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Overview

Digitalisation has created significant value in the global value chain and trade activities. However, most of the benefits harnessed to-date are by large enterprises, given their substantial resources to tap into the digital transformation of trade. With over 70 million MSMEs in ASEAN accounting for approximately 98% of the total enterprises in region, it is imperative that MSMEs in ASEAN can reap these same benefits. The digitalisation of trade for MSMEs is critical to accelerate regional growth given that MSMEs employ over 85% of the regional workforce.

MSMEs still account for a small proportion of trade in terms of exports, in comparison to their share of activity in ASEAN. It is estimated that MSMEs in AMS make up for only around 19% of the total exports in the region. For the region’s digital trade and growth to be inclusive, MSMEs need to be able to digitalise their business model in a safe, cost-effective, and integrated way to the broader economic community of ASEAN.

Digitalisation has the potential to improve existing processes and introduce new business opportunities for MSMEs. From the digitalisation of trade, through both existing business models and new business opportunities can translate to a lower cost of entry and doing business, and expanding the opportunity for those who are more constrained in terms of resources and locality.

However, the realised benefits of digital trade are still small compared to the total potential in the region’s digital trade. Compared to larger companies, adoption of these digital technologies across MSMEs are still limited and highly fragmented. For digital trade to be inclusive in ASEAN, digital technologies in key areas needs to be made more accessible to MSMEs. Adoption and harmonisation of digital trade standards can be a critical step to standardise the solutions available to MSMEs.

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