Micro, small and medium-sized enterprises (MSMES) play a significant role in transforming ASEAN towards a circular economy and prepare the region for sustainable future, Secretary-General of ASEAN Kao Kim Hourn said in an article published on June 26.

His writing titled “Empowering ASEAN MSMEs to embrace circular economy” marks the UN’s MSME Day (June 27) in recognition of the tremendous contributions of MSMEs to the achievement of the UN Sustainable Development Goals (SDGs).

Kao said that deeply rooted as part of local society, MSMEs are frequently regarded as vital enablers of socio-economic development. In ASEAN, MSMEs account for 85% of employment and 44.8% of the region’s GDP. They provide primary sources of income and livelihoods for a significant number of individuals and households.

Through partnerships with other local businesses, MSMEs are an integral part of the value chain, enabling access to a variety of products for their customers and servicing the local community.

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.

The ASEAN leader said in the last three years, the region witnessed many businesses, particularly MSMEs, rapidly adopting innovative technologies and practices to remain relevant and competitive.

Additionally, in building a circularity ecosystem, technology adoption also plays a crucial role in enabling better tracking and traceability while supporting innovative business models.

He said that those developments resulted in reduced physical resource requirements, decreased commuting-related emissions and sharing economy being enabled through digital platforms. The development illustrates how an MSME sets sail on their journey towards the circular economy.

The secretary-general of ASEAN said that to build 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. This endeavour should be supported by good governance and close stakeholder engagement, investment in infrastructure and technology, as well as human resource development.

He said ASEAN are committed to promoting circularity in MSMEs across the region. Through collaborative efforts, ASEAN member states are working towards achieving a circular economy that is inclusive and bring benefits to all sides. One of the key approaches is to promote MSME understanding and upskill them to embrace circular business practices through various initiatives and activities.

He added that one important initiative is the Framework for Circular Economy for ASEAN Economic Community (AEC), which was adopted in 2021, that created a structured pathway for a supportive ecosystem for circular business models. It builds upon existing initiatives and introduces new activities to accelerate the region’s transition to circular economy.

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 policy-making process.

Kao emphasised that it is imperative that ASEAN, across all sides, whether public or private sector, work closely together to support and nurture more MSMEs.

“As we honour the importance of MSMEs and the role they play in the economy, let us also recognise 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,” he said./.