Introduction
The private sector is essential in a nation’s urban and rural development by providing employment opportunities, job creation, and contributing toward national income. Approximately 90 percent of employment opportunities in developing countries arise from the private sector. Moreover, it acts as a source of tax revenue and enhances the supply of goods and services to national and international markets (Manzoor et al., 2019). The ambition of Asia to become the fastest-growing economic region worldwide has led to a rapid rise of enterprises in the private sector. Thus, acting as an economic game-changer toward achieving the development plans in Asia. Major companies like AirAsia, Tata Group, Samsung, LG Electronics, and Alibaba have brought up new technologies and innovations, transforming traditional methods of business engagements. Consequently, new products for trade opportunities and job creation lift millions of people out of poverty (Manzoor et al., 2019). Emphasis is laid on various strategies for development, such as maintenance of infrastructure, expansion of businesses, promotion of human capital development, development of micro, small, and medium enterprises, and attraction of investors.
Private Sector Supports Micro, Small and Medium Enterprises
The private sector in Asia is vital in developing micro, small and medium enterprises (MSMEs). The MSMEs are generally faced with insufficient funds to invest in innovations to enhance production and growth in their enterprises. The private sector promotes sustainable development and entrepreneurial culture among the owners of MSMEs (Manzoor et al., 2019). Initiatives within the private sector strengthen businesses through funding projects and providing current technical skills and knowledge necessary for expansion. For instance, Ricoh’s Bottom of the Pyramid project in India partnered with Drishtee, a local non-governmental organization, creating businesses for local entrepreneurs within poor communities in Bihar. In 2011, the first shop was opened, and through Ricoh’s Technology support, there are currently 42 shops giving employment opportunities, generating income, and empowering Bihari women in India (Manzoor et al., 2019). Thus, the private sector is crucial in opening new businesses and promoting their expansion through innovation and financial support.
Private Sector Facilitates Continued Education in Asia
Economic development in Asia is facilitated through continued education and technical skill development in the private sector. Investors usually source the right skilled personnel since it is a basic growth and production increment requirement. The new global agenda also focuses on enhancing personnel skills among adults and youths employed in industries and those owning businesses (Manzoor et al., 2019). Cisco, a giant private information technology (IT) firm located in India, has trained one million students by creating a networking academy within 24 nations in Asia. Moreover, the Women Rock-IT initiative in India is focused on training and inspiring young women to take IT-related careers. By acquiring the correct knowledge and skills, youths and adults can implement and create businesses and run them effectively (Das, 2020). Therefore, through proper training, high-income generation and reduced unemployment cases within Asia are realized.
Manufacturing of Goods in the Private Sector
The private sector in Asia develops the economy through the production of goods for exportation. International trade is determined by the available products which can be exported and generate income for a nation. Asia is one of the continents with countries well known for heavy production for exportation, such as China (Dewi et al., 2018). The private industrial sectors, including Samsung and LG, greatly contribute to generating novel products through technological advancements in developing various electronics, such as cell phones, radios, and accessories. Tata companies have developed automobiles that are exported for trade. The private sector has helped Asian countries negotiate a partnership with other nations for exchange services and policy-making through international trading. Consequently, a conducive environment for Asian investors outside the continent has been created. Therefore, the private sector provides jobs to Asians directly from the companies (Manzoor et al., 2019). Moreover, it promotes local trade through wholesaling goods to Asian citizens owning retail shops, generating income within the continent to support individuals in building a good environment for trade.
Private Sector Provides Tax Revenue to the Government
The private sector contributes to government revenue which accounts for finances used in economic development plans in a nation. Over 80 percent of taxes remitted to the government in developing countries arise from companies, employees’ income, and rent payments (United Nations Conference on Trade and Development, World Investment Report 2013). Due to rapid growth, for example, in urban centers such as Beijing municipality, the private sector currently contributes about 65 percent of the total tax revenue to the government (Dewi et al., 2018). Thus, the government can realize development plans for national growth through revenues from the private sector.
