2001 APEC Small and Medium Enterprises Ministerial Meeting

APEC Ministers and their representatives responsible for SMEs from Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; the Republic of Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Peru; the Republic of the Philippines; Russian Federation; Singapore; Chinese Taipei; Thailand; the United States of America; and Viet Nam gathered during August 29~30, 2001, in Shanghai, the People's Republic of China, for the 8 th APEC SME Ministerial Meeting. The APEC Secretariat was present. The Pacific Economic Cooperation Council (PECC) and the Pacific Islands Forum (PIF) also attended as observers.

Ministers held a joint session with representatives from the Business Forum. Ministers welcomed the extensive involvement of SMEs and both sides welcomed this opportunity for dialogue and supported continued efforts toward producing mutually desired results. During the Ministerial Meeting, representatives from SMEs in the region held a concurrent Business Forum and Exhibition in Shanghai.

The theme of the Ministerial Meeting is "New Century, New Challenges: Innovation and Environment for SME Development". Ministers held wide-ranging discussions on how APEC SMEs could best respond to the new challenges emerging in the new century with focus on the following three issues:

Ministers welcomed the APEC Secretariat report on the extensive SME-related activities and action plans by the various APEC fora. Ministers agreed to further encourage various relevant APEC fora to consider incorporating SME-related activities into their work.

Ministers welcomed the report delivered by the Chair of APEC SME Working Group (SMEWG), and thanked SMEWG for its efforts in the past year in implementing directives of the 7 th APEC SME Ministerial Meeting. Ministers endorsed the recommendations contained in the report, including the Proposal for the Interaction with the Business Community (Annex 1), in order to encourage enhanced and sustained participation of the business/private sector in SMEWG activities.

Ministers received a briefing by the lead economies on the following ongoing APEC SMEWG activities:

Ministers welcomed detailed presentations of the above projects and called for all economies to continue to support and enhance these valuable work programs contributing to human capacity building and information sharing to benefit SMEs across the Asia-Pacific region.

Ministers endorsed the SMEWG amendments to the related sections of Osaka Action Agenda (OAA), and directed SMEWG to continue to push for the implementation of relevant initiatives and activities. Ministers welcomed the decision to allow Macao, China to participate in SMEWG activities in the capacity of guest until the end of the year 2003.

Ministers welcomed the reports by ABAC Chair and ABAC SME Caucus Chair, and expressed appreciation for ABAC's support and contribution to SME-related activities in the APEC region.

Ministers welcomed the statements made by PECC and PIF.

In this world of accelerating economic globalization, advances in science and technology continues apace, and knowledge is recognized as a core competence in accumulating wealth. Technological innovation is a driving force behind social and economic development. And this in turn relies more and more upon new technologies, new products and new industries, as well as increasing linkages among industries, universities and research institutes. This is the new context and economic environment for SMEs.

This new environment has created favorable conditions for SMEs to develop in a broader range of fields and offered unprecedented opportunities, but also poses new challenges.

Ministers noted that the Asia-Pacific region had experienced a slowdown in its economic growth recently. Lackluster market demand, falling exports, and elements of instability in the financial markets, all combine to add to the uncertainty in the Asia-Pacific economic prospects, thus exposing APEC SMEs to a more complicated market environment.

Ministers pointed out that member economies have achieved notable results in addressing many of the difficulties confronting SMEs, such as the lack of access to information, technological disadvantages, financing problems, inefficient marketing and managerial skills. However, Ministers shared the view that economies must continue to address the priority issues of technological innovation, financing and human capacity building for the region's SMEs to achieve long-term and sustainable growth. Ministers stressed the need to continue examining thoroughly the problems and obstacles that are faced by SMEs, especially micro-enterprises.

It is of vital importance to improve the efficiency and competitiveness of SMEs in the face of an increasingly globalized and knowledge-based economy.

Technological innovation is a central and perpetual theme in the development of SMEs. Ministers agreed that SMEs are a formidable force in the new economy and that their continuation to growth can be strengthened by increasing their innovative capacity. Ministers appreciated the full awareness of this fact among APEC member economies that have accordingly formulated their own strategies and policies for the development of science and technology, particularly information and communication technologies to advance SME growth and development.

Ministers noted that SMEs in traditional industries can also contribute to economic growth by introducing advanced and applied technology, to speed up the adjustment of the product mix and technological improvement, to expedite the industrialization of new high-tech products, and to support those SMEs that are technology-based, export-oriented and service-focused.

Ministers noted that some member economies have adopted measures aimed at fostering technological innovation and collaboration among industries, universities and research institutes. Examples include technology matching, open labs, incubators, as well as innovation clusters in the form of critical mass of skilled people, expertise, capital and entrepreneurial drive. Ministers called for further emphasis on the linkages between industries, universities and research institutes, as this will ultimately help enhance the innovation capacity and competitiveness of SMEs.

