Policy recommendations

Policymakers can work on the following areas to ensure that competition laws and policies assist, or at least provide a level playing field to MSMEs:

  • Raising Awareness of Competition Policy and Law for MSMEs
    The most critical recommendation is an ongoing need by competition authorities to raise awareness within the MSME sector about how competition law and regulation affects them. MSMEs need to understand when laws do or do not apply to them, the benefits of competition policy, and how they can actively utilise these laws for their benefit. This is a common challenge in all countries, as knowledge levels are often low, and there is a constant stream of new business entrants into the marketplace.
  • Establishing Dedicated MSME Consultative Bodies in Each Competition Agency
    An ongoing way in which competition agencies can familiarise themselves with the needs and concerns of the MSME sector is to create a standing small business consultative committee. Some national competition agencies have already created MSME-specific consultation mechanisms. These committees are drawn from the ranks of individual entrepreneurs, industry bodies/associations, and research institutions specialising in MSME issues. They can provide agencies with the external MSME perspective, suggest new ideas and issues for agencies to consider, and partner with agencies to promote education and empowerment campaigns within the MSME community.
  • Appointing Competition Commissioners with an MSME Background
    Most competition agencies globally are governed by a set of commissioners or a similar board. This group of individuals is ultimately responsible for the overall management of the regulator, the overall strategic direction of the agency, and major decisions regarding both education and enforcement amongst the business community. Yet, in many cases, these roles are drawn from large corporations, the legal community, government and academia; few MSME representatives are included in their ranks. It may be appropriate to mandate that at least one of the commissioners in each national agency have experience in and knowledge of the MSME sector.
  • Standardising Collection of MSME Data 
    The current understanding of the MSME sector in the region is constrained by the widely various calibre of business data collected by countries. Measuring the MSME sector's actual size is difficult because there are no standard definitions across the region. It may now be time for governments to consider working through multilateral forums to adopt a standardised set of MSME definitions and reporting frameworks. This can be helped with realigning existing into a standardized definition of MSMEs.
  • Establishing Annual Publications of MSME Data
    Standardised data collection can also be assisted by effective dissemination in easily-accessible formats that are frequently updated. Such data could provide readers with an easy to understand overview of the MSME sector and is invaluable in helping policymakers and regulators to understand the industry better.
  • Organising Joint Forums Between Competition and MSME Support Agencies
    There are currently no standing or regular informal forums in which national MSME agencies meet with competition regulators to discuss developments in each of their areas of portfolio responsibility, exchange ideas, and evaluate the impact of competition frameworks on the MSME sector. Such a forum will help both parties better understand each other. It can also encourage the development of a more excellent in-depth knowledge of the MSME sector and assist competition agencies in enhancing their engagement with small firms.
  • Promoting Regional Dialogue with Industry Associations
    It may also be appropriate for competition authorities and MSME agencies across the region to jointly undertake more regional dialogue with key industry associations, such as peak national business bodies. Whilst several competition agencies engage with business chambers and organisations within their national jurisdictions; a broader regional focus may now be appropriate. For example, any businesses in the ASEAN region trade activities across borders, particularly with the establishment of the AEC in 2015. To do this, national business associations must also be bought into dialogue with their regional counterparts, regional MSME regulators, and regional MSME policy agencies.
  • Enforcing Anti-trust policies and law
    Governments have many policies and regulations that control monopoly and market power, known as anti-trust policy and law. However, some policies purposely increase or protect monopolies, for instance, to create national champions. In particular, laws related to intellectual property rights protection, such as patent and copyright laws, in essence, protect monopolies. Patent laws are a case in which there is some recognition that the efficiency analysis is static, but the economy is dynamic. The economic case for antitrust policy is based on efficiency. Monopoly can lead to inefficient use of resources when compared to the competitive result. Yet, antitrust recognizes that the potential for economic rewards is what incentivizes investment and risk-taking. The resulting competition for marketplace supremacy can be fierce, and weaker firms often fail along the way.129 Those MSMEs that survive should not be punished for their success.

128 These policy recommendation also appear in ESCAP (2021). The Role of Competition Policy in Strengthening the Business Environment for MSMEs in the ASEAN Region.

129 Washington Post (March 20, 2020), Five myths about antitrust law. It’s not designed to protect small businesses.