Private Sector Funds Socio-Economic Protection Projects
Funding of projects and environment and social protection are economic goals achieved through resources from the private sector in Asia. Policies have been implemented in Asian countries to finance projects that create a favorable environment and society. In 2013, India enforced a law asking companies with annual profits worth 10 billion rupees to give out 2 percent of their total annual profit to Corporate Social Responsibility (CSR), thereby having the capacity to raise 2.5 to 3 billion dollars to fund around 16,000 companies for social impact (Manzoor et al., 2019). The Chinese chambers of commerce and industry associations developed standards for social responsibilities to Chinese engineering contractors. A Farm Forestry project in a large South Asian country facilitated eucalyptus tree supply to small farmers and loan access. Thus, the associate companies are demanded to ensure equity in resource generation, environmental protection, and social development in partnering countries (Dewi et al., 2018). Therefore, the private sector is contributing to poverty alleviation through the establishment of protection of middle and low-income countries’ resources.
Provision of Banking and Financial Services to Asians
The traditional sources of financial development are inadequate to cater to the developing countries problems; hence private sector has the potential to surpass the government-implemented programs. The private sector engages in projects designing and provisioning partnership programs to catalyze a rise in resources to fill the financial gaps within the public domain (Manzoor et al., 2019). The Indian EXIM bank changed its services from product-centric to customer-oriented, generating a new financial strategy called the Hybrid Annuity Finance Model. The model has changed the previous government’s old slow service provision methods to rapid ones implemented in Indian projects within partner states. The efficient service delivery, in return, increases the income generation power of the Indian economy, and many countries are willing to adopt the same strategies to promote growth (Manzoor et al., 2019). The sector then employs citizens of countries where the services are offered, thus, reducing poverty levels since many people would have jobs.
The private Sector Facilitates Infrastructure Development, Health, Water, and Energy Provision to Asians
Economic development requires good infrastructure for quick service delivery. Therefore, it stands as a goal for development success for many economies with limited expenditure of public revenue (Manzoor et al., 2019). Nations with good urban infrastructure have the potential to withstand the rapid population increment within urban areas and economic development. Qualities of the infrastructures like roads, hospitals, airports, sanitation and waste management, water, public transport sector, housing, and electricity potentially affect economic growth opportunities (Das, 2020). The well-constructed and effective road networks enable the supply of goods and services to the marketplaces and exportation from one country to another.
Asian private sector has invested in constructing healthcare provider facilities like Aga Khan Hospitals to help treat and control diseases within the region. The sector also participates in water provision, IFC Water and Sanitation project in medium-sized East Asian countries, and the project was destined to reduce the cost of water supply to the poor living in urban and rural areas to access quality water and farmers within Asia to ensure adequate investment on the citizen towards sustainable agricultural production and good health (Ratnawati, 2020). Thus, the food supply and trading of raw materials for farming expands within Asia and extends to the external markets.
A good energy source and power supply are fundamental to developing the economy.
Chinese private companies’ investment in solar energy has built an alternative to hydroelectric energy, reducing the cost of power utilization for manufacturing goods in the industrial sector. Through individual and private companies, the region has realized good construction of housing facilities within the urban areas to hold the rapid increase of population within the urban areas. All these aspects facilitate the development and growth within Asian countries, ensuring that citizens have all minimum needs for survival to ensure adequate energy input for the workforce (Manzoor et al., 2019). The infrastructural development helps in job opportunities expansion and new avenues for government taxation, which promotes growth at the national level, thereby alleviating poverty within the Asia region.
Private Sector Provides Employment to the Asians
The private sector is instrumental in creating employment opportunities for vulnerable people. Population increase within a nation leads to a rise in unemployment, thus, socio-economic instability. Apart from government intervention, the private sector has become an essential alternative to fix the matter by creating dozens of job opportunities and initiating financial inclusion for economically unstable persons. The sector employed 89.5 million employees, exceeding the government’s 20 million in 2003 China (Ratnawati, 2020). Moreover, the numbers have rapidly increased due to innovations within companies and expanding programs within the private sector. Alleviating poverty requires the employment of women and people with disabilities, who depend mostly on other individuals’ incomes. The private sector offers vast business opportunities for self-employment for such a category of persons within the economy. It also creates employment through capital investment generating new companies and stores which need people to run (Manzoor et al., 2019). The sector, therefore, plays a critical role in alleviating the pressure of unemployment by employing poor people and reducing individuals’ poverty status.
