Surveys show SMEs turning more upbeat

SMALL and medium enterprises (SMEs) have turned more optimistic about economic prospects this year, according to two separate surveys on Thursday.
In its 2010 Asia Business Monitor, UPS said about three-fourths of the SMEs polled expect “more opportunities” for domestic growth this year.

Sixty-nine percent of respondents said their companies’ prospects this year are better than last year, with 51 percent expecting Asia to rebound.

“This year, SMEs have come out better and stronger, positive about prospects. Optimism is almost back to pre-crisis levels,” Tim Gohoc, UPS Philippines managing director, told reporters.|

Gohoc said the recent elections that ushered in the new administration spurred optimism among local entrepreneurs.

Because of the upbeat prospects, 44 percent of local SMEs surveyed said they would hire additional workers.

The availability of a quality workforce as well as easy access to overseas markets through various trade agreements would further boost opportunities, according to survey respondents.

Most SMEs in the country see growth potentials in the information technology (IT), manufacturing, and business services sectors.

In a separate briefing, Junie Veloso, HSBC Philippines senior vice president, said small business confidence in the Philippines was more optimistic than in other Asian emerging markets.

Citing HSBC’s Global Small Business Confidence Monitor, Veloso said the Philippines ranked 115th in the second quarter from 106th in the fourth quarter of 2009.

A score above 100 is positive, “but with guarded optimism against other emerging markets in Asia,” he said.

Veloso said 40 percent of SMEs in the Philippines plan to increase their capital expenditures, 27 percent plan to expand their workforce, while 66 percent plan to maintain their existing staff count.

“SMEs across the globe showed increasing confidence, with the Philippines and Asia demonstrating steady signs of recovery by maintaining their levels of confidence in the first half of 2010,” the HSBC executive said.

More than 70 percent of SMEs surveyed in the country have a better outlook on the economy in the next six months, although economic conditions, labor costs and political stability remain major concerns.

According to the HSBC survey, one of five SMEs has international trade operations, with China and the US/Canada being the top trading partners at 56 percent and 42 percent, respectively.

Thirty-three percent of respondents plan to go international in the next two years, while 58 percent said they have some kind of international dealings through importing and exporting.

Despite their optimism, SMEs remain saddled by the lack of infrastructure, intense competition both domestically and in the Asian region, and high costs of doing business, according to UPS.

Gohoc noted that the difficulty of tapping funds—a perennial grievance—is no longer among the most pressing concerns of SMEs in the country.

The HSBC survey respondents said the meager government support, lack of access to market intelligence and IT know-how, among others, are obstacles to improving their competitiveness.

Rhodora Leaño, director of the Department of Trade and Industry-Bureau of Micro, Small and Medium Enterprise Development (DTI-BMSMED), said the government would plug these gaps by updating its six-year MSME development plan, which is in the works.

But Leaño said micro enterprises—companies that have capitalization of up to P3 million or have less than 10 employees—still cannot easily borrow capital, especially in far-flung rural areas where lending institutions are very few or there are none at all. –BEN ARNOLD O. DE VERA AND LAILANY P. GOMEZ REPORTERS, Manila Times