MSME export can boost jobs: NRI

EXPORTING more micro, small and medium enterprise (MSME) products than imports can boost the country’s employment growth targets, according to the National Research Institute (NRI).
It said in a statement that globally, MSMEs had enhanced their participation in international trade whereas in Papua New Guinea, the participation of MSMEs was currently minimal in that the domestic content of their production was limited.
“So only about one per cent of their output is exported,” it said.
“Since PNG’s MSME participation in international trade favour imports over exports, the Government’s policy has been to encourage MSMEs to expand their business horizons, indicating that the MSMEs have the potential to drive economic growth through participating in international trade.”
In effect of international trade on employment growth of MSMEs, small-to-medium enterprises in Papua New Guinea (NRI discussion paper No.182 released yesterday,) researchers, Dr Francis Odhuno and Dr Joseph Muniu, investigated whether PNG MSMEs were likely to create more jobs if they increased their participation in international trade.
Their analysis of data from a survey of 1,117 MSMEs across the 22 provinces suggested that the number of new job openings that MSMEs filled tend to decline as the firms increased their participation in international trade. “This negative effect is attributed to the fact that most of the MSMEs participating in international trade were importers rather than exporters,” the researchers found.
“The effect of participating in international trade seems to depend on the size of firms.
“Micro enterprises are likely to increase their workforce while both small and medium size enterprises are not likely to create any new employment opportunities as they increase their participation in international trade.
“It seems, therefore, that the Government’s target to increase the number of SMEs to half a million, which in turn would create two million jobs by 2030 is an uphill task.
“But policies that discourage imports of consumer goods in favour of importing goods needed for domestic production for export might help boost PNG’s MSME employment growth targets.”