Ministers appreciated member economies' efforts to promote technological innovation by creating a favorable economic environment. In addition, the establishment of service centers for technological innovation and productivity centers , innovation incubators, and science and technological parks will benefit the technological innovation of SMEs by providing specialized services in technology, qualified personnel, information, finance and laws. This will also foster the innovativeness and innovation culture in SMEs and strengthen the protection of intellectual property rights.

Ministers recognized the need for further actions to increase the R&D input by SMEs through multiple channels. Ministers were pleased with the effective efforts made by some members in setting up funds for the benefit of technological innovation, patent applications, personnel training, as well as in establishing mechanisms for venture capital for technology.

Ministers welcomed broader and stronger exchange and cooperation in the areas of new technologies, new processes, new equipments and advanced management expertise in promoting optimization and upgrading of industrial structures, especially closer cooperation in high-tech industries, infrastructure projects, environmental protection and human resources development. This will benefit all concerned.

Ministers welcomed the new project "International Cooperation Forum on Innovative Management Skills" as proposed by Russia and encouraged all member economies to take an active part in this project so as to enhance exchanges and share experience.

Ministers fully recognized the importance of financing to enable the sustainable development of SMEs. It was noted that the key factors affecting SMEs' access to financing in the member economies include: lack of security and collateral, high costs of financing, limited sources of funds, few financing channels, inadequate financing institutions serving SMEs, the lack of management skills, and poor corporate governance standard in SMEs.

Ministers appreciated the actions taken by all member economies toward easing the financing difficulties faced by SMEs, where governments no longer directly provide funds for SMEs but instead assist SMEs to access to capital.

Ministers pointed out that venture capital is essential to the development of SMEs, especially in the ICT sector. Ministers decided that it is necessary to improve the policy and personnel exchange relating to the venture capital system and regulatory models, and that actions should be taken to set up an APEC-wide mechanism for sharing information on start-up companies, venture capital and capital markets with a view to facilitating the sharing of resources.

Ministers encouraged further improvements on the secondary boards catering to the needs of SMEs. Ministers recommended that a study be undertaken on the feasibility of harmonizing access thresholds across economies, as proposed by ABAC, while strengthening the information exchange and cooperation between regulatory bodies as well as between regulatory bodies and listed companies.

Ministers commended the efforts made by Chinese Taipei this year in addressing the issues of venture capital, start-ups and SMEs, as well as other related issues and facilitating member economies to share experience among themselves through the APEC Symposium on "Best Practices for Entrepreneurship and Start-up Companies" held in Taipei in August. Ministers looked forward to Chinese Taipei's efforts on developing a Guideline for Best Practice in this regard.

To further the cooperation in the region on the finance facilitation for SMEs, Ministers instructed SMEWG to continue to enhance the policy dialogue and exchange of experience among APEC members in building a favorable financing environment, especially in the development of capital markets, for the start-up and development of SMEs. It is of particular importance for developed economies to share their lessons learned with developing members.

In addition, Ministers also attached special importance to women entrepreneurs and encouraged all economies to facilitate financing for them.

Ministers recognized that the 21 st century is full of opportunities as well as challenges. Therefore it is of vital importance for SMEs to learn to respond to this constantly and rapidly changing global environment.

Ministers reaffirmed that continued efforts should be made to create a better environment for the development of SMEs. They welcomed APEC ECOTECH Action Plans (EAPs) which outline individual and cooperative actions and are to be submitted on a voluntary basis annually to the APEC Ministers. The EAPs will be beneficial to the promotion of cooperation among SMEs.

Recognizing the importance of a better understanding of SME profile in the region, Ministers tasked the SMEWG to work further for the enhancement of the project: "1990-2000 Profile of SME in APEC", and encouraged economies to submit the necessary information in order to facilitate the completion of the project.

A fair competition environment is a prerequisite for the survival and development of SMEs. There are successful experiences available in some members of APEC to demonstrate this. Nevertheless, continued efforts in strengthening regulatory policy environment, and in establishing rules and regulations conforming as far as possible to international practices are still required. Ministers further urged member economies to continue creating increasingly transparent policies and regulations in aid of the development of SMEs.

Ministers welcomed the US proposal for a Voluntary Visitor Program by APEC SME officials, as it would benefit the SME policy-makers in developing economies, and help them to better serve SMEs. Ministers instructed the SMEWG to facilitate early implementation of the program in 2002.

Ministers called for further application of ICT in SMEs, and for enhancing government's support on e-commerce and for joint implementation of "Cooperation Program for SMEs and New Business Support" and for the continuation of the work with OECD, to bridge the Digital Divide that already exists among members, to improve the scientific management and decision-making skills in SMEs, and to apply ICT to procurement, sales and services as well.

Ministers appreciated the contributions made in this connection by the E-Commerce seminars and relevant research projects undertaken by Brunei Darussalam and Chinese Taipei in 2000 and 2001 respectively.

Ministers recognized that ICT provides an advanced means for SMEs to take advantage of the global markets. Ministers agreed in principle to the proposal of establishing an APEC SME Portal Hub and asked Canada, PECC, other interested economies and APEC Secretariat to work further on the proposal.

