Lack of support programs dampens growth of SMEs

CEBU, Philippines - Lack of effective support programs for small and medium enterprises (SMEs) is identified as one of the hurdles that detain the strong growth of players and high competitiveness advantage in the Asian region.

During yesterday's conference dubbed Enterprise Performance in Asia, organized by the International Development Research Centre (IDRC) and the Asian Institute of Management (AIM), IDRC senior program specialist Edgard Rodriguez emphasized the vital role of the governments in the Asian region as the primary tool for SMEs to grow and compete.

In the Philippines, for instance, Rodriguez said that although there are a lot of SME development related programs, there are no clearer results after the implementation.

Access to capital and market, in place infrastructure, and technology adoption are just few of the problems identified by SMEs region-wide.

WayanDipta, deputy minister for Ministry of Cooperative in Indonesia, confirmed this, saying in developed countries, they strengthen the role of academe, not only for human capacity building but also technology and quality of the product.

The biggest problem, Wayan said, is the governments' lack of SME support in terms of updated and effective policies that promote the development of small and medium companies around Asia.

Like the Philippines, other Asian SMEs in Asia countries also face similar problem in inconsistency of programs and policies implemented by the government. Change of political leadership affects the effectiveness of the programs.

"To promote the growth of SMEs within the region, the role of government is very important," Wayan said.

According to Rodriguez, although the governments in Asia have their own programs to support the SMEs, most if not all of them are fragmented. "None of them is effective," he said.

Based on IDRC study, there is a large gap in the productivity level between SMEs to large companies in Asia. Rodriguez said this mirrors the inequality the region is experiencing. Inequality, he said, is the major problem in the development of SMEs in Asia.

SMEs' access to global chain is seen to play a critical role in order to protect them from being swallowed by bigger firms or the non-Asian SMEs in the global landscape.

Ronald Mendoza, AIM policy center director, said that SMEs across Asia like the Philippines, Vietnam, Indonesia, and Thailand are facing more or less similar challenges.

SMEs in these countries are also apprehensive on the effects of the upcoming Asean integration, just like what Filipino businesses are experiencing.

"It's a matter of exploring opportunities rather than looking at the integration as a threat," said Mendoza.

SMEs, especially those in the Asean region, should lobby to their respective governments and demand support and proper incentives.

A survey conducted by the German Development Institute revealed that only one to two percent of micro and small enterprises in the Philippines are able to upgrade, while the rest stay stagnant.

The three-day conference that started on Thursday at the Radisson Blu Hotel carried the theme "Small Enterprises, Good Government, and Competition: Keys to Growth with Equity in Emerging Asia" attracted over 200 participants, representing the academe, government small businesses, and development organizations from around the world.

The conference hopes to address and tackle key issues for MSMEs, such as innovation, governance, obstacles to growth, competitiveness and competition policies, female entrepreneurship and how private sector and public policy makers can collaborate to help MSMEs power inclusive growth. — /JMD (FREEMAN)