INASIA

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Southeast Asia’s Microbusinesses Go Digital to Compete

May 13, 2020

By Eelynn Sim, Meloney C. Lindberg

Covid-19 is hitting Southeast Asia hard. Women, young people, low-wage workers, and the underemployed have been devastated. Mom-and-pop small businesses, particularly traditional handicrafts and small-scale trading and tourism, were under financial pressures long before Covid-19. As other enterprises move online to survive, can Southeast Asia’s microentrepreneurs compete without digital tools? It will be a challenge.

Economic shocks like this reverberate, and traditional supply chains break. This is especially true for the micro, small, and medium enterprises (MSMEs) that are the lynchpin of Southeast Asia. MSMEs account for 99 percent of businesses in several key sectors, employ 80 percent of the workforce, and contribute 50 percent of the region’s GDP. The tourism sector, with millions working as tour guides, drivers, and handicraft makers, accounts for more than 20 percent of GDP in Thailand and the Philippines. Travel bans, especially from China, the region’s largest source of inbound tourism, have sent this vital industry into free fall.

MSMEs account for 99 percent of businesses in several key sectors, employ 80 percent of the workforce, and contribute 50 percent of the region’s GDP.

As the world’s fifth-largest economy, the ten member states of ASEAN are moving towards greater economic integration yet are severely constrained by a growing digital divide—now more pressing in this global crisis. Easy access to computers, online mobile platforms, and social media and the skills and training needed to use these tools to reach markets and participate in the gig economy are not ubiquitous across the region. While many men in urban hubs are connected, women and youth in rural communities are trapped on the fringes of the digital economy. This divide between the under-connected and the hyper-digitalized will only deepen during the pandemic, exacerbating inequalities and sapping the potential for recovery and growth. 

As we confront Covid-19, the only way to ensure an inclusive economic recovery is to rapidly equip these microentrepreneurs and informal workers to secure a foothold in the digital economy. Here are three critical actions so microbusinesses will not just survive, but thrive:

Mobilize digital tools now. Digital technologies can no longer be tools of the elite or those in urban hubs. To weather the coronavirus crisis, small enterprises must expand and gain access to markets beyond their own communities. In a March Covid-19 communique, ASEAN economic ministers called for digital trade and technologies to keep businesses operating, especially MSMEs.

The divide between the under-connected and the hyper-digitalized will only deepen during the pandemic.

In most parts of Southeast Asia, the tools and connections are already there. Smartphone usage is high for the region’s 400 million internet users, and most households have more than one mobile phone, but they use them primarily for entertainment and personal communications. In Cambodia, we surveyed 180 microentrepreneurs; while all had access to the internet and could call or text without assistance, half of those polled needed help to download apps, set up accounts, or use online banking. Now, mobile phones must become tools for doing business, and gaps in digital literacy, access, and training must be addressed.

Deploy civil society. As governments respond to Covid-19 with support for major companies and industries, who is meeting the needs of microbusinesses, women, and underserved populations? In rural Cambodia, for example, a female entrepreneur single-handedly supports her family by selling traditional clothing. Now, as travel restrictions make business more difficult, she needs to connect with customers in new ways to preserve her livelihood and keep her family from destitution.

Local nonprofit organizations, such as STAR Kampuchea in Cambodia, with deep reservoirs of experience working in their communities, can bridge the digital gap and quickly reach microentrepreneurs with training and business-development support in local languages and specific to the needs on the ground. Community-led approaches and nascent online communities will make a real difference in reaching those on the “wrong side” of the digital divide.

With economies temporarily crippled across the globe, digital literacy training can salvage the incredible untapped power and potential of MSMEs.

Activate partnerships and platforms. In Southeast Asia, governments, businesses, and NGOs must pool their resources and experience to shrink the digital divide. For example, in one initiative, Go Digital ASEAN, The Asia Foundation is supported by Google.org, Google’s philanthropic arm, to train up to 200,000 people in marginalized communities across the region, 60 percent women. Another example of digital collaboration is ThailandLearning.org, supported by Australia’s Department of Foreign Affairs and Trade and the Australian Embassy in Thailand, which delivers educational tools and resources to Thai students and educators affected by school closures.

Technology has opened so many doors and empowered hundreds of millions of people, and many more are eager and ready to join ASEAN’s digital revolution. With economies temporarily crippled across the globe, digital literacy training can salvage this incredible untapped power and potential of MSMEs. Now is the time to get everyone on the right side of the digital divide.

Meloney Lindberg is The Asia Foundation’s country representative in Cambodia. She can be reached at meloney.lindberg@asiafoundation.org. Eelynn Sim is The Asia Foundation’s director of Global Communications. She can be reached at eelynn.sim@asiafoundation.org. The views and opinions expressed here are those of the authors, not those of The Asia Foundation.

Related programs: Economic Opportunity, Technology & Development
Related topics: ASEAN

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