Governments around the world have stepped up and rolled out rapid and substantial policy measures to tide businesses, households and institutions through the COVID-19 crisis.
The same is true in Southeast Asia, where stimulus packages run as high as 12 per cent of the nation’s gross domestic product (GDP), most notably Singapore, followed by Thailand at 10 per cent, and Brunei Darussalam, Cambodia and the Philippines at six per cent.
This was highlighted in the recently released Policy Insight on boosting micro, small and medium enterprises (MSMEs) during the pandemic by the Association of Southeast Asian Nations (ASEAN) Coordinating Committee on Micro, Small and Medium Enterprises (ACCMSME) and the Organisation for Economic Cooperation and Development (OECD) to commemorate the International MSME Day.
The report is one of the ACCMSME’s contributions in support of the ASEAN Leaders’ Declaration of the Special ASEAN Summit on COVID-19 and ASEAN Economic Ministers’ Statement on strengthening ASEAN’s economic resilience in response to the pandemic.
The report details measures taken by ASEAN member states to mitigate the impact of COVID-19 on businesses, particularly MSMEs, and proposes various ways forward, drawing on lessons learnt and success stories collected from the OECD and its partner countries.
It also applauded ASEAN for having made laudable efforts to strengthen the resilience of their enterprises in response to the unprecedented crisis.
“This is not to understate the magnitude of the challenge,” it said. “The global economy is currently experiencing its deepest recession since the Great Depression, and unemployment is surging rapidly.”
Supply chains have been disrupted, financial markets spooked, and many businesses are facing several liquidity problems, it added.
“MSMEs are likely to be particularly affected, and this is notable for ASEAN where such enterprises make up 88.8-99.9 per cent of total establishments, accounting for 51.7-97.2 per cent of total employment.”
Beyond figures, the report said, “MSMEs sustain the livelihoods of millions of people and form the fabric of many ASEAN economies. Extraordinary stress on these entities should be addressed as a matter of priority.”
To counter such a challenge, all ASEAN member states have offered deferrals for a range of social expenditures, to free up enterprises’ cash flow and discourage employee layoffs.
While the scope and duration of these measures vary, countries have extended the initial period of two to three months to six to 12 months in most cases.
In a number of countries – Cambodia, Indonesia, Malaysia and Vietnam – deferrals have been extended for specific sectors, while in others – such as Brunei Darussalam, Myanmar and Thailand – the measure has been applied economy-wide.
Some countries have also adopted the strategy of direct financial assistance in the form of grants and subsidies for vulnerable sectors or smaller companies to encourage workforce retention.
In Brunei Darussalam, MSMEs can claim up to 25 per cent salary subsidy for local employees that make less than BND1,500 per month for a period of three months.
A number of ASEAN member states have also offered support programmes for the self-employed, and in the case of Brunei, there are COVID-19-related schemes that allow for bank loan repayment deferral and the restructuring of credit card debt into a loan for up to three years.
Meanwhile, the report also foresaw the adoption of digital technologies in numerous enterprises due to the pandemic; and the adaptation of business models to pave the way for the new mode of operation.
The push for such an adoption is two-fold: social distancing measures have obliged enterprises to consider the benefits of automation and other digital tools; and closed markets are encouraging them to move their businesses online.
Utilising this juncture, a number of ASEAN member states, including Brunei Darussalam, have extended advice and training to enterprises to prepare them for the e-commerce platform, such as focussing on better descriptions of their products and services and adjusting business models to the current climate.
The report noted that ASEAN member states have deployed a mix of short-term stimulus and longer-term structural measures by encouraging enterprises to re-evaluate their business models, upskill their staff, digitise their operations and explore new partnerships to source and sell their products and services.