The lack of common and comparable ASEAN-wide business statistics is an impediment to realising the vision of an ASEAN Economic Community.
For a multilateral body that sees itself as an economic union in the making, ASEAN lacks some of the basic information needed to make the union work.
How many businesses exist within its borders, how much wealth do they generate, what sectors are they found in, and how many people do they employ?
No one really knows.
And that’s a major problem in the creation of an integrated regional economic zone. It is impossible to create genuinely effective economic policies if core information about the most basic unit of commercial activity – the standalone business – is unclear.
For example, how does one accurately measure trade, employment, or economic growth if the actual number of firms within ASEAN countries isn’t known? When such data doesn’t exist, policymakers are forced to rely on highly generalised aggregate figures and estimates. They are hampered in understanding what is going on at the firm level or within localised business communities.
Other major policy issues also remain unanswered when common firm data is missing. How has Covid-19 affected the number of businesses operating in ASEAN? How many new firms open each year, and how many close, in the region and in each member state? Which industry sectors are expanding, and which ones are declining? Do some countries have higher business failure rates than others, and if so, why?
The problem springs from a number of different causes, and a lack of any serious attempts to date to adopt a common definition or counting method. ASEAN doesn’t use a common language when defining businesses, rendering it impossible to accurately measure or understand its business community.
Instead, business definitions across Southeast Asia are the equivalent of a statistical Tower of Babel. Every member state defines micro, small, medium or large business in a different way. Some are extraordinarily complex (there are 27 categorical criteria used in Lao PDR, 24 in Myanmar, and 18 in Vietnam), whilst others (like Singapore) are so basic that there is very limited capacity to differentiate between different groups. Some countries include the self-employed; others do not. Some counts include informal sector enterprises; others exclude them.
… Business definitions across Southeast Asia are the equivalent of a statistical Tower of Babel. Every member state defines micro, small, medium or large business in a different way.
Data is also collected in numerous different ways from one country to the next, with a mix of surveys, economic censuses, and business registration databases utilised. Often statistical agencies and business development ministries collect different data sets without consulting each other. And publication or public dissemination of the results varies from the very opaque and irregular in Cambodia to first-class best practice annual reports from countries like Thailand and Brunei Darussalam.
The result? A mishmash of different measurements, using different definitions, collected in different ways, and made public in different times and ways. We’re not comparing apples and oranges; it’s a whole fruit shop.
As a result, some very important, very basic figures are absent from public discourse, such as a reliable count of just exactly how many firms exist in the region, and how big (or small) they are. Some estimates say 70 million firms; others believe it may be much bigger. But no one knows for sure.
Many other regional economic bodies have in the past recognised these problems and promptly adopted a common terminology. The European Union, for example, has a standardised definition and counting framework that its members all use.
It could also easily be adopted by ASEAN member states, so enabling them to not only compare data between themselves, but also to benchmark their business demography and trends internationally.
A change may be coming. In September, ASEAN published a discussion paper on the need for robust and comparable business statistics, pointing out the potential gains to be made if accurate, standardised information can begin to be collected and published. That’s a useful first step to start a public discussion on the issue.
The alternative is to spend a lot of time, effort, bureaucracy and money in an attempt to create an ASEAN-specific set of measures—all for little additional gain.
As a very first step, Southeast Asian nations don’t even need to change their collection methods – they just need to agree to start publishing their data in a format that uses a common set of definitions.
ASEAN is as much an economic entity as it is any other common forum. Indeed, the ASEAN Economic Community’s goal of turning the region into an integrated single market and production platform depends on all of us talking about the same things. Therefore, it makes sense to standardise definitions and get the most accurate data on hand. After all, you can’t manage – or develop good policy – for what you can’t measure.
Michael Schaper is Adjunct Professor with the John Curtin Institute of Public Policy at Curtin University in Western Australia.