Tapping Global Value Chain

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SMEs play a critical role in boosting economic activity in Asia Pacific, where they account for more than 90 percent of businesses, up to 70 percent of employment, and more than 50 percent of gross domestic product (GDP) in several nations. In the face of the Covid-19 pandemic, stimulating the region’s SME growth through trade will be critical to fostering recovery and resilience through, for instance, enhancing their participation in global value chains (GVCs). GVCs is a methodology in which production is divided into activities and tasks that are carried out in different nations. Firms in both developed and developing countries have benefited from the fragmentation of industrial processes across national borders.

GVCs have played a key part in Southeast Asia’s economic development, allowing the area to achieve spectacular export-led growth and establish itself as a top investment destination for global corporations.

Despite the fact that SMEs account for the majority of businesses in Southeast Asia and employ the majority of the workers, their contribution to GDP and exports is minor. Low productivity and worldwide competitiveness are often linked to SMEs’ small size and lack of expertise, which limit their access to scale, international markets, fresh investment financing, information, skills, and technology.