62
6.5% respectively. Furthermore, within the manufacturing sector, SMEs are involved mainly in low
technology manufacturing industries such as the food and beverage, textile and garment, and wood
product industries, while only small numbers of them are involved in high technology industries. SME
sector in Indonesia is predominantly domestic-oriented.
3.4.4. SME and Exports in Asian OICs
The lack of adequate data or information about the proportion of exports that SMEs contribute to in each
country is remarkably scant, especially for Malaysian and Bangladeshi SMEs. In Indonesia SMEs have a
small share of exports. Larger firms dominate the scene in terms of contribution to non-oil and trade.
According to the ASEAN, the Indonesian SMEs’ non-oil exports accounted for approximately 17% of
total national exports in 2009, while exports from the large enterprises comprised 83% of the total export
in the same year. Overall, they contribute only 15% to 16% of total national exports, most of which
comes from medium enterprises. Another interesting feature of export-oriented SMEs in Indonesia is that
the majority of them do not export directly, but rather indirectly through intermediaries like traders,
trading houses, and exporting companies (Tambunan, 2007).
3.4.5. Barriers to Economic Growth, SME Development and Exports in Asian OICs
External Barriers
While some progress has been made in improving the investment climate setting, Bangladesh is still
ranked low (122nd among 183 countries, down from 118th position a year earlier) in the most recent World
Bank Doing Business Survey of 2012. Infrastructure is on top of the list of problems followed closely by
registering property, enforcing contracts and accessing finance. Corruption also ranks high, whereas
social problems of crime and health do not appear to have the same level of impact.
For a country such as Malaysia certain procedural and foreign competition barriers such as obtaining
reliable foreign representation, the identification of foreign business opportunities, limited information on
international markets, high levels of competition in, for example, the electronics industry, and lack of
access to export distribution channels, hamper the exporting capability of SMEs.
Indonesian SMEs face slightly different problems associated more with external factors. According to the
World Bank’s Entrepreneurship Survey, access to finance is by far the greatest impediment to investment
for Indonesian SMEs. While the lack of financial instruments prevents excess liquidity from being
channelled into financing tangible investment, small firms face additional difficulties, including business
licensing. The top three set of problems are similar to those of their Malaysian counterparts which we can
expect given the similar economies of both countries. However, unlike Malaysian firms, Indonesian
SMEs, in common with Bangladeshi ones, also cite social problems of corruption and crime reasonably
high on their list of obstacles faced by doing business.
Internal Barriers
The internal barriers that Asian OIC SMEs face are often a product of or related to the external constraints
in the business environment.
In Bangladesh, while the small RMG units are contributing to exports, it is difficult to ascertain, in the
absence of data, what is accruing to them in terms of revenue and their ability to grow independently.
Given the possible difficulty in gathering data at the small unit level it is hard to detect the nature and
scope of routine business problems faced by entrepreneurs and owner managers.
Unlike Bangladesh, actual and practical business issues affect Malaysian SMEs more than other factors.
The cost of materials and other inputs and rising overhead costs are characteristic of growing economies