Thai SMEs well equipped to survive

Tim Hinton, global head of SME banking, said yesterday that the bank believed SMEs in Thailand, Malaysia and Singapore were strong enough to survive the current volatility.

He attributes their resilience to the experience of the 1997 economic crisis, which equipped them to handle the current global situation by such strategies as market diversification.

The bank is focusing more on SME customers in the emerging economies because this is the one sector of the global economy that is growing. The growing economies of Asean countries including Thailand are regarded as providing opportunities for the bank's expansion.

Standard Chartered (Thai) will reveal its SME banking strategies next month.

However, Hinton acknowledged that competition in SME banking in Thailand was tough, as local banks have a stronger role in financing smaller firms. Foreign banks, therefore, must work harder and create connections with SMEs, and Standard Chartered believes its international perspective and non-financial services give it an edge.

Meanwhile, the bank has shifted from a purely transactional relationship with SME clients to that of adviser and trusted partner, because it believes gaining a better understanding of customer needs will serve both well in the long term.

He said SMEs were not just looking for financing, but wanted help from banks in terms of non-financial services such as cash management, business planning and marketing, and international services such as foreign-currency exposures, trade finance, and onshore-offshore services.

When SMEs can improve their knowledge and skills, banks will also benefit as these companies become more competitive and able to service their debts.

"The ambitious goal for Standard Chartered is to encourage SMEs to use the bank as their main bank. Our goal is to help SMEs achieve in business," Hinton said, including expanding into larger enterprises.

Asked about whether higher wages would reduce the competitiveness of Thai SMEs, he said labour costs were predictable for entrepreneurs, so he did not think this would hurt businesses. The situation in Thailand is unlike that in China and India, where labour costs have soared to a degree that SMEs are less competitive.