Invest in ICT to help businesses

Editorial

THE small to medium enterprise SME sector has an important role to play in economic development, poverty reduction and employment creation in developing economies.
A small or medium-sized enterprise, or SME, as defined by the European Commission is a business or company: that has fewer than 250 employees.
Accordingly, governments and donors alike have recognised the important role of the SME sector for overall development.
As a result, many government policies are geared toward supporting the SME sector’s growth through a variety of programmes that range from tax incentives to technical assistance, from regulatory provisions to policy interventions, training and other types of business development services.
Here in PNG, there is also the informal sector which is also part of an economy that is neither taxed nor monitored by any form of government.
Unlike the formal economy, activities of the informal economy are not included in a country’s gross national product (GNP) or gross domestic product (GDP).
Informal or unorganised sectors are the ones where the employees or the workers do not have regular working hours and wages and are exempted from taxes.
Based on a national audit of the informal economy survey conducted last year by the Department of Community Development, Youth and Religion, the informal economy is the biggest generator of income for families in the country. Experience shows that the medium-size enterprises spur economic growth, innovation and are capable of moving into the global supply and value chains.
Figures released during the Apec business advisor council (Abac) micro to small medium enterprise and innovation summit two years ago said the informal sector was worth around 20 per cent of the country’s GDP.
That figure can increase through the use of utilising some form of information and communication technology (ICT).
To achieve these targets, and since SMEs are an important factor in the PNG economy, especially with respect to production and employment, the Government should plan to establish several key interventions, including ICT support systems and tools for SME business development and growth.
ICTs are becoming increasingly important in running successful businesses, achieving development goals and promoting citizen participation in the development of the country.
Investments in ICTs give businesses a competitive advantage.
A survey conducted by the National Research Institute of SME owners or managers in remote, rural, and urban areas of PNG provides evidence on the potential impact of such an ICT support strategy.
The research found that in urban areas, SMEs using mobile phones are more likely to have growth in business profits or develop new products or services than those not using mobile phones.
In both remote and rural areas, SMEs using landline telephones and websites are more likely to develop new products or services.
On the other hand those using computers are more likely to have their business profits grow.
Those using website and internet are, however, less likely to increase product sales and develop new products or services.
The number of SMEs using various ICT resources other than mobile phones is very low in rural and remote places across the country.

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