KADIN INDONESIA ASEAN-China SME Conference Kuala Lumpur Mr. Suryo Bambang Sulisto Chairman of Kadin Indonesia June 8, 2011

KADIN INDONESIA Key Points To discuss ways that all of our businesses, including SMEs, can grow and prosper within the CAFTA framework. Kadin works with our government to accelerate economic development through projects and programs that fulfil the dual mandate of strengthening our home-grown industries while simultaneously opening our markets to foreign investment and trade. With SMEs in Indonesia making up the majority of businesses, the government’s recent master plan for the acceleration of economic development will not succeed unless our SMEs succeed. Our SMEs must be competitive within the framework laid out by CAFTA and other FTAs.

KADIN INDONESIA - Potentials CAFTA is the world’s largest Free Trade Area in terms of population – creating a market for exchange and cooperation on a scale that has never been seen before. The potentials: a 38 percent increase in one year in trade and investment between ASEAN and China. This potential went largely unnoticed by the small and medium sized enterprises that comprise the biggest part of our economies. Why? Because the CAFTA vision is still a vision of governments.

KADIN INDONESIA Challenges Limited knowledge of CAFTA’s implications and opportunities. Many sectors will need extensive capacity building in order to be able to compete. SMEs are negatively affected by technical market access barriers, not just tariffs. Non-technical barriers like labelling requirements, import regulations etc. often lack transparency and add significantly to the cost of doing business.

KADIN INDONESIA Challenges Within ASEAN, good legal frameworks have been adopted, but implementation at the national levels is still pending. No clear strategy on how to best position ASEAN countries’ businesses to benefit under CAFTA. This is the perfect forum to discuss the development of strategies that will support the goal of increased intra- regional trade and investment through programs that strengthen our SMEs. Focus on concrete ways to enable SMEs to become integrated into the CAFTA framework by ensuring that they are competitive.

KADIN INDONESIA ASEAN Recommendations Develop an ASEAN SME Policy Index. Set-up an ASEAN Standard for business. Build an ASEAN SME Information System as a way to speed up business matching. Effectively implement ASEAN initiatives and SME specific support programs. Develop programs to provide SME financing with low collateral. Develop business advisory, entrepreneurial and financial management services for SMEs. Strengthen technical capability of ASEAN SMEs through cooperation with technical education institutions. Integrate ASEAN SMEs in the regional production network.

KADIN INDONESIA National or Local Level Suggestions Coordinate and fund awareness programs that educate business people how to tap into opportunities. Create easily accessible online resources that serve as information clearing houses and guide business people through complex processes. Organize networking events to help SMEs make important business contacts that can lead to partnership opportunities as well as information sharing. Identify and strengthen priority sectors. Provide government with timely and precise feedback on how policies can be improved for SMEs.

KADIN INDONESIA Learning from China China has been very successful in promoting their SMEs abroad and ASEAN countries could learn from them. Strong political backing of promotional activities, trade fairs, trade missions, and expos have paved the way for Chinese firms entering new markets. China’s programs and strategies may serve as models for us in moving forward in the promotion of our own SMEs.

KADIN INDONESIA Thank you