THE lack of innovation, availability of qualified staff, and limited access to funding and working capital continue to threaten the long-term sustainability of the booming intra-Asia market for small and medium enterprises (SMEs), according to the second United Parcel Service Asia Business Monitor (UPS ABM II). Despite these problems, Asia’s SMEs, including those in the Philippines, continue to be bullish about the region’s prospects. "With intra-Asia trade thriving and major markets such as India and China becoming the world’s greatest economic powers, SMEs have tremendous opportunities to grow. UPS is well positioned to help SMEs become more competitive through a wide range of supply chain solutions from package delivery to financial solutions," said Andrew Connelly, UPS senior vice president, South District, UPS Asia Pacific, who presented the findings. The study uncovered obstacles affecting the region’s ability to maintain sustainable growth. SME leaders in most markets believe that "hardware" such as transportation infrastructure and IT adoption is available but the biggest obstacle to SME competitiveness is the lack of "software" such as qualified staff, innovation, and funding and capital. Government support is also a concern in many markets. For Filipino SMEs, qualified staff and IT adoption are available while supply chain efficiency, transportation infrastructure, and government support are lacking. Their top three concerns are government regulations, rising cost of raw materials and oil prices; and cash flow and funding. The UPS ABM II is a survey of more than 1,200 SME leaders in Asia on competitive issues. The study found that nearly half of the respondents expect to see improvements in their business prospects. SMEs also remain bullish on Asia’s economy, with 69% expecting to see growth in intra-Asia trade and 71% expecting Asia’s economic power to continue growing this year. The responses of 100 Filipino SME leaders surveyed did not venture far from the overall regional results. From a regional viewpoint, while the Philippines and Indonesia received the lowest expectation for growth from other markets, a good 25% of Filipino SME leaders are optimistic that the Philippine economy will experience growth this year. Filipino SMEs, like other SMEs in the region, expect their business to improve during the year. Of those surveyed, 48% of Filipino SMEs expect their business to improve while 30% think their business will remain the same, and only 7% expect their business to become worse. The study also showed that another indication of their optimism for growth is their expectation to grow their current workforce, with most SME leaders across the region expecting to maintain or increase the size of their current workforce. In the Philippines, 50% of SME leaders said they would increase their current workforce. The survey revealed 75% of Filipino SMEs think intra-Asia is expected to lead in trade volume growth in 2006; 25% are optimistic that the Philippine economy will grow this year.Consumer goods remain a strong sector in highly populated countries such as the Philippines (72%). The automotive sector also gained more ground in the Philippines since 2004. Utilities and energy remain important to developing nations, including the Philippines.
