Minding the (Information) Gap - Challenges of Market Access and Trade Facilitation Confronting ASEAN MSMEs

Traditional textiles on display at a market in Ubud, Bali, Indonesia. [Credit: Flickr Steel Wool ]

A few weeks before world leaders gathered at the major Asia-Europe Meeting in Vientiane to pledge a “strong rejection of protectionism”, a much smaller forum was being held in Jakarta.

In the latter “Roundtable Discussion Forum on Southeast Asian Foreign Economic Policies”, many gaps were identified on the challenges ASEAN MSMEs faced with market access and trade facilitation. Indeed, one of the participants jokingly referred to the famous London Underground warning sign: “Mind the Gap.”

The comment instantly conjured the image of a fast, modern and efficient train that serves as a wonderful symbol of what the ASEAN Economic Community 2015 (an important element to any Asia-Europe equation) strives to become. And just as passengers boarding the train must beware the platform gap, so too must MSMEs in the region avoid the many challenges they confront as the 2015 deadline fast approaches.One major issue highlighted as a challenge of market access and trade facilitation confronting ASEAN MSMEs was the lack of comprehensive up-to-date data available; the “information gap”. The Roundtable Discussion, which heard presentations from Dr Tulus Tambunan (Center for SMEs, Industry, and Business Competition Studies, Trisakti University) and Didi Diarsa Adiana (Tangan di Atas Business Community), noted this “information gap” was apparent not only in data on ASEAN MSMEs but also information for them, especially in Indonesia.

For example, whilst it was noted that the majority of Indonesian MSMEs operated in rural areas, largely carrying out agricultural activities, recent official government statistics only covered those operating in the industrial sector. One has to go back to 2009 to find any data on rural Indonesian MSMEs operating in the agricultural sector. Even then, the 2009 statistics focused generally on all sectors, rather than specifically on the agricultural sector.

Similarly, except for a small research on the impact of the ASEAN-China FTA on the garment industry in Tanah Abang last year, there is little concrete data to validate the common belief (both among academics and the public) that the ASEAN-China FTA has had a negative impact on Indonesian MSMEs.

In other areas, data on the percentage of Indonesian MSMEs’ access to trade facilitation is severely lacking. This includes data on access to trade insurance, technical assistance, trade information, bank funds, etc. This situation contrasts starkly with that in the Philippines, India and Sri Lanka where data is more widely available.

Given the “information gap” that exists for data on Indonesian MSMEs, it is unsurprising that the same applies on information for them. The findings of Dr. Tulus Tambunan’s research (conducted in May 2012 at Yogyakarta and Solo) revealed a large number of respondents who demonstrated a lack of awareness of the many trade facilitations available. 20.5% of MSMEs surveyed listed “access to information on market, trade policy/regulation and others” as the main constraint in doing export and 84% of MSMEs surveyed cited “not knowing” as the main reason for not accessing available trade facilitations. Meanwhile, for those that were aware of the opportunities, respondents cited procedural problems where information was either difficult to find or were too difficult to understand. 96.6% of MSMEs surveyed cited difficulties with the procedures. This finding was backed up by official government statistics from 2010 that showed of the MSMEs surveyed, 17.5% did not borrow money from financial institutions because they did not know the procedure.

The consequences of this “information gap” leaves Indonesian MSMEs poorly placed with the 2015 deadline of an ASEAN Economic Community fast approaching. Not only are they lagging behind the “big boys” of China and India but also with their ASEAN counterparts. Moving forward, more must be done to close this “information gap.” This should start with those in the government, who must ensure that data both on and for MSMEs are comprehensive and up-to-date. Better information on MSMEs will allow the government to devise the best possible and most effective strategies for MSMEs’ market access and trade facilitation. Better information for MSMEs will require the government to place more effort in promoting the opportunities available and socializing the procedures required for Indonesian MSMEs. Only then will Indonesian MSMEs be able to “Mind the Gap” and board the train towards the ASEAN Economic Community with all the riches and prosperity it promises.

[This article was first published in The Jakarta Post on 22nd November 2012 and can be found at: http://www.thejakartapost.com/news/2012/11/22/minding-information-gap.html]