Naylin Oo Trade and Investment Division

1. Integrating GMS SMEs into Global and Regional Value Chains (Tourism Sector) Naylin Oo Trade and Investment Division

2. Outline UN ESCAP in a Nutshell Global and Regional Value Chains Opportunities and Challenges for SMEs in Value Chains Role of SMEs in Global/ Regional Tourism Value Chains Supporting GMS SMEs through Sub-Regional Cooperation

3. in a Nutshell • One of the five United Nations Regional Commissions under ECOSOC • 53member states and 9 associate member states • Promoting inclusive and sustainable economic and social development • Trade and Investment: • Trade Policy and Trade Facilitation • Business for Development: Private Sector contribution to inclusive and sustainable development

5. Current Focus • Integrating SMEs into Global and Regional Value Chains • Bottom-up approach to identify needed changes in business environment and trade facilitation relating to selected supply-chains (Greater Mekong Sub-region) • Investors for Development (I4D) • Promoting Global Compact principles and Corporate Social Responsibility (CSR) • Public-private sector dialogues • Asia-Pacific Business Forum (APBF) • Business Advisory Council (BAC)

6. Why SMEs? In the era of globalization… Can SMEs compete in the international market? Can SMEs learn to be competitive? Will SMEs benefit from the globalization? Can SMEs survive in the global competition? What can we do to bring the benefits of globalization to the poor? • Tourism industry is largely dominated by SMEs • > 95 per cent of all enterprises

7. The Idea is… • Selling products and services directly to the international consumers with “Brand Presence” & “Pricing Power” • Have information related to market/process/product • Have capabilities over the full Value Chain (design, production, marketing, distribution, etc.) • Respond effectively to the changing market conditions • Alternate option: Reaching the international consumer through global and regional value chains Very difficult for SMEs in developing countries

8. Emergence of VCs: Drivers • Multilateral and regional free trade agreements • Policy liberalization • Trade, investment, capital & finance, HR • Technological innovation • Transportation and ICT • New management strategies • JIT, ERP, supply chain management

9. Global Value Chains (GVCs) • Full range of value-added business activities involved in design, inputs, production, marketing, distribution, finance, HR and after services across borders • Firms can focus on one or more activities in a VC • Typically a lead firm regulates a GVC with brands, technologies, channels & distributions, expertise and/or goodwill 2nd TIER SUPPLIER 1st TIER SUPPLIER END CUSTOMER LEAD FIRM DISTRIBUTOR Movement of Goods and Services across Borders

10. Tourism Value Chain • Tourism principal – Supplier of tourism products and services • Intermediary – In charge of bundling, packaging and promoting the products and services • Consumer – Tourist and visitor Tourism Principal Intermediary Consumer (Tourist) Simple Tourism Value Chain

11. Traditional Tourism VC Consumer National Tourism Organization Travel Agent Regional Tourism Org. Tour Operator GDS/CRS Local DMO Group/ Consortium CRS Accommodation at Destination Air Travel Car Rental Rail/ Bus

12. New Tourism VC

13. Tourism and Related Sectors • Improve product and service standards • Provide an intermediate export market • Enhance competitiveness • Create demand for export products • Drive exports through joint branding/ marketing Agriculture Transportation Tourism Production Accommodation

14. Challenges for SMEs • Lack of awareness,capacity and resources • Skilled labour • Capital • Infrastructure • Managerial expertise • Knowledge and technology • Contacts/networks • High entry barriers -- International Standards • Pressure to deliver specified product, required quantity and right quality at competitive price, agreed delivery times (leadtime), CSR • Unfavorable national business environment • Increased risk

15. Opportunities for SMEs • Access to international market through GVCs • Support from TNC (training/ investment in business process/ information sharing etc.) • Technology and knowledge transfer • Long term buyer-supplier relationship • Reputation and brand development • Opportunity to up-grade and move up to the next tier

16. To overcome Challenges • Supply side capacity building: Training/ Counseling and advice/ R& D/ Micro Financing/ Corporate governance (incl. CSR)/ Management techniques • Enabling business environment and policies: Laws & regulations and their enforcement/ ICT and logistic infrastructure/ Government & Institutional support • Develop opportunities through cooperation (i.e. SME clusters): Economies of scale/ joint action/ information sharing/ enhancing attractiveness to global buyers by reducing transaction costs • Promote GVC mind-set

17. SMEs’ Corporate Strategies • Reach the global market through existing GVCs that are most likely dominated by principals • Enter into lower tiers with a low-value role in GVCs - intermediaries • Move up GVCs to high-value added activities over time • Find adequate financing for the investments and accessing quality workforce • Collaborate with other SME players vertically and horizontally in a GVC • Value co-creation, rules of interaction • Synergetic thinking • Performance monitoring

18. Value Chains Management • To systematically reduce any sources of uncertainty in supply and demand through active cooperation of the key players • Value chain governance • Legislative (setting the standards of production and delivery) • Judicial (monitoring conformance with the standards set) • Executive (helping actors in meeting the standards set)

19. Sub-regional Cooperation • Develop ‘GVC mindset’ in cross-border cooperation among GMS countries (need coordinated approach at strategic level) • Facilitate the development of GMS SME clusters/networks (consortia/alliances) across borders (and share information/ best practices) • Facilitate cross-border linkages of business institutions and services (e.g., GMS BF, BDS) • Strengthen cross-border (GMS/Sub-regional) trade and transport facilitation for tourism GVCs • Promote inclusive and sustainable tourism (e.g., accessibility, culture and heritage, environment)

20. GVC-focused Cooperation • “Mapping” value chains within the framework of a GMS GVC Working Group • Holding Sub-regional training workshops on Tourism GVC • Establishing GVC-related ICT training and resource centers • Building SME supplier clusters along the corridors • Building vertical linkages in Tourism GVC • Fostering sub-regional cooperation in standards and certification

21. Thank you! Questions?