Advanced economies’ decline scaring Asia’s small businesses

THERE’S a specter haunting Asia—the ghost of double—dip recession in advanced economies that small businesses are trading with is dampening confidence, a report by Regus Plc. said.

“It’s clear that there’s been a stagnation in business confidence, accompanied by significant falls in some rapidly developing economies since our last BCI report in April,” said Filippo Sarti, Regus’s CEO for Asia, in a statement.

“This suggests that slowing trade with Europe and Western economies, combined with a host of national factors, is taking its toll. If there is some good news it’s that, globally, the proportion of companies reporting revenue growth is stable, while profits increased slightly,” Sarti added.

Regus said in his statement that “[c]onfidence among small businesses in particular has flatlined in both mature and developing economies, and given the important role of small and medium-sized enterprises as an engine of growth and provider of jobs, this finding is of particular concern.”

The 23-year-old firm founded by Mark Dixon in Brussels, Belgium, based its statements on its Business Confidence Index that polled more than 24,000 senior business people from 92 countries.

“Business confidence in some of the world’s leading growth economies has dropped significantly over the last six months,” the Luxembourg-headquartered firm said.

However, the Philippines has bucked the trend, with confidence levels rising 10 points from 136 to 146 since April 2012.

The Regus BCI, on the other hand, noted that global confidence levels have shown little change compared to six months ago; down 2 percentage points to 111 since April 2012.

But while the proportion of Filipino companies reporting revenue increases rose from 56 percent in April 2012 to 67 percent, the respondents said profits stagnated; dipping from 50 percent to 49 percent.

Still, three-quarters or 75 percent of Filipino respondents reported that they were satisfied with government’s support strategies for business.

Respondents, including those from the Philippines, listed the following as major challenges to small businesses and start-ups: cash-flow (40 percent); sales (39 percent); and, cost of marketing and promotion (36 percent).

“We were particularly struck by the lack of any improvement amongst entrepreneurs and small businesses. In order to improve their cash situation, respondents identified affordable and flexible business services—especially for overheads such as workspace, administrative support and sales/marketing,” Sarti was quoted as saying.

He added that 45 percent of respondents, “for instance, reported that one of the major burdens during the downturn has been inflexible property leases. Flexible services allow businesses to be more agile and free-up cash for investment without relying on credit at a time when it is so difficult to secure.”

Respondents, however, also cited that government’s provision of tax exemptions (62 percent), information services (53 percent), and low interest loans (52 percent) “would substantially help small businesses and start-ups” hurdle these challenges. –Dennis D. Estopace / Reporter, BUsinessmirror