SMEs in RP Asia's 'laggards'

58% OF RESPONDENTS IN U.P.S. SURVEY ATTACH ‘LEAST COMPETITIVE' ’TAG

By Max V. de Leon

Reporter

PHILIPPINE small and medium enterprises (SMEs) have been tagged as the laggards in the region by their Asian counterparts, according to the UPS Asia Business Monitor (UPS ABM) 2007 survey. Results of the study, which covered 1,200 SMEs in 12 Asia-Pacific countries and conducted from November 15, 2006 to January 10, 2007, were released locally Tuesday by the world’s largest package delivery company at the New World Renaissance Hotel in Makati. The survey covered Australia with 100 respondents; China, 150 respondents; Hong Kong, 100; India, 100; Indonesia, 50; Japan, 100; Korea, 100; Malaysia, 100; the Philippines, 100; Singapore, 100; Taiwan, 100, and Thailand, 100. Respondents were from a range of industries such as automotive, garments and textiles, health care and pharmaceuticals, toys and sporting goods, electronics and electricals, gifts and housewares, timepieces, jewelry and optical goods. The survey said 58 percent of the total Asian respondents rated the SMEs in the Philippines as the least competitive in the region. Also, 46 percent of the respondents see local small and mid-sized firms as less competitive than the SMEs in their own country. With this, Asian SMEs were also least optimistic towards Philippine economic growth, with only 26 percent of them believing that the country will grow economically this year. As expected, the respondents were most optimistic for China, with 92 percent of them seeing strong economic growth in China. Tim Gohoc, UPS Philippines managing director, said the survey did not inquire into why the Philippine SMEs were rated the least competitive by their peers. Still, government and business leaders said there is truth to the “perception” and this should be used both as an opportunity and challenge. Benel Lagua, president of the state-run Small Business Corp. (SB Corp.), said this presents an opportunity for Philippine SMEs to prime up and compete better since they are not being seen by their counterparts in the region as threats. “Since we are not in their radar, this is the time to build up capacity. Let us look at the opportunities and take advantage of our best resources, which is human capital. This is how we should look at it,” Lagua said. Also, Lagua said the government and the private sector should move quickly to correct this perception, as this might discourage foreign investors to come in. He thinks this negative perception on the country’s SMEs stems from the perception that bad politics here hinders the growth of enterprises. Donald Dee, chairman of the Philippine Chamber of Commerce and Industry (PCCI), said it is true that the Philippine SMEs are the least competitive in the region mainly because they are not getting the “much-needed government support to be of the same level” with their Asian counterparts. Dee thinks the government should help improve the SMEs’ access to financing, research and development, modernization through venture capital or leasing and market access. These same issues were raised by the SMEs as challenges to their growth in the survey. “The SMEs in the Philippines believe that the factors crucial to their competitiveness but are highly lacking are: lacking of government support, access to funding and working capital, inadequate transportation infrastructure, supply chain efficiency,” the survey said.

 

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