Competitiveness still a top concern for SMEs — survey

COMPETITIVENESS issues continue to hound small and medium enterprises (SMEs) in the Philippines but they are also among the most upbeat in the region, a United Parcel Service (UPS) survey showed.

The 2010 Asian Business Monitor survey, conducted from March to April, culled responses among businessmen behind 1,351 SMEs in 13 Asian economies as the logistics firm sought to gauge sentiment and identify barriers to development, UPS Philippines Managing Director Tim K. Gohoc said in a briefing yesterday.

SMEs are deemed the backbone of the Philippine economy: according to official data, micro, small and medium enterprises accounted for 99.6% of registered businesses and employed nearly two thirds of the labor force as of 2008.

The Philippines came out at the bottom — ranked 13th out of 13 economies — in the UPS survey when respondents were asked to compare SMEs in other countries to their own. The country was also last in 2009 when it ranked 12th out of 12 before Vietnam was included this year.

China again led the pack again while the rest followed in this order: Korea, Japan, Hong Kong, Singapore, Taiwan, India, Australia, Thailand, Malaysia, Vietnam and Indonesia.

Among the competitiveness factors lacking in the Philippines, businesses here said, were access to market intelligence such as reports on saleable trends and also government support in general. Asked what their pressing concerns for this year were, they commonly cited business infrastructure, competition and costs.

The issue of access to finance which was one of the top concerns amid last year’s downturn was no longer high up on the list, Mr. Gohoc said.

Philippine SMEs, however, ranked as the most optimistic in terms of how they viewed opportunities. A net 76% of local responses said 2010 would be better than last year compared to the 52% in the region.

Local respondents also had the 4th and 5th most positive outlooks, respectively, in two indicators: that their company would have better overall prospects this year and were going to increase their work forces.

The reasons cited were an expected increased access to overseas markets and availability of qualified workers. Philippine firms also said they were focusing on improving product quality and management practices this year.

Sought for comment, a Trade department official welcomed the findings as input for government SME support programs.

“It gives us a firmer direction in our pursuit to address concerns,” said Rhodora M. Leano, chief of the Bureau of Micro, Small and Medium Enterprises Development.

“It validates the [concerns we’ve been hearing as well].”

The Trade department, she said, is continuing to coordinate support programs offered by both the public and private sectors in order to identify gaps that need to be filled.

It is also focusing on “improving the operational environment” by cutting red tape, Ms. Leano added. — Jessica Anne D. Hermosa, Businessworld