Asean MSMEs and the circular economy

Mark Sultan Gersava was a peace development worker from Mindanao who decided to act on what he saw as a critical challenge: transforming his ordinary products to become environmentally friendly to help mitigate the effects of climate change while empowering his local community with sustainable and long-term livelihoods. His enterprise, Bambuhay, produces bamboo straws and toothbrushes to replace plastic-based products.

To date, his ambition has brought a real positive impact on 13,910 farmers, providing them with an increased sustainable source of income, and bringing 68 families out of poverty. Their work has helped remove around 1,100 tonnes of plastics from the environment, and they have planted nearly 40,000 trees and bamboo. His products are wholeheartedly welcomed by consumers and recognized by multinational companies, having supplied bamboo straws for Coffee Bean and Tea Leaf in the Philippines.

As we celebrated the United Nation’s MSME Day last June 27 in recognition of the tremendous contributions of micro, small, and medium-sized enterprises (MSMEs) to the achievement of UN Sustainable Development Goals, Bambuhay’s story is a remarkable example of how MSMEs can play a significant role in transforming Asean toward a circular economy and prepare the region for a sustainable future.

The World Economic Forum reported that by 2030, Asean is expected to see 140 million new consumers, representing a 16-percent global increase. Fortunately, a remarkable change has unfolded in consumer behavior, heralding a careful reevaluation of the consumption patterns that impact their health and the environment. Demand has shifted toward more sustainable products, which consumers were willing to pay premium costs.

The COVID-19 pandemic triggered a strong sense of community and preference to support socially responsible enterprises, evident from intensified collaboration and coordinated efforts to purchase from local businesses. These shifts paved the way for innovations that promote waste reduction, resource conservation as well as self-sufficiency through locally sourced and produced goods.

Deeply rooted as part of local society, MSMEs are frequently regarded as vital enablers of socioeconomic development. In Asean, MSMEs account for 85 percent of employment and 44.8 percent of the region’s gross domestic product. They provide primary sources of income and livelihoods for a significant number of individuals and households.

Due to their lean structure and versatile business model, MSMEs have the ability to embrace new developments, such as the circular economy and digital technologies. But the transformation of MSMEs is not without challenges. Shifting in business approach and mindset of MSMEs could be one of the first and foremost obstacles. Most MSMEs also often struggle with limited capital and constrained budgets. With the scarcity of resources available at their disposal, it becomes even more critical for MSMEs to embrace circularity in ensuring their survival.

In building an enabling environment for MSMEs to thrive in a circular economy, governments must put in place a long-term strategy and implement balanced actions that create strong economic incentives.

In Asean, we are committed to promoting circularity in MSMEs across the region. Through collaborative efforts, Asean member states are working toward achieving a circular economy that is inclusive and brings benefits to all sides.

One initiative is the Framework for Circular Economy for the Asean Economic Community, which was adopted in 2021, that created a structured pathway for a supportive ecosystem for circular business models. A number of engagements involving the government and the private sector are also taking place this year, offering a platform for sharing best practices and ensuring inclusivity as part of the policymaking process.

Through public-private collaboration, a variety of instruments have been developed to raise awareness and capacity building for both policymakers and enterprises. The Climate Change Guidelines for Asean Small and Medium Enterprises (SMEs) provide a great resource on why MSMEs should be concerned about climate change and how to better prepare them for climate-related risks. In addition, the Asean SME Academy’s Business Continuity and Resilience Tab offers tools to help MSMEs prepare for the future, including by implementing sustainable approaches.

Finally, building partnerships between businesses, innovators, service providers, and investors is imperative. Through Asean’s flagship platform for MSMEs to internationalize, Asean Access, business matching opportunities are provided to enable circular MSMEs to promote their offerings and meet potential buyers from within and beyond the region.

Bambuhay’s success in balancing the need to address climate change and poverty while being able to secure partnerships with multinational companies proved how sustainable business models can provide MSMEs with a competitive economic edge.

As we honor the importance of MSMEs and the role that they play in the economy, let us also recognize the challenges that they face, particularly in accessing financing and technology. By addressing these challenges and creating a conducive environment for MSMEs to thrive, we can unlock their full potential and contribute to sustainable economic growth.

—THE JAKARTA POST / ASIA NEWS NETWORK

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Kao Kim Hourn is secretary general of Asean.

The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.