Can gains of ASEAN benefit the poor more?

PRESIDENT Rodrigo Duterte has a good point when he said that the equitable spread of wealth, and not merely wealth accumulation, ought to be the ultimate goal of globalization.

“We must ensure that globalization does not [only] lead to wealth generation, but equitably, wealth distribution as well,” the President told top leaders of the international business community in his keynote address last Thursday at the Asia Pacific Economic Cooperation (APEC) CEO Summit in Vietnam.

“To unleash the full potential of globalization, we must create an inclusive environment where everyone has the opportunity for growth,” Mr. Duterte said as he stressed the need for “cooperation of the business community to addressing the pessimism and suspicion of those who do not feel the benefits of free trade and globalization.”

Indeed, the “pessimism and suspicion” of those who don’t feel benefited by globalization can hang like a dark cloud shadowing any of the talks on free trade, including the 2017 ASEAN Summit which our country hosts. In his latest column in Manila Bulletin, Fr. Rolando dela Rosa described a typical ASEAN summit as “lavish with bombastic words and expensive pageants that are often bereft of meaning and lasting value.”

“Participants in the summit make contacts without any commitment to personal engagement. They take part in dialogues that are not real conversations. Daily events in the summit are like a rush of orchestrated filmic images without presence, plots without any fixed purpose, and colorful spectacles that ‘start with a bang and end in a whimper,’” Fr. Dela Rosa wrote.

But it cannot be denied that in the past 50 years since its founding in 1967, ASEAN has forged in this part of the world a “community of peace and cooperation based on the principles of consensus and non-interference” with the 10 nations comprising the bloc becoming more closely connected.

And it is hoped that our country’s current hosting of the ASEAN summit would lead to more successes, especially on connectivity and economic linkages with other economic blocs. After all, this year’s summit theme is “Partnering for Change, Engaging the World.”

President Duterte has asked business leaders to adopt an Inclusive Business Model that provides opportunities for those at the bottom of the business pyramid. “As CEOs of big business, you are in a unique position to effect change. To the extent that you can, involve as many MSMEs in your own supply chains.”

“Inclusivity requires that the more developed economies provide greater market access to less developed ones – the same way that we encourage big businesses to allow MSMEs to be part of their Inclusive Business Model,” the President explained. ”The essence of true cooperation is that all are partners and everyone contributes. Charity is not what less developed economies and small businesses need. What they need are greater market access and the opportunity to participate in growth and development.”

Indeed, if ASEAN is to really help the poor and be relevant to small businesses that still feel being left out in economic integration, there is urgent need to boost participation in global trade of micro, small, and medium enterprises (MSMEs), which comprise about 99 percent of all enterprises in our country and contributes an average of 61 percent of the total number of jobs. Across the Asia-Pacific region, MSMEs make up 97 percent of all enterprises and provide 67 percent of all jobs.

ASEAN Business Advisory Council Chair Joey Concepcion III said the other day that lack of inclusivity continues to plague ASEAN, with growth remaining elusive to many MSMEs because large corporations still dominate industries.“This is really the problem that I see in the ASEAN area. How do we make these MSMEs move up the value chain? It’s a challenge,” Concepcion said.

But there’s new hope as the President said more funds will be put in the national budget to help small businesses. “Next year, I’d like to make some late changes in the GAA, the annual budget. I would like to pour more money in these MSMEs,” he revealed at the ASEAN Business and Investment Summit on Sunday.

Strengthening efforts to help MSMEs, particularly those hampered by lack of access to financing and credit, is essential indeed, considering this sector’s potential in solving widespread joblessness and its capability to bring forth more equitable wealth distribution across broader sections of society.

Aside from infusion of funds, small and medium enterprises (SMEs) can also achieve significant growth through “clustering” of companies that have characteristics of so-called “hidden champions,” a term coined by German scholar and business guru Dr. Hermann Simon, to describe little-known firms “that become global market leaders by focusing on the development of unique and critical technologies in specific areas.”

Perhaps the Philippines can learn from Taiwan on how it has tapped the collective power of SMEs. The products of these SMEs may seem inconspicuous, yet in the market they’re considered among the world’s top. Taiwan is home to the world’s largest contract computer chip manufacturer and a global leader in smartphone camera lenses, with 1.3 million SMEs working in every field of endeavor.

Successful clusters of SMEs form a symbiotic link within an integrated supply chain where there’s division of labor and “each individual company makes investments in research and development in its specific field, thereby strengthening the cluster’s overall ability to take orders, customize goods, and deliver products,” and enabling them “to make up for their small individual size and limited resources when competing against conglomerates” in other countries.

In other words, tapping the “bayanihan” spirit which Filipinos are known for can go a long way in the pursuit of inclusive growth in the ASEAN region.