Small and medium-sized enterprises are important contributors to employment and inclusive economic growth around the globe, including in Southeast Asia. As one of the fastest growing regions in the world, Southeast Asia has broadly embraced a growth model based on international trade, foreign investment and integration into regional and global value chains. This approach opens up an important window of opportunity for SMEs, but it also means that they must increase their competitiveness if they are to survive and grow in a highly competitive marketplace.

Small and medium-sized enterprises (SMEs) are the backbone of ASEAN economies. They generate jobs and contribute to inclusive economic growth and prosperity of households and communities.

SME development is an increasing priority for policy makers across ASEAN as they seek to establish a broader base for growth while ensuring that it is resilient and inclusive. This is becoming more pertinent as incomes rise and trade barriers across the region are lowered, opening up new opportunities to produce goods and services. In most ASEAN countries, SME policy has traditionally had a social orientation, but in some countries (notably in Brunei Darussalam, Malaysia, Singapore, Thailand and Viet Nam) this has evolved to focus increasingly on stimulating innovation and technological upgrading.

ASEAN is comprised of ten Member States which collectively cover 4.49 million km2 and are home to 642.4 million people. Based on preliminary ASEC statistics for 2017. The region’s large and growing market is strategically located. It has large natural resource endowments, is a top destination for the global offshoring industry and is located on one of the world’s busiest shipping routes. It generated a combined nominal GDP of USD 2.8 trillion in 2017. Based on preliminary ASEC statistics for 2017. Indonesia is the region’s largest country, accounting for 37% of its nominal GDP and 41% of its population in 2017.

The ASEAN SME Policy Index framework aims to provide an independent and rigorous assessment of the policy environment for SMEs and to benchmark this assessment against the goals and actions identified in the ASEAN Strategic Action Plan for SME Development (SAP SMED) 2016-2025, as well as OECD good practice. It aims to provide guidance for policy reform and development on the basis of these findings.

This assessment suggests that ASEAN countries have made significant progress in the area of SME policy since the first such assessment was conducted in 2014. In particular, they have made notable efforts to build up the institutional framework for SME policies, enhance the provision of business development services and increase SME access to e‑commerce. Productivity enhancement is now a key policy priority, although many countries still focus on improving the policy environment for micro enterprises, which are often informal, and often do so through subsidies. Measures to support the development of social enterprises and inclusive SMEs remain limited. The sophistication of the policy framework for SMEs generally correlates with overall income levels and institutional capacities across most ASEAN member states (AMS).