The nation’s 1.23 million small and medium enterprises (SMEs) should be able to deal with the current financial difficulties if they take advantage of the slow season to upgrade their business models and address their weaknesses in financial management while increasing their core competitiveness, specialists said yesterday.
“Now is a good time to upgrade businesses because the risk is the lowest in 80 years,” Kung Ming-hsin (龔明鑫), vice chairman of the Taiwan Institute of Economic Research (台經院), told a seminar, organized by Standard Chartered Bank Taiwan (渣打銀行) yesterday, referring to record-low prices of commodities, gasoline and raw materials.
Kung urged SMEs to address their long-persisting weaknesses in financial management and accounting to be ready for the economic recovery expected in a year or more.
Moreover, Lai Sun-quae (賴杉桂), director-general of the Ministry of Economics’ SME administration, encouraged SMEs to add value to their businesses by reorienting their core competitiveness and getting back to basics.
“Turn the crisis into a turning point,” he said.
Businesses facing liquidity problems could also resort to the government’s preferential loan plan, which offers NT$600 billion (US$18 billion) in guaranteed fund to businesses in need, Lai said.
Amid the economic slowdown, small businesses should also put more focus on domestic markets now that export opportunities are waning, despite SMEs taking up about 17 percent of the nation’s exports, Victor Lee (李明德), managing director of SME banking at Standard Chartered Bank, said at the seminar.
He said SMEs should turn to “three best friends” for expertise in long-term development — their accountants, lawyers and banks — for advice on business and management.
Lauding the government’s recent stimulus policies to bolster the economy, Lee said most banks preferred lending money to SMEs, which yield higher returns at higher interest rates, than big companies.
Panelists, however, said banks had tightened credit for SMEs, which are facing a higher risk in maintaining business operation with a thin profit margin.
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