Small firms will propel APEC growth: Minister

Small firms will propel APEC growth: Minister

CEBU, Philippines (Reuter): Enterprises employing less than 500 people will lead the robust growth of the Asia-Pacific economies into the next century, APEC officials said yesterday.

Small- and medium-sized enterprises comprise 90 percent of the region's economy and contribute between 30 to 60 percent of the economies' gross domestic products, official figures show.

The 18 member-economies of the Asia Pacific Economic Cooperation (APEC) produce more than half of the world's output and represent 46 percent of the world's total merchandise trade.

"Considered a critical engine of growth, vitality and innovation in most APEC economies, the...(small- and medium-sized business)...sector's strength is seen as central to the continued dynamism of the Asia Pacific economies in the next century," Philippine Trade Secretary Cesar Bautista said.

He was speaking at the start of an APEC ministerial meeting held in the central Philippine city of Cebu.

But problems such as inadequate business information and lack of financing and market access are hindering the growth of these companies, Bautista said.

In an open and free trade environment, small- and medium-sized enterprises could look forward to a rise in demand for their exports.

However, some of these enterprises may have difficulty adjusting to this new environment as they experience more competitive pressure from other regional firms, Bautista said.

The Philippine minister is chairman of the ministerial meeting aimed to help small businesses compete in an open regional trade regime.

APEC member economies are committed to bringing down trade and intra-regional investment barriers by the year 2010 for developed economies and by 2020 for developing economies.

"This is an important opportunity for the APEC member economies to develop programs and policies to support the global expansion of small businesses," Philip Lader, head of the U.S. mission, said in an interview.

Growth

He said development in small- and medium-sized businesses could greatly contribute to the overall growth of the region.

In the United States, 22 million small businesses employ 50 percent of the workforce and generate more than 50 percent of the country's gross domestic product.

In Japan, small businesses produce about 50 percent of the country's output, supporting large companies in their overseas conquests.

Multilateral projects to enhance human resources, information and market access, financing schemes and technology transfers will be developed during the two-day meeting.

APEC groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Taiwan, Thailand, Singapore and the United States.

Meanwhile, Australian Telecommunications Minister Richard Alston suggested at the APEC telecommunications ministers meeting in Gold Coast, Australia, yesterday the Asia-Pacific region should work towards lowering telephone charges to stimulate usage and promote economic growth.

"An important emphasis of our work must be to ensure that users benefit from progress being made in telecommunications," Alston said.

"At the most basic level this means providing access to people who have lacked it, by extending the reach of networks and by lowering prices to ensure that genuine access is available to all our people," Alston said.

"Our experience is that real cost reductions are possible, but they are less likely to be achieved under monopoly arrangements," he said.

Alston cited Australia's example. In June, privately owned telecommunications and pay television group Optus Vision started to offer local telephone calls at 20 cents per call, which was 25 percent cheaper than that charged by state-owned Telstra.

Australia's six-month-old conservative government plans to sell one-third of Telstra in the 1997/98 financial year to June.

The three-day APEC ministers meeting aims to co-ordinate a regional telecommunications policy, also known as Asia-Pacific Information Infrastructure (APII).

"The development of the APII will encourage business activity and growth in the region. It will increase the investment funds available for the provision, expansion and modernization of telecommunications networks," Alston said.

Alston, who is hosting the APEC meeting, said lower prices for telecommunications services, telephones, on-line and interactive services would stimulate economic activity.

"It remains a paramount objective of APEC to ensure that these trade and investment flows are able to occur by removing barriers through liberalizing reforms," he said.