Our policymakers need to support and reinforce the move by facilitating the adoption of optimized digital solutions that will make it easier for small businesses to operate online
Jakarta (ANTARA) - The ongoing COVID-19 pandemic has brought the world to a halt, with most individuals compelled to remain indoors and work from home in the wake of government-enforced quarantines and lockdowns.

In no other time in modern history has access to the internet been as crucial a form of communication to the average person as it is now. Platforms, including Microsoft Teams, Zoom, and Tencent Meeting, are currently household names, thereby demonstrating that digital technology is at the forefront of the so-called "new normal".

Even as we look ahead, digital tools will indubitably shape the global economy in the wake of the COVID-19 pandemic, surpassing the need for optimized systems of communication. The online food industry, for instance, is witnessing a boom, with an expected rise of delivery platforms for both meals and groceries, such as Deliveroo, Meituan Waimai, and Amazon.

The impact of digital tools undeniably transcends households. Governments worldwide are turning to these for required policy work even as businesses are maximizing them to facilitate online operations.

However, at the core of digital technology is its enhanced role in dealing with the COVID-19 pandemic, right from tracking disease-related developments and contact-tracing to offering timely updates and monitoring.

The pandemic has also made telehealth and online consultation the norm. As hospitals struggle with strained capacities, migrating to online solutions placates the burden on healthcare systems. The 3D printing technology has also proven its practical value, with companies in the industry utilizing the tech to manufacture face shields and other PPEs that are currently being used both by health workers and the general population.

Despite all the aforementioned benefits of technology during these times, it is important to recognize that the onset of COVID-19 has also brought to fore certain digital-related issues and shortcomings that clearly need to be addressed.

For instance, propagation of fake news and misinformation on the disease continues unabated through social media that could spell the difference between a safe reopening and a protracted pandemic. Hackers are also exploiting people’s increased use of video-conferencing tools to disrupt ongoing calls and programs.

Certain automated data analytics software employ algorithms that have erroneously categorized some goods as non-essential, thereby resulting in pushed-back delivery dates, with detrimental implications on merchants and potentially consumers.

Moreover, some delivery platforms are arguably capitalizing on the situation by charging steep commission rates for their services, gnawing away at the already-thin margins of restaurants and food outlets.

Most of these foreseen and emerging technology-related concerns have been highlighted in the 2019 APEC Economic Policy Report (AEPR) on Structural Reform and the Digital Economy.

The ongoing pandemic makes it apparent that instituting measures to address them is crucial as we move forward. Steps should be taken, for instance, to offer better social protection to workers in the gig economy, or to extend unemployment insurance to people affected by widespread business stagnation.

While scientists and medical professionals continue their quest for a vaccine, the impact of COVID-19 on APEC economies will continue to be felt for some time. To this end, we need to make the required adjustments.

A particularly crucial recommendation in the latest policy brief by the APEC Policy Support Unit, with support from the Asia Foundation, is that micro, small, and medium enterprises (MSMEs) bring their businesses online. Even as consumers are changing their behaviors and flocking online, small businesses likewise need to migrate online if they are to keep afloat.

These small businesses will certainly benefit from government assistance. Our policymakers need to support and reinforce the move by facilitating the adoption of optimized digital solutions that will make it easier for small businesses to operate online.

Doing so is both urgent and vital now, with several MSMEs already facing imminent closure. It must be borne in mind that small businesses play a vital role in the APEC region, contributing 40-60 percent to the GDP of most economies while employing some 60 percent of the entire workforce across APEC’s 21 members. Moreover, nearly 150 million businesses are considered small businesses in the region.

These MSMEs are most susceptible to economic shocks such as this health crisis, given that they generally have fewer assets, limited cash reserves, and lower levels of productivity as compared to their larger counterparts.
They likewise must deal with several expenses, such as insurance, debt payment, rent, and employee wages, which exert pressure on their resources.

Targeting these businesses for relief should remain a crucial component of actions by APEC economies. However, currently, the key move is to assist them in going online and allowing them to maintain liquidity to remain competitive.

For this support to be realized, policymakers must develop -- in coordination and dialogue with the private sector -- a series of interventions that encompass promoting digital literacy, facilitating access for MSMEs to devices that enable access to the internet, onboarding them to relevant online platforms to optimize their services, promoting lower data cost for internet access, helping MSMEs gain better access to both mobile money and fintech, developing their trust in digital solutions, addressing competition issues, and fostering regional cooperation and public-private partnerships.

Among others, these measures will assist MSMEs in engaging with customers, managing transactions from safe distances, as well as delivering goods and services efficiently, thereby allowing them to tap into new revenue streams and address various pain points, including cost reduction.

However, policymakers should identify that the initiative must be a two-pronged system of intervention: first, allowing small businesses to ease themselves into the digital world while; second, helping them adjust to and overcome the challenges of digitalization.

The experience of the COVID-19 pandemic has shown the world that digital technology is the key to keeping economies running during a health crisis, and that much depends on our small businesses’ ability to cope with the times.

The entire APEC region should support the initiative to have MSMEs go digital while ascertaining that this digitalization remains people-centric. Now is the time to initiate this much-necessary and much-welcome reform.

**Andre Wirjo is an analyst at the APEC Policy Support Unit (PSU). He is co-author of the policy brief "Supporting MSMEs' Digitalization Amid COVID-19," with support from the Asia Foundation.

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