What is ASEAN?

• ASEAN stands for the Association of Southeast

Asian Nations.
• It was established on August 8, 1967, in Bangkok,
Thailand, with the signing of the ASEAN
Declaration (Bangkok Declaration) by the
founding members: Indonesia, Malaysia,
Philippines, Singapore and Thailand.
• Brunei Darussalam joined on January 7, 1984;
Vietnam on July 28, 1995; Laos and Myanmar on
July 23, 1997; and Cambodia on April 30, 1999.
Cont.
ASEAN –member countries are the following:
• Brunei
• Cambodia
• Indonesia
• Laos
• Malaysia
• Myanmar
• Philippines
• Singapore
• Thailand
• Vietnam
What is AEC?
• ASEAN leaders agreed to establish the ASEAN
Economic Community or AEC in 2003 as the
realization of the end-goal of economic
integration.
• AEC is envisioned as a single market and
production base, which means businesses have to
operate under a trade order characterized by freer
flow of investments, capital, labor, goods and
services.
• The ten countries together create a market of
more than 600 million people.
Cont.
• Under a single market, goods produced in one
country can easily be moved and sold in another
country.
• The same thing goes for labor, investments,
capital and services.
• It is also good news for entrepreneurs, because
they can set up business in any country in the
community.
Cont.
• The challenge for the Philippines is to help
business owners, particularly SMEs, remain
competitive in the midst of tougher competition
under a single ASEAN market.
• It is a challenging task given that according to
government data, 99.6% of enterprises in the
Philippines are micro, small and medium-sized.
Cont.
“What the ASEAN trade agreement means is that
our local companies are going to need to gear up
because some of the protections they have for the
business in the Philippines against businesses in
other countries are going to go away.”
- Steven DeKrey, president of the Manila-based
Asian Institute of Management
Small business, big reach
• Number of Philippine enterprises (777,687)
• Micro enterprises make up 91.3% (709,899); small
enterprises 7.9% (61,979); medium enterprises 0.4%
(2,786); and large enterprises also 0.4% (3,023).
• The micro, small and medium-sized companies
provide 62% of all jobs in the country.
• Contributes 35.7% of value-added to the economy.

(SOURCE: NATIONAL STATISTICS OFFICE, MSMED

COUNCIL)
Classification of MSMEs
MSMEs are defined as those whose total assets
(excluding land) fall into one of the following
categories:

• Micro – Php3.0M and below

• Small – Php3,000,001 to Php15,000,000
• Medium – Php15,000,001 to Php100,000,000
Problems of SMEs in the Phils.
• Lack of financing over the years. SMEs have had
no choice but to do what they’ve done in the
past to raise funds – borrow from relatives, sell
assets or borrow from the informal sector.
• Antiquated labor laws
• Challenging business environment