Local SMEs more bullish than Asian counterparts - survey

MANILA, Philippines - Philippine small-to-medium enterprises (SMEs) are the most bullish about the opportunities in their own country compared to other Asian SMEs, according to the UPS Asia Business Monitor (ABM) 2010 findings.  

Possibly driven by the Philippine election optimism, the survey shows that 85 percent of Philippine SME leaders see more opportunities for themselves in the country in 2010 compared with last year.

“We are glad that Philippine SMEs continue to be positive about their business prospects. They showed remarkable resilience last year when they maintained their optimism amidst the global economic downturn and from this year’s findings, they are maintaining the same bullishness,” UPS Philippines managing director Tim Gohoc said.

Now in its sixth year, the award-winning UPS Asia Business Monitor is a survey of Asia-Pacific SMEs covering 1,350 SMEs across 13 markets: Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam. The ABM is conducted to look into the latest insights on the changing business needs of SMEs, the largest business community in the Asian region. 

UPS is the world’s largest package delivery company and a global leader in supply chain and freight services.  

This year’s results show that almost half (49 percent) of SMEs across the region showed positive outlook at their economic prospects for the year. In the wake of the financial downturn, the 2009 survey showed 65 percent of SMEs expecting the economy to decline. This year, only 14 percent expect the economy to decline.

Trade sentiment is also on the rise. Sixty-six percent of Philippine SMEs feel that most opportunities for trade growth are within the Asia-Pacific trade lanes followed next by 43 percent that point toward North America.

Funding, long a problem for Philippine SMEs, does not seem to be a primary concern this year. Instead, local SMEs are more concerned about competition (32 percent), business infrastructure (29 percent), and costs. 

“Last year, we said that most local SMEs were caught in a ‘chicken or egg’ situation in terms of funding. Traditional financial institutions continue to look at small businesses with caution, a situation that, in turn, benefits small loan companies that offer cash loans even without collateral. Now, it would seem that banks are beginning to recognize the value of SMEs as a growth driver and are seeing the viability of lending to these small and medium firms,” Gohoc pointed out.

In terms of supply chain management, 38 percent of Filipino SME leaders see it as a means to cut costs while 21 percent believe it is one method that can ensure quality.

“Philippine SMEs realize that in order to compete in the regional markets, they have to be cost-competitive while maintaining a relatively high level of quality and service. They see a sound supply chain strategy as providing them with the edge to compete with more sophisticated markets,” Gohoc added.

In terms of which industries promise growth, information technology remains on top of Asian SMEs’ lists. The Philippine SMEs also see IT as their biggest industry growth opportunity (48 percent), followed by manufacturing at 39 percent and business services at 27 percent.  

Local SMEs are also looking to increase their workforce this year with 44 percent saying that they are likely to hire more workers. “This is consistent with what we saw last year. When all the large manufacturing firms were struggling, it was the SME sector that provided jobs for displaced workers. I think this is a compelling reason why SMEs in the Philippines should continue to be supported by providing them with more flexible access to funding, research and development, particularly in the area of market intelligence, and having the legal and business infrastructure that will allow them to grow,” Gohoc added.