Developing small and medium business for greater wealth creation

Wednesday, 13 November 2013 00:35 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis SMEs have been identified as the core of an economy, particularly in emerging economies. Building a sustainable model that drives this segment must be in the forefront of the Government’s plan, Standard Chartered Bank CEO India and South Asia Sunil Kaushal said. Chairing a Commonwealth Business Forum titled ‘Developing small and medium business for greater wealth creation,’ Kaushal noted that often, SMEs do not get priority by banks as it is too small for the corporate sector of the bank and too complex in the retail sector. “SCB covers SMEs in 33 markets in which nearly 90% of business enterprises are owned by SMEs, employing 90% of the workforce. The bank also has US$ 30 billion dollars of deposits from SMEs,” he said.

Sri Lankan perspective Giving the Sri Lankan perspective on the sector, Technology, Research and Atomic Energy Minister Patali Champika Ranawaka noted that SMEs play a strategic role in the country’s economy, with 80% of all business units that exist in the country run by SMEs. “We have noted their importance for regional growth and social development. We are working towards strengthening the sector and bringing SMEs into the new equation of development by transferring home grown technologies to SMEs in the regional level through the ‘Vidatha’ program.” Ranawaka noted that the contemporary outlook on SMEs is seeing a radical paradigm shift with a new industrial revolution driven by IT and manicuring technology. “New generation IT will drive the next big wave in the global economy. SMEs refer to a scale of operation. Escalating the size of operation to optimise the scale of operation is what is needed.” A bonsai model must be introduced to the system, connecting large production to smaller ones through ICT and cloud manufacturing. “With innovation, the rules of the game are changing. It is key in determining the competitiveness of business today,” Ranawaka said. Indian angle Having always considered Sri Lanka as a second home, sitting on the board of Hemas for many years, CII Southern Region Past Chairman and Coaching Foundation India Ltd. Pradipta K. Mohapatra noted that nearly 65% of members of the CII are noted as SMEs in India. In India, there are three key problems beyond financing and globalisation, Mohapatra said. “These are more difficult to resolve. The issues are the SMEs’ ability to source and retain talent, remaining plugged into the network to the ecosystem around them, and the problem between partners or family members and movement from one generation to the other.” These issues are being faced by SMEs in the developed world as well, he asserted. As an initiative to counter these, CII along with Coaching Foundation introduced a business mentoring forum, creating forums with typically eight to 10 SMEs from non-competing businesses plugging them into large companies and the supply chain. “This has been very successful and can be used elsewhere as well.” Bangladeshi initiatives Bringing in views as a central banker, regulator and policymaker, Bangladesh Bank SME Department General Manager Sukamal Sinha Choudhury noted the Bangladesh Bank, which is the central bank of the country, has taken special initiatives to boost the sector in the country. Taking into account cottage industries, micro, small and medium enterprises under the SME umbrella, measures have been taken under agriculture, small enterprises and micro industries, which have shown great results. Having introduced a separate policy for SMEs in the recent past, the bank has made it mandatory for all banks and non-banking organisations to finance the SME sector. The measure is regularly monitored and supervised. “Each bank and organisation has been encouraged to have a target towards SME banking and to work accordingly. Special focus has also been given to women entrepreneurs,” he said. “We have also placed emphasis on cluster financing and are working with financial institutions towards this. ADB, IFC and JAICA have come with refinancing funds and we are maintaining this, and giving it to the banks and non-banks. What is needed for SME development is the leadership.”