Looking South Episode #20 – Helping SMEs Expand

In this week’s episode of Looking South, Eric Gau takes another look at how the New Southbound Policy will impact SMEs, with Kristy Hsu, program director at the Taiwan-ASEAN Studies Center under the Chunghwa Institute of Economic Research.

Eric Gau: Good morning, everyone. I’m Eric Gau, and you are tuned in to Looking South, here on ICRT FM100. On today’s episode, we are joined by Kristy Hsu, program director at the Taiwan-ASEAN Studies Center under the Chunghwa Institute of Economic Research, whom we spoke to earlier this year. She’ll be telling us about the government’s efforts to assist Taiwan’s small and medium enterprises. Ms. Hsu, welcome back to the program.
Kristy Hsu: Thank you, good morning Eric.
Eric: Ms. Hsu, based on your experiences working with SMEs in Southeast Asia, what’s your opinion about the incentives offered by those countries’ governments to Taiwan-based SMEs?
Kristy: The SMEs are very important. They are not only pioneers, but also the main players of Taiwan’s investment in Southeast Asian countries. There are different types of Taiwan-based SMEs operations in this region. Some of them are in the form of joint ventures with local companies as their business partners. Most of them are foreign companies with 100% foreign capital. In some Southeast Asian countries, foreign companies can benefit from policy incentives provided by the host countries for encouraging foreign investment and, for example, facilitating technology transfers or other policy objectives. However, according to your question, most Taiwan-based SMEs in Southeast Asian countries have difficulties in taking advantage of these incentives. Moreover, the SMEs, particularly in the less-developed countries such as Cambodia, Myanmar, and sometimes in Vietnam, Indonesia, and the Philippines, always have problems to access financing and funding. They also suffer from poor information flows that would enlighten them on the governments’ new policy and regulation. And also they do not have effective channels or platforms to communicate with local officials and catch up with the most up-to-date policy making and legislation. This serious information divide is most acute when nowadays most Southeast Asian countries are rapidly changing or updating their regulations. I think this will have a huge impact on SMEs, and this something we need to assist SMEs in to better their operations in the region.
Eric: So, here in Taiwan, what measures has president Tsai Ing-wen’s government put in place to help SMEs under the New Southbound Policy, and how can owners and operators of SMEs here in Taiwan take advantage of them?
Kristy: The SMEs are an important component under President Tsai’s New Southbound Policy. The New Southbound Policy’s goals are to develop comprehensive ties with the 18 target countries. And to achieve that, the government will enhance Taiwan’s ‘soft power’, to promote bilateral and multilateral cooperation in culture, tourism, medical care, technology, agriculture, and in particular, cooperation between SMEs between Taiwan and this country. This Policy will do that, and also the Policy will help Taiwan SMEs to explore the domestic market. To do this, the government has announced an increase of financial support and other capacity-building programs to the business sector doing business in Southeast Asia or investing. For example, there are a lot of training programs and business courses since last year to provide our SMEs with knowledge of the ASEAN markets and experience-sharing by various companies which are already operating in the region and they have very successfully experiences in Southeast Asia. This is very important in helping SMEs. Furthermore, The New Southbound Policy emphasizes the use of e-commerce to promote and export good-quality products, and this is very important for SMEs as they cannot afford traditional marketing and advertising, and usually the SMEs cannot get access to traditional distribution channels. The emphasis on e-commerce and other non-traditional forms to promote business is particularly important to help business in the SME sector.
Eric: What effects have you seen in the wider SME field so far, based on what you’ve just said?
Kristy: I think the New Southbound Policy, given what I already mentioned about giving more financial support and capacity-building programs, is also helping them explore markets. The Policy has brought in general the SMEs in Taiwan’s attention to an emerging market in Southeast Asia and India. For example, a lot of SMEs were either inward-looking before they focused only on our domestic market, or they were only interested in the Chinese market, as these businesspeople prefer to speak in Mandarin Chinese when doing business, and doing business with Chinese people is a lot easier. And now, because of the New Southbound Policy, the SMEs know better and know there is a huge potential market out there in our neighborhood and the government will assist them in getting to the market. I think this in general the effect of the Southbound Policy so far, a broad sense of implications on SMEs in Taiwan.
Eric: What would you like to see the government to do further, to further assist SMEs as it moves forward with the New Southbound Policy in the future?
Kristy: There are a wide range of work programs under the New Southbound Policy that already cover a lot of aspects of doing business with Southeast and South Asia countries. I would like to particularly bring attention to the agricultural sector. I’m saying this because Taiwan has strong agricultural technology and very successful experiences in agriculture and its management systems. Agriculture is important in most Southeast Asia countries, not only because of its large share of national GDP among these countries, but also it is a very important creator of jobs for families in rural areas. And nowadays, agriculture also is very important in the sense of food security and other social and economic reasons. I believe the New Southbound Policy should put more emphasis and resources into the agricultural sector to help disseminate agricultural technology and other business that have potential to cooperate with New Southbound Policy countries.
Eric: Finally, before we go, what are the benefits for Taiwan SMEs, and the broader Taiwan economy, that will come about from having more access to New Southbound Policy target economies?
Kristy: I think SMEs are important, they are key players in the Taiwan economy in general, not only because they create job opportunities for millions of people, but also because they are important for all local business. So if they have a better chance to get into a potential market like the Philippines, Indonesia, or also India, they may prosper from that market and then they can contribute back to our domestic market and upgrade their operations. I think this is very important under the New Southbound Policy.
Eric: We’ve been speaking with Ms. Kristy Hsu, with CIER’s ASEAN studies center. Ms. Hsu, thank you for joining us again.
Kristy: Thank you, Eric.
Eric: And that’s Looking South here on ICRT. Thank you for tuning in, and join us again next week.

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