When will the small grow big?

31 October 2009

Small and medium enterprises (SMEs) in the country express their disappointment with inadequate government support.

They say that the government, especially in the form of financial institutions, looks after big and well-established companies and neglects small businesses. Heavy mortgages and guarantees for loans, which small businesses cannot afford, keep them out of the fray and threaten their sustainability, according to them.

“It is only the big companies with huge assets that get loans,” said the proprietor of PT Printing and Publishing House in Thimphu, Tshering Deki. The Director of Bhutan Media service, Sonam Gyeltshen, said if the government could not help SMEs in monetary terms, it could guide them technically and managerially. He said it was important that the agencies concerned reviewed the businesses frequently.

According to the Director of MPC Media Entertainment, Karma Tshering, the government should look into projects the SMEs are undertaking. “The government should take risks and trust small businesses,” he said.

Bhutan Chamber of Commerce and Industry (BCCI), which represents the business community, is ignorant of the small companies, said a businessman, who requested anonymity.

BCCI General Secretary Phub Tshering, however, said the chamber was fighting for budget from the Ministry of Labour and Human Resources (MoLHR) to train people in the private sector. “We mostly focus on the SMEs as they make our reach, client base, growth and responsibility wider and broader,” he said. With the initiative of the chamber, Bhutan Development Finance Corporation (BDFC) will soon finance micro businesses with a Nu-100,000 loan.

He, however, added that businesses should strategically target their own market. “We have been spoon-fed and backstopped by the government for so long, and such a time no longer exists,” he said.

Today, about 27,000 SMEs are registered with the BCCI. But only 143 medium, 1,667 small and 11,668 cottage and micro businesses are operational. On the other hand, there are 128 large operational industries.

While some entrepreneurs said the BDFC’s loan was too small, the General Manager of credit at BDFC, Karma Choden, explained that big loans required collateral which SMEs could not put up The head of micro SMEs of the Ministry of Economic Affairs (MoEA), Rinchen Dorji, acknowledged that access to finance was a problem with SMEs but said that financing them depended on the feasibility of their projects.

MoEA currently has Nu 5 million with BDFC for credit. It is expected to support estimated 4,000 micro SMEs entering the market between 2008 and 2010.

According to Rinchen Dorji, the government has undertaken several initiatives to promote SMEs. They include the integrated entrepreneurship development programme, cottage, small and medium scale industries development project, skills development programme, and small business resource centre, among others. Besides, there are several ongoing projects aimed at helping SMEs.

Rinchen said the government had gone to the extent of requesting the Royal Audit Authority not to make objections to SMEs.

The MoLHR has predicted 21, 466 jobseekers by the end of this year and 93,000 jobseekers at the end of the 10th plan. The bulk of them are expected to look for private sector jobs.