Ensuring growth and stability for Asean’s MSMEs

If there is anything we’ve learned in recent years, it is how fragile an interconnected global economy can be. Sadly, this is not an abstract concept. The effects are very real – felt by consumers and businesses alike, but especially by ordinary people and small entrepreneurs who may not have enough resources to weather disruptions.

When supply chains break or logistics slow down, the impact quickly becomes visible: ingredients become harder to source, production becomes uncertain and goods arrive later – if they arrive at all. For MSMEs in particular, this is devastating. They often operate with limited buffers, rely on predictable input flows and need steady demand to stay afloat.

That is why resilience must be treated as a regional priority. Resilient supply chains ensure that a small manufacturer can reliably access inputs. Efficient trade and logistics systems help businesses deliver without interruption. Sustainable infrastructure – whether physical, operational or digital – allows the back-and-forth between consumers and businesses to withstand economic ups and downs instead of being derailed by every external shock.

These elements support a bigger vision: an integrated ASEAN where trade flows smoothly between independent nations. Integration should not mean dependence. It should mean independence with interdependence – countries working together so that each one can benefit, while maintaining sovereignty and flexibility.

But with today’s uncertainty, we need practical strategies, not only broad commitments. We need approaches that strengthen supply chains, logistics and infrastructure against forces that threaten regional stability and growth. We also need strategies that work for the businesses that actually carry most of the economy: the MSMEs.

Much has been said about sustainable infrastructure, often focusing on low-carbon solutions and greener transport. Those efforts matter and should continue. Yet I believe the most immediate and scalable support for MSMEs today is digital infrastructure – especially digital trade platforms and the policy frameworks that enable cross-border digital commerce.

This is where the Digital Economy Framework Agreement (DEFA) becomes particularly relevant. DEFA aims to harmonize digital trade across ASEAN’s 11 nations. It covers cross-border e-commerce, data governance, digital identity, e-payments, online safety, cybersecurity standards and digital talent mobility. In effect, DEFA helps create shared rules so that businesses can transact online across borders with fewer obstacles, clearer expectations and greater trust.

DEFA’s details were finalized last May, and all signs point to its signing in November. If implemented well, DEFA can lower compliance costs, make cross-border transactions easier and expand market access for companies – including MSMEs. But the benefits will depend on whether MSMEs are supported to scale digitally now. MSMEs are capable of growth, but they often face gaps in digital skills, market readiness and access to cross-border systems for payments, documentation and customer engagement. Uniform guidance can reduce friction, but MSMEs need help if they are to use these opportunities effectively.

Digital integration also helps future-proof industries in the face of AI and other rapid technological shifts. AI will arrive regardless of readiness. If businesses and workers lack access to the tools, standards and skills needed to adapt, technological progress can widen inequality and leave smaller firms behind. DEFA offers an opportunity for ASEAN to build a stronger foundation early in the game.

Infrastructure is more than traditional roads and bridges. It includes the digital backbone and systems that allow MSMEs to operate efficiently. This means secure and interoperable payment systems; digital identity and trust frameworks that enable safe transactions; logistics tools that improve coordination and process visibility. When these systems work across borders, businesses can compete and expand.

And MSMEs are central to this effort. They comprise almost all enterprises in ASEAN economies and generate more than half of jobs. Their wide base makes the region more resilient: when one segment faces difficulty, others can still sustain livelihoods and entrepreneurship. But resilience depends on whether MSMEs can continue operating; they need constant support in terms of capital, markets and mentoring.

Investing in infrastructure for these three areas strengthens resilient regional trade. Capital support helps MSMEs invest in production, improve quality and manage cash flow. Market access support helps them reach buyers beyond local boundaries. Mentoring support helps them build capabilities, including digital adoption. When these supports are connected to broader trade and digital systems, MSMEs become active participants in integration rather than victims of disruption.

In our experience, public-private partnerships are effective in delivering this kind of support. During the pandemic, public-private partnerships enabled mass testing and helped secure vaccines. Those outcomes could not have happened without private sector mobilization and government support to cut through red tape, coordinate with local governments and reach vulnerable communities effectively.

Public-private partnerships are also important for mobilizing the grassroots. Through our partnership with the Department of Trade and Industry, the agency connected entrepreneurship mentors from the private sector with MSMEs across the country. The mentorship roadshows served as a practical channel to deliver expertise directly to entrepreneurs who needed guidance most.

As we expanded these entrepreneurship roadshows, we strengthened the ecosystem further by partnering with the Department of Labor and Employment and community-based Public Employment Services Offices of local government units. This helped align enterprise development with workforce needs because skills, jobs and enterprise growth reinforce each other.

Programs also gain longevity when the public and private sectors cooperate continuously, not just during the initial rollout. Today, this cooperation extends to ASEAN itself – between nations – because regional integration requires shared implementation, not just shared aspirations.

Across the world, nations are learning the strength of working as blocs. Intra-ASEAN trade is already increasing, and it can strengthen further if we remove barriers, align standards and build interconnected systems – especially digital systems – that help businesses trade smoothly across borders.