Women Business Owners Prepare for Unified ASEAN Economic Community

November 28, 2012

By Sarah Alexander, Véronique Salze-Lozac'h

While leaders from the Association of Southeast Asian Nations (ASEAN) met in Phnom Penh on November 18 for the 21st ASEAN Summit, concerns over the prospect of a unified ASEAN Economic Community (AEC) for 2015 spilled over into smaller discussions among the business communities across the region.

Ms. Rath Chan Thim owns a small home business making water collection pots in Cambodia. Women, who are becoming more and more active as SME owners and entrepreneurs in Southeast Asia, express frustration with their lack of access to the information, connections, capital, or labor they need to grow their businesses. Photo/Karl Grobl

The AEC would become the world’s broadest trade pact, covering 16 countries, 3 billion people, and $16.7 trillion combined GDP. In ASEAN, small- and medium-sized enterprises (SMEs) account for the vast majority of businesses, constitute 30-53 percent of the GDP, and represent 19-31 percent of exports. In addition, these companies provide 50-95 percent of employment in the region. Needless to say, SMEs will have an important role to play as ASEAN moves toward greater regional economic integration in the next three years. However, how this goal of a single market and production base will benefit ASEAN SMEs remains uncertain for most business owners.

For small businesses, the notion of free trade, free flow of skilled labor, or free flow of capital and investment are often perceived as being at best, too vague, and at worst, threatening. Women, who are becoming more and more active as SME owners and entrepreneurs in Southeast Asia, and who often express frustration with their lack of access to the information, connections, capital, or labor they need to grow their businesses, are particularly concerned.

As U.S. Secretary of State Hilary Clinton emphasized in her speech on November 17, a day before the summit at the Singapore Management University: “No nation can achieve the kind of growth that we all want and need if half the population never gets to compete. And we cannot afford any longer to exclude the energy and talent that women add to our economies.”

However, from one country’s economy to another, the environment for women in business varies drastically. Certain factors in the business environment make it easier for women-owned SMEs to prosper in some ASEAN countries while they struggle in others. In Thailand, women represent almost half of entrepreneurial activity, while that figure drops to just 9 percent in Malaysia.

Such a dramatic range in women’s activity reveals that across the region, women face a myriad of challenges when entering and operating in the SME sector. A commonly cited factor that prevents women from participating in the economy to the same extent as men is access to networks. Networks are essential to doing business in Asia. They can be informal and personal, such as building rapport with potential clients at a social occasion like a wedding, or formal and professional, such as belonging to a business association. Yet for a multitude of reasons, including gender stereotyping that places the lion’s share of household responsibilities on women’s shoulders and cultural expectations that women should not display character traits like assertiveness, research shows that in general women do not have the same extent of business connections that men have.

In response to this constraint, The Asia Foundation has worked with local partners and business associations in Malaysia, the Philippines, and Thailand to organize networking workshops for businesswomen in each of these country’s capitals in October and November. Thirty-five women entrepreneurs from several provinces within each of the three countries participated.

While discussions ranged in topic, two universal challenges emerged: access to finance that could be used for starting a new business or expansion, and opportunities to engage in trade. In terms of accessing finance, the participants said it was simpler and faster to arrange loans through personal and family connections rather than attempting to approach a commercial bank, with the obvious limitation this implies on the scope of their investments. Furthermore, they shared the difficulties of arranging the paperwork and documents and to developing a rigorous business plan to convince banks that investing in their business is worth the risk.

The launch of the ASEAN Economic Community (AEC) in 2015 was of course a hotly debated topic at the workshops. On the one hand, most women expressed uncertainty about what the AEC actually means for them, and fear about the impact it will have on competition and labor supply. On the other hand, there were some women who had been actively preparing their businesses for the AEC. One woman who operates a silk export business in Thailand, who ramped up her staff training to include English language so that her business would be more competitive globally. “AEC is going to be a challenge. A lot of people say it is going to be very unpredictable, and so do I. But we are actually preparing as well to accept this change of climate. We are expanding our line of production, and have more training for our staff,” she said.

At the end of the workshops, women commented on how useful they had found the networking workshop, as initially they had struggled to see any tangible benefits to participating. For women-owners of SMEs that are largely family-owned and locally oriented, networking is perceived as a unique opportunity to discuss common issues and to open up to new markets, suppliers, and innovations. In fact, many women requested that we help them continue to expand the networks, possibly across countries, nominating themselves and others from their group to take on roles and tasks in driving membership and participation.

In early 2015, The Asia Foundation will organize a regional workshop in Kuala Lumpur to discuss concrete actions to developing these much-needed networks, including the use of technology and social networks, to help Southeast Asian businesswomen take full advantage of a more unified ASEAN economy.

Sarah Alexander is The Asia Foundation’s economic development program fellow and Véronique Salze-Lozac’h is the Foundation’s director for Economic Development Programs based in Bangkok. They can be reached at [email protected] and [email protected], respectively. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.

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