Establishing Business Linkages between ASEAN and Chinese SMEs

Kuala Lumpur, 9 June 2011, the ASEAN-China SME Conference with the theme “Maximising Trade under the ASEAN-China FTA” is ongoing in Kuala Lumpur. The two days conference to conclude today aims to create awareness and provide latest updates on the ASEAN-China FTA (ACFTA) to small and medium-sized enterprises (SMEs).
SMEs, as backbone of the region’s economy, contribute 30-53% to ASEAN Member States’ and about 60% to China’s GDP. The conference provided an excellent platform for ASEAN and Chinese SMEs to explore business collaborations and market opportunities.
“The region holds vast opportunities for businesses in the same industry to collaborate and complement rather than compete with each other. The ACFTA has the largest consumer market size with 1.9 billion consumers and a GDP of US$7.6 trillion in 2010,” said H.E. S. Pushpanathan, Deputy Secretary-General of ASEAN for ASEAN Economic Community.
Since import duties began falling in 2005, when the ACFTA Trade in Goods Agreement was signed, trade and investments between China and ASEAN grew at an impressive rate. Between 2005 and 2010, total trade between ASEAN and China increased 20% per annum, while investments from China into ASEAN quadrupled from US$0.54 billion to US$2.10 billion except for 2009 which saw a slight dip in both trade and investment due to the global economic downturn.
“Contrary to the fears that the ACFTA would increase competition for domestic businesses within ASEAN, particularly the SMEs, the FTA had acted as a catalyst for the success of ASEAN’s own economic policies aimed at a single market and production base,” H.E. Pushpanathan remarked.
To appease SME’s concerns on the competition from the second largest economy in the world, H.E. Chai Xi, Ambassador of the People's Republic of China to Malaysia, assured ASEAN that China was and will always be the reliable neighbour and business partner.
The Ambassador likened China with the Admiral Zheng He from the Ming Dynasty, “whose fleet was so powerful to make seven voyages to the Western Seas, brought no threat but porcelain, silk and tea.”
In his keynote address, Dato’ Mukhriz Tun Mahathir, Deputy Minister of International Trade and Industry of Malaysia, highlighted China’s initiative in establishing two financing assistance, namely the China-ASEAN Investment Cooperation Fund with an allocation of US$ 10 billion to finance major investment cooperation projects and the US$15 billion credit facility to strengthen ASEAN-China economic cooperation and deepen ASEAN integration.
Acknowledging the challenges that SMEs face—including limited access to finance, technologies and markets as well as lack of management skills and market information, ASEAN Leaders endorsed the Strategic Plan of Action for ASEAN Small and Medium Enterprises (SMEs) Development 2010-2015, which incorporates all SME-related regional commitments in support of AEC building and aimed to further SME development, competitiveness and innovation. The Strategic Plan of Action covers five important areas of cooperation: (i) SME access to finance; (ii) internationalisation of SMEs; (iii) establishing SME Service Centres; (iv) improving marketing and ICT skills; and (v) strengthening SME Human Resource Development and capacity building.
The ASEAN-China SME Conference was organised jointly by the SME Corp Malaysia and Asian Strategy and Leadership Institute (ASLI), and supported by the ASEAN-China Trade Negotiating Committee-Working Group on Economic Cooperation.