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SMEs in Asia Pacific are bullish bunch, especially in India: survey

SMEs in Asia Pacific are bullish bunch, especially in India: survey
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First Published: Fri, Jun 22 2007. 01 41 AM IST
Updated: Fri, Jun 22 2007. 01 41 AM IST
Small and medium enterprises (SMEs), considered to be the backbone of the economy in developing countries, are oozing business confidence, especially in India, according to a nine-country Asia-Pacific survey done by Nielsen Group and the commercial banking division of HSBC Holdings Plc.
The survey, concluded in the first quarter of 2007, covered 1,800 respondents across India, China, Hong Kong, Singapore, Taiwan, Korea, Malaysia, Australia and Indonesia.
While all respondents are bullish about the growth rate of the economy, Indian enterprises are most optimistic about the local economic growth and expect it to accelerate in the next six months.
Different countries define SMEs differently. The EU recently standardized the definition to companies with fewer than 50 employees being called “small”, and those with fewer than 250 as “medium”.
In India, SMEs are an important target segment for the banking industry.
According to the latest figures available with the Reserve Bank of India, the total outstanding credit of banks to the SMEs in March 2006 was more than Rs90,000 crore. The figure for just the public sector banks was more than Rs82,000 crore, growing at a rate of 25-30% annually. These enterprises provide employment to 50,000 people in India and is the largest provider of employment after agriculture in the country.
The survey says small- and medium-sized companies are bullish over economic prospects, investment in their business, recruitment of staff and growing trade opportunities worldwide. Rating agency Crisil Ltd, in a separate survey concluded in May, found SMEs were eager to get rated for a better understanding of their business as well as to be able to negotiate better rate of interest from lender banks on the basis of their rating.
Among the respondents, Indonesian SMEs were found most likely to expand their business by way of investments, followed by China, Australia and Singapore. Respondents in China showed eagerness to recruit significantly, followed by Indonesia, India and Singapore.
In India, HSBC surveyed 200 respondents with an annual sales turnover of up to $11 million (Rs45 crore). While a bulk of these respondents are bullish on growth, 36% of them plan to invest in their business and 43% want to hire more staff over the next year.
“It was surprising to see the confidence in the growth rate, in the rising interest rate scenario. Even though only 36% of Indian respondents want to invest significantly in the business over the next year, 64% of respondents are reaping benefits from earlier investments,” said Puneet Chadda, head of HSBC’s commercial banking in India.
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First Published: Fri, Jun 22 2007. 01 41 AM IST
More Topics: SMEs | Money Matters | Global Markets |