefit from a shared outlook on APEC's future industrial structure. Ministers
therefore recommended that APEC commission in-depth studies of the impact of
regional interdependence, more open trade and deregulation on SMEs and suggestions
on assisting SME adjustment to this environment. The proposed studies should
take account of existing work on SMEs within APEC.
Ad-Hoc SME Policy-Level Group
19. Ministers stated their belief that SME policy dialogue can contribute
importantly to the formulation of effective SME policy and enhance SME policy
transparency.
20. Ministers agreed that the various SME-related activities in APEC would
benefit from more effective and systematic coordination to ensure that SME-related
concerns can be adequately addressed.
21. Ministers therefore recommended that the present APEC Experts' Meeting
on SMEs be upgraded at the next Ministerial Meeting into an ad-hoc policy-level
group on SMEs, meeting as needed under the direction of the APEC Senior Officials
Meeting. This group should report to the APEC Senior Officials Meeting.
