SME definitions vary across countries and institutions – despite the close geographical proximity of countries in ASEAN – and this poses a challenge for cross-country comparison. Indonesia and Malaysia, for instance, define SMEs as companies that have more than five but less than 75 employees. Philippines, Singapore, and Thailand, on the other hand, adopt a broader definition and consider SMEs as firms with no more than 200 employees and a turnover of less than USD 74 million. At the lower end of the SME sector, there is a group of smaller “micro” enterprises. Usually consisting of the self-employed, these micro-businesses are typically found in the informal sector or the shadow economy. More than 90% of SMEs across the five chosen markets are made up of small and micro-enterprises.
A source of growth and employment
Across the five countries of Indonesia, Malaysia, Philippines, Singapore, and Thailand, SME contribution is at least a third of GDP and approximately 70% of employment with its share being the highest in Indonesia.3 SME contribution to a GDP stands at 59% in Indonesia, followed by Singapore (47%), Thailand (37%), Philippines (34%), and Malaysia (33%). SME contribution to employment stands at 97% in Indonesia with Thailand in second place at 81%. This is followed by Singapore (70%), Philippines (63%), and Malaysia (58%).