The impact of COVID-19 containment measures has brought more consumers online and subsequently firms, especially small businesses, need to go digital, according to the latest policy brief by the APEC Policy Support Unit and The Asia Foundation.
The report recommends policymakers around the region to prioritize facilitation measures to make it easier for small businesses to operate online considering that the window between business survival and closure is narrowing amid the pandemic.
“To remain competitive, small businesses have to adapt quickly to the new realities of the market,” said Dr Denis Hew, Director of the APEC Policy Support Unit. “There is little to no choice at all for them but to go digital, especially considering that containment measures will likely persist for some time or need to be re-introduced.”
The role of small businesses is extremely significant in the APEC region. These firms contribute between 40 to 60 percent to the gross domestic product (GDP) in most economies and employ around 60 percent of all workers across the 21 members. There are nearly 150 million businesses considered to be small businesses in the region.
The report finds that promoting the adoption of digital tools and solutions will help small businesses tap new revenue streams, reduce costs and eliminate pain points during the COVID-19 crisis, particularly around managing transactions at a distance, delivering goods efficiently and engaging with consumers.
Despite the benefits, it is crucial to recognize that digital solutions are not a panacea and have their own set of challenges, including cybersecurity and data privacy concerns, exposure to digital fraud, misinformation and digital divide and infrastructure issues.
“Governments across APEC are providing relief measures for small businesses including payment deadline delays, rate cuts, income tax exemptions, wage subsidies, soft loans and refinancing,” explained APEC Policy Support Unit Analyst, Andre Wirjo, who co-authored the policy brief.
“Policymakers should proactively adopt a two-pronged approach for allowing small businesses to reap the benefits while overcoming the challenges of going digital.”