Unfolding impacts of the COVID-19 pandemic on micro, small, and medium-sized enterprises in Asia

Abstract

Due to economic shocks related to the COVID-19 pandemic, micro, small, and medium-sized enterprises (MSMEs) have faced significant hardship. Questions arise; however, regarding the extent to which hardship has varied between sectors and countries over time, whether it is gender neutral, whether digitalization could alleviate it, and whether government support has reached them. Using survey data from eight Asian countries, we found a wide variation in the severity of and responses to the pandemic impacts between sectors and between countries. Turning to common trends, firstly, MSMEs’ sales and non-permanent employment tended to recover toward late 2020. Second, women-led enterprises remained vulnerable, exhibiting bleak prospects for sales or more job cuts than men-led enterprises. Third, the intensity of digitalization had a nonlinear relationship with sales and employment. Lastly, the number of MSMEs receiving support from their governments increased, but such support could have more effectively reached the most vulnerable MSMEs.

Keywords:

• COVID-19
• Micro small and medium-sized enterprises (MSMEs)
• Women-led enterprises
• digitalization
• government support

Acknowledgements

We are grateful to Md Zainuri Juri, Huong Thu Ngo, and Mayumi Nakagawa, our partners from the Asian Productivity Organization, for their wholehearted support and guidance. We owe special thanks to Rosmi Abdullah (Malaysia), Thu and Nguyen Le Hoa (Viet Nam), Md Nazrul Islam (Bangladesh), Mayank Verma (India), Ratna Sari Dewi (Indonesia), Vilakone Philomlack (Lao PDR), Batbileg Tsagaan (Mongolia), Nadia Jahangir Seth (Pakistan), and all the other con-tributing NPO staff for their insights and support in the fieldwork and consultation. We thank Daisuke Miyakawa (Hitotsubashi University) for providing helpful comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Source: World Health Organization (WHO). n.d. “WHO Coronavirus (COVID-19) Dashboard.” https://covid19.who.int/ (accessed 15 March 2022).

2 The APO is an intergovernmental organization established in 1961 to increase productivity in the Asia and the Pacific region through mutual cooperation with its member national productivity organizations (NPOs). A list of the member NPOs is also available on the official website: https://www.apotokyo.org/about/overview/

3 The stringency index is a composite measure based on nine response indicators including (i) school closures; (ii) workplace closures; (iii) cancellation of public events; (iv) restrictions on public gatherings; (v) closures of public transport; (vi) stay-at-home requirements; (vii) public information campaigns; (viii) restrictions on internal movements; and (ix) international travel controls. The index is calculated as the mean score of the nine metrics, each taking a value between 0 and 100. A higher score indicates a stricter response (i.e. 100 = strictest response).

4 In this study, food-processing firms; textile-, garment-, and leather-producing firms; wholesale and retail trading firms; and hospitality services (restaurants, bars, etc.), hotels, and tourism operators (referred to as hospitality service providers) are the sectors that the pandemic shocks have severely affected.

5 Each of these tables presents the regression outputs based on two corresponding outcome variables (e.g., actual sales revenue vs. sales growth prospects), of which each offers three different models’ results, using (a) the first-wave sub-sample, (b) the second-wave sub-sample, and (c) the pooled data (using both first- and second-wave data).

Additional information

Notes on contributors

Asami Takeda

Asami Takeda is a consultant at the Asian Development Bank Institute (ADBI) in Tokyo (Japan). Her research interests include poverty reduction, infrastructure, gender and informality, small and medium-sized enterprise development, and their effect on economic growth. She holds a PhD in advanced policy studies and a MA in international development studies from the National Graduate Institute for Policy Studies (GRIPS) and an MBA from Aoyama Business School. Before joining the ADBI, she was a researcher with the Permanent Delegation of Japan to the Organisation for Economic Co-operation and Development (OECD) in Paris and the Japan International Cooperation Agency (JICA) Research Institute in Tokyo.

Takiko Igarashi

Takiko Igarashi is a consultant at the Asian Development Bank Institute in Tokyo (Japan). Prior to joining ADBI, she worked as an education specialist with the World Bank and as a consultant with the National Institute for Education Policy Research in Japan and the Asian Development Bank. She has extensive field experience, especially in Bangladesh, Cambodia, Indonesia, the Philippines, and Tanzania. Her research interests are focused on human capital development, particularly education and skills development. She has conducted projects on alternative education, socioemotional skills, vocational training, educational assessments, and teacher development, as well as industrial development and labor market issues. She holds a master of arts in international development from the National Graduate Institute for Policy Studies (GRIPS) and a bachelor of arts in law from Hosei University. She also studied as an exchange student at Truman State University.

Tetsushi Sonobe

Tetsushi Sonobe is the Dean and CEO of the Asian Development Bank Institute (ADBI), the Tokyo-based think tank of the Asian Development Bank that promotes the realization of a prosperous, inclusive, resilient, and sustainable Asia and the Pacific through policy research and capacity building. Born in 1960 in Tokyo, He obtained his PhD in economics from Yale University and BA in economics from the University of Tokyo. His research interests are centered on the empirics of economic development, particularly the roles of industrial clusters, human capital, social capital, management practices, and market competition in industrial development in developing Asia and other regions. Before joining ADBI in April 2020, he served for six years as a vice president of the National Graduate Institute for Policy Studies (GRIPS) in Tokyo and taught economics for thirty years at Tokyo Metropolitan University and GRIPS. He is a recipient of the Nikkei Book Publication Prize and the Masayoshi Ohira Memorial Prize, and a founding board member of the Japanese Association for Development Economics.