Future Of SMEs In Brunei

Posted on  07/11/2012  |  Media Centre

By Danial Norjidi

Wednesday, 07 November 2012

Jerudong – The future is bright for Bruneian Small and Medium Enterprises (SMEs), but there are a number of challenges that they need to overcome in order to achieve such a future.

This was the point made yesterday by the CEO of Baiduri Bank, Mr Pierre Imhof, speaking at the Asia Inc Forum’s Local Business Development Forum at The Empire Hotel & Country Club.

Speaking on what the future holds for SMEs in Brunei, Mr Imhof highlighted that Brunei has identified prioritised industry sectors for business and investment opportunities including Oil and Gas, logistics, ICT & Infrastructure, halal, green business, aviation and agriculture.

On this point, he said that Joint Ventures between local and foreign companies will be inevitable as they will allow for better positioning in the market.

“Public-private sector partnership cooperation remains an important factor in developing successful and effective policies and tools to assist SME development and financing,” he said.

Mr Imhof shared his belief that the future of the SMEs in Brunei is very promising; highlighting that it is encouraging to see a new breed of highly motivated and innovative entrepreneurs.

`A number of the entrepreneurs in SMEs are young, highly educated and well versed with up-to-date technologies and have been able to take the advantage in strengthening their competitiveness,” he said.

“Many of them are in professional service industries, IT, e-Business, hospitality and technical consultancy, but we also observe very successful and innovative SMEs in the oil and gas and manufacturing sectors.”

He also touched on the expansion of SMEs outside of the Sultanate, saying that local SMEs may benefit from how Brunei has managed to build an image and reputation which carries value in the region.

These local SMEs could also benefit from being in the middle of a dynamic region, taking advantage of further regional integration within Asean, High GDP growth in other Asean countries and the opening of new markets in the region, such as Myanmar, Laos and Cambodia.

The Baiduri Bank CEO added, however, that Bruneian businesses wishing to expand abroad also face a number of challenges.

“Local SMEs in Brunei are operating in a rather protected market where they have easier access to opportunities,” he said. “Such opportunities are more difficult to find abroad since more marketing efforts are required.”

These local companies, he said, need to be groomed and given the opportunities to grow, and also need advice and resources to operate in a more risky environment.

He added that what would definitely be a good approach to new products would be to tie with local partners.

Mr Imhof also mentioned that local SMEs are also facing a number of generic challenges, including business viability as well as a lack of medium/long-term commitment, a lack of technical knowledge, market knowledge, financial means to conduct research and innovation, a lack of good governance, human resources and finances to fund their growth.

The focus was then shifted to that of one specific challenge, where some lack the financial resources to meet with the opportunities of the wider market and hence are not be able to grow as expected towards the international market.

The most common sources of funding here, he said, are personal savings, family, friends, suppliers, government assisted financing, venture capital and listing/stock exchange.

“The banking sector is by far the most developed and would likely remain the main source of external financing for SMEs in the near future,” he said. All the other factors aside, banks must examine their internal structures and processes to treat SMEs as distinct business entities if they are to benefit from the sector’s potential.”

“Developing our relationship with the SMEs offering them a wide range of banking services and financial advice has always been a priority to us,” he added.

He then went on to mention a number of schemes that Baiduri Bank offers in collaboration with the Ministry of Industry and Primary Resources (MIPR), namely the Enterprise Facilitation Scheme, Micro-credit scheme and Export Refinancing Scheme, all of which are designed to help finance SMEs.

In conclusion, the Baiduri Bank CEO said, “I very much believe in a better future for local SMEs. They are more often more adaptable than bigger organisations.”

“(These SMEs) may be more proactive, more innovative and therefore, quicker to seize opportunities abroad,” he added.

–Courtesy of Borneo Bulletin

Source: http://www.brudirect.com/index.php/Local-News/future-of-smes-in-brunei.html