Ministers held initial discussions on PECC's proposed "Scorecard for Entrepreneurial Environment" and urged for follow up.

Ministers also expressed appreciation for the contribution made by the APEC SME 2001 Conference on Strategic Alliance for Efficient Supply Chain Management hosted by Thailand, and instructed SMEWG to explore ways to realize increased cooperation in the area.

Ministers recognized that it is imperative for SMEs to strengthen cooperation through multiple channels so as to reduce or eliminate the adverse impact from rapid changes in the marketplace. These include: cooperation among SMEs, vertical and horizontal alliances with larger enterprises and partnership with overseas companies.

Ministers believed that the evolving Business Partnership Initiative project led by the United States is making a major contribution to the establishment of business partnership program among SMEs in the Asia-Pacific region. Ministers expressed their satisfaction with the results achieved under the initial U.S.--Thailand Strategic International Alliance and Matchmaking Program. Ministers welcomed the update of new programs being launched with Singapore and other interested member economies.

Ministers recognized that building such support systems for SMEs is an indispensable assurance for the development of SMEs, and an important channel for SMEs to gain access to external resources at lower costs in the new environment.

Ministers welcomed the Training and Certification of SME Counselors program that involved 15 APEC economies with Canada and the Philippines as coordinating economies. They were supportive of the program becoming operational, and encouraged future similar programs to be initiated by governments in aid of the development of SMEs in the Asia-Pacific region.

Ministers were appreciative of the SME-related activities conducted by other APEC fora in other fields, and encouraged continued enhancement of interaction between appropriate fields and fora to contribute to the sustainable development of SMEs.

Ministers supported the proposal put forward at the High-level Meeting on Human Capacity Building held in May 2001, in Beijing, and believed that it is important for all stakeholders, including governments, businesses and education/training institutions to work together and to get actively involved in the development and capacity building of human resources through the following channels:

Ministers urged member economies to take follow-up actions actively to implement the Beijing Initiative for the benefit of SMEs with combined efforts by all stakeholders, including governments, academic and businesses and to pursue substantive results in human capacity building.

Ministers recognized that the new environment resulting from globalization and the development of New Economy has placed higher and more stringent demands on SME entrepreneurs and managers. In particular, the shortage of skills in technology, management and international trade has become an unnecessary hurdle hindering the development of SMEs. They recognized the continued need to build up the capacity of SMEs and to encourage young people and entrepreneurs to start up their own businesses.

Ministers welcomed the "Evolving Cooperation Initiative for SMEs and New Business Support", and were pleased with the contributions made by Japan in the area of management and skills development for the past two years.

Ministers maintained that it is important for each member economy to promote SMEs having regard to SPAN, and hoped to promote the exchange and sharing of information and experience among member economies. Ministers welcomed the reports on SPAN progress delivered by China; Malaysia and Hong Kong, China during the two SMEWG meetings this year.

Ministers encouraged other member economies to report voluntarily on the progress of implementing SPAN on a periodic basis so as to share their successful practices and experience with all others.

Ministers instructed the SMEWG to strengthen the contact and interaction with the business/private sector in routine work, including holding seminars on a non-regular basis, conducting in-depth surveys and questionnaires on SMEs, so that they can receive more government support and have their concerns and recommendations taken on board by government. Ministers looked forward to more active participation by business/private sector as appropriate in SMEWG activities, and future SME Ministerial Meetings and related events.

Ministers welcomed the recommendations delivered by the Women Leaders' Network (WLN) Meeting and representatives from the Business Forum, and appreciated their positive contributions toward promoting the development of SMEs in the Asia-Pacific region (Annex 2 and 3), and instructed the SMEWG to study and implement the recommendations as appropriate.

Ministers were pleased to have had an interactive discussion with the delegates of the Business Forum. Ministers hoped that this kind of dialogue mechanism will be kept alive and further developed to better enable the voices from the business/private community to be heard, for a timely understanding of the problems and difficulties in their growth to be achieved, so that tailor-made policies can be formulated. Business representatives welcomed this opportunity to exchange views with Ministers at the joint session and other occasions arranged during the meeting. Ministers believed that the WLN, ABAC and the Business Forum should continue their close interaction with the Ministerial Meeting, and keep Ministers informed of developments on a timely basis.

Ministers hoped that APEC SMEs will embrace creative thinking and take innovative actions, build up the capacity in earnest to enhance efficiency and competitiveness. Ministers called for all member economies to continuously create and improve an enabling environment for SMEs while at the same time to promote the exchange among members. Ministers noted that this meeting was convened at a time when the New Economy and the accelerating globalization are exerting a more extensive impact on the economic development and business climate. Therefore, Ministers particularly stressed that member economies should strengthen cooperation and policy dialogue to attract as many businesses as possible into the APEC process.

Ministers thanked the Chair for his leadership during the meeting and also thanked the Chinese government and the Chinese people for their hospitality. Ministers looked forward to the next Ministerial Meeting to be held in Mexico in August 2002.