SMALL- and medium-scale enterprises (SMEs) in the Philippines should look at the markets of Asia, Europe, the Middle East and Latin America as an alternative to the US, the country’s largest trading partner, while waiting for the latter to recover.
“Trade growth prospects for Europe, the Middle East and Latin America have increased 1%, indicating a slight shift to these markets and possibly bigger opportunity for Asian SMEs in the future,” said Tim Gohoc, managing director of United Parcel Service (UPS), during the launch of the annual UPS-commissioned Asia Business Monitor (ABM).
“The Philippines and Europe (trade) is the fastest growing link for us,” Gohoc said. “This trade lane is growing at a tremendous rate,” he added.
In Asia, Gohoc said volumes are expected to remain strong, with China and India powering the growth.
The ABM survey revealed Philippine SMEs believe they are facing tougher times ahead because of the peso appreciation, volatile inflation rate and other domestic and international factors. Still, there is much optimism about growth prospects this year and next due to the robust business process outsourcing sector.
Funding though continues to be a problem for 38% of SMEs across Asia. In the Philippines, SMEs cited bureaucracy and red tape as the primary hindrance to funding followed by lack of collateral.
SME leaders, meanwhile, are divided on the effect of the US economic slowdown on their businesses. Some 48% feel the slowdown will have no effect while 43% fear the opposite. Indonesia, Hong Kong, Singapore and South Korean SMEs believe they will be most affected by the current situation in the US.
Fewer SMEs see China as a threat to their business. In the Philippines though 37% of SMEs, reeling from the flood of China goods, view China as a threat.