How Private Sector Alleviates Poverty
Poverty alleviation requires merging efforts toward achieving equal income generation among individuals in a nation. However, solving the problem of income inequality begins with financial inclusion across gender and age differences among citizens in a country. The private sector in Asia has invested in integrating women and youth into various industries through employment provision (Ratnawati, 2020). Consequently, the target groups can access banking services at affordable interest rates, including loans for investment. Moreover, financial inclusion focuses on establishing a stable source of income to meet daily household needs, an index of poverty in a community. Through the private sector, women and young people in Asian countries are encouraged to own businesses and manage their daily operations toward income generation (Ratnawati, 2020). Thus, poverty alleviation can be achieved through financial inclusion, which balances the economy and access to services to all people in a nation equally.
The private sector unveils opportunities for innovative management and tactical planning. In collaboration with municipal and other companies within Asian cities, the private sector provides strategic plans to develop commitment towards broadening the cities’ visions past the short-term needs. They, therefore, help the municipalities ensure better urban management. They aid in architectural framework and layout plans for the urban investments and vendor’s services orientation (Dewi et al., 2018). Consequently, the living standards within Asian cities would be improved through proper management of resources to help improve citizens’ lives.
Through a partnership with other government sectors, the private sector creates extension services for poor communities. Providing a safe working environment and facilitating of non-discriminatory policies for employment help the poor access credit and uplift investments towards reducing the cost of housing (Ratnawati, 2020). The slum networking project in Ahmedabad and Manila’s water authority privatization is an example of partnership among investors and is rooted in understanding the community’s needs. The sector has also partnered with non-governmental organizations and informal settlements to inform everybody about their welfare and feel a sense of ownership through seminars and campaigns (Dewi et al., 2018). The incorporation of the informal sector is vital in relevant in achieving satisfaction in the informal sector. It ensures that low-earning families are assisted through micro-finance provisions to invest in small-scale projects to uplift them from the state of poverty.
Conclusion
In conclusion, poverty is a global challenge that has hit every continent, driving the need for development plans and strategies. Several sectors have been drawn on board with objectives and goals to combat the rising poverty levels by creating strategies to uplift the poorest and low-income populations in all communities within a nation. In Asia, the private sector is one of the major stakeholders in strategic planning for alleviating poverty within the continent. The combination of all possible private sector industries and innovative research associates has increased the gross domestic product within the countries. The sector has also provided a wider range of income-generating job opportunities to the citizen, thereby lifting many people from poverty. Individuals can meet their livelihood through the income generated from the jobs obtained. Through collaboration with government and non-governmental institutions, the private sector has provided capital and subsidies to poor communities, including initiating development projects and education, which has increased household income. Therefore, it is important for governments in Asia to implement favorable policies for the private sector to thrive and develop since it is the potential sector to circumvent poverty in the whole continent.
References
Das, D. (2020). In pursuit of being smart? A critical analysis of India’s smart cities endeavor.Urban Geography, 41(1), 55-78.
Dewi, S., Majid, M. S. A., Aliasuddin, A., & Kassim, S. H. (2018). Dynamics of financial development, economic growth and poverty alleviation: The Indonesian experience.The South East European Journal of Economics and Business, 13(1), 17-30.
Manzoor, F., Wei, L., Nurunnabi, M., & Abdul Subhan, Q. (2019). Role of SME in poverty alleviation in SAARC region via panel data analysis. Sustainability, 11(22), 6480.
Ratnawati, K. (2020). The impact of financial inclusion on economic growth, poverty, income inequality, and financial stability in Asia.The Journal of Asian Finance, Economics, and Business, 7(10), 73-85.