Study on Micro, Small, and Medium Enterprise Participation in the Digital Economy in ASEAN Literature Review

According to the International Telecommunications Union ICT Development Index 2017, ASEAN member states range from number 18 (Singapore) to 111 (Indonesia) to 139 (Lao PDR) among 176 countries ranked. This disparity is also reflected in other datasets, including the IMD World Digital Competitiveness Ranking 2017 and Tufts University's Digital Evolution Index. ASEAN itself has recognized the importance of the digital economy, with an explicit focus on e-commerce in the ASEAN Economic Community (AEC) Blueprint 2025. The region aims to leverage its MSMEs to engage with the digital economy to further economic growth. MSMEs contribute approximately 70% of employment and a third of GDP in the five largest economies in ASEAN, but the proportion of GDP generated is low relative to other regions. In the European Union, SMEs generate roughly the same percentage of total employment but contribute 58% of GDP. Advances in digital technologies are being heralded as the Fourth Industrial Revolution, and governments need to be ready to encourage SMEs to engage with it for their business. SMEs are constrained in their growth through limitations on access to markets, finance, and information, which can be solved through opportunities in the digital economy. The potential can be seen from how e-commerce in ASEAN is valued at about $14 per person, whereas in China it is valued at $327 per person. ASEAN intends to conduct a survey on the current status of digital adoption by MSMEs in ASEAN to provide a comprehensive snapshot of the state of MSME digital adoption in ASEAN today. The survey will also draw out how to further increase their engagement and provide data for ongoing discussions regarding the ASEAN e-Commerce agreement. As preparation, US-ACTI surveyed AMS representatives from the ASEAN Coordinating Committee on Micro, Small, and Medium Enterprises (ACCMSME) inquiring about available national-level MSME surveys on ICT adoption and e-commerce capabilities and each AMS' current digital incentive programs and available resources/portals for MSMEs. Among the responses received, the biggest distinction is between those countries that have conducted MSME surveys regarding ICT adoption and e-commerce capabilities, either at the national-level or through external partners. Brunei Darussalam, Indonesia, Malaysia, The Philippines, Singapore, Thailand, and Viet Nam have had national-level surveys on e-commerce applications conducted among their MSMEs. On the other hand, Cambodia, Lao PDR, and Myanmar have not. Previous surveys on MSMEs in ASEAN did not focus on this question exclusively in all 10 AMS, nor did they seek to draw out ASEAN-wide answers through the data. The Economic Research Institute for ASEAN and East Asia (ERIA) and ISEAS – Yusof Ishak Institute (ISEAS) survey on better understanding "the current state of manufacturing SMEs' participation in economic integration" surveyed seven AMS's SMEs and large-sized enterprises to create a comprehensive research effort. However, this survey did not focus on digital adoption exclusively and did not seek to draw out ASEAN-wide answers through the data.