Rapporteur Report

Plenary Session 5

 

 

1.0  Title of Discussion

 Fostering SMEs Sustainable Integration Into Global Markets

 

2.0  Presenter

 Mr. Osorio Mauricio (Peru)

 

3.0  Chairperson/Moderator

 Hj Abdul Rahman Hj Chuchu

 

4.0  Rapporteurs

 4.1 Shahrin Hj Mohd Tamit

 4.2 Siti Rozana DP Hj Mohd Yunos

 

5.0  Presentation and Discussion

 

   5.1  Abstract/Overview

The process of globalization has pressured the competitive and comparative advantages of SMEs to compete within their internal and  external markets. A key feature in promoting SMEs is once again the government. This paper highlights the Peruvian Commission for the Promotion of Small and Micro Enterprises’ (PROMPYME) experience in promoting SMEs. The basis of PROMPYME’s approach emphasizes on ‘wealth creation’ and is supported by a clustering development programme.  The market led approach involves the use of horizontal and vertical networking. At the same time, the integration process also emphasizes on the opportunities attainable in the global markets.

 

   5.2  Main points and Issues discussed

 

5.2.1       The government’s role in promoting strategies for SMEs.

 

5.2.2       Horizontal networking: In essence these strategies promotes the idea of networking system to get the benefits of (1) market-sharing and resource pooling; (2) forming alliances with all stakeholders that result in greater bargaining power; (3) encouraging product standardization; (4) implementing quality monitoring processes and the design of common market plans; and(5) rapid learning procedures and productive upgrading schemes.

 

5.2.3       Vertical Networking: (1) To promote SMEs with an ‘outward-oriented’ strategy by promoting subcontracting relationships with medium and large scale exporting companies that need to expand their trading capacities and to benefit from any major trade agreement; (2) To promote SMEs with an outward-oriented strategy simply by facilitating linkages with export-oriented MNCs.

 

5.2.4       Access to Government Procurement Information in which SMEs can participate and that PROMPYME is in charge of: (1) providing SMEs with information about government entities’ demands; (2) ensuring transparency in procurement processes; (3) developing programmes to improve SME’s production quality towards satisfying the public market requirements

 

6.0  Suggestions and Conclusion

 

  • This paper highlights the government’s alternative role in promoting SMEs whereby a ‘wealth-creation’ approach is used. It is supported by a ‘market-led’ vision to locate where the niche market is. The ‘identified’ markets will be used as a basis for their clustering programme which are hoped to generate spillover effect in their respective field.

 

  • There are two ways to help strengthen the SMEs abilities to integrate to global markets:

 

    • By establishing a Centre for Business Promotion - In providing assistance in developing the necessary groundwork (e.g. business plans, marketing research etc)
    • By establishing Private Market Information Networks - A Private Market Information Network that replicate PROMPYME’s Access to Government Procurement Information programme.

 

7.0  Question and Answer Session

 

7.1  Q: What is the risk of relying on USA as the dominant export market for Peru, knowing that USA has ‘questionable’ foreign trade policies to the developing economies? (Expert)

 

A: In Peru, exports account more than 30% on the US market but Peru is currently diversifying its export markets away from its US counterparts. At the same time, this risk will be minimized with improvements in technological developments which will enable Peru to increase its international competitiveness.

 

7.2  Q: How have SMEs contributed towards poverty alleviation or improve the standard of living? What about the non-government organizations in certain countries in terms of building capacities etc? (Yemen)

 

A: In terms of poverty alleviation, Peru’s SMEs have contributed 100% in all sectors and in all regions. Non-governmental organizations were established but there are problems with regards to supervision as these NGOs are not as transparent as they should be. The NGOs need to identify the potential entrepreneurs.