PETALING JAYA: To ensure the sustainability of a business amid the current economic uncertainties, companies including small and medium enterprises (SMEs) should have trade credit insurance, the ability to manage market changes as well as take charge of their businesses by having the right strategies.

Export-Import Bank of Malaysia Bhd (Exim Bank) managing director and chief executive officer Adissadikin Ali said SMEs often do not have a trade credit insurance policy when they export overseas.

With the lingering eurozone sovereign debt crisis and sluggish US economy, local exporters were at higher risk of their payments being defaulted by overseas buyers, he said, adding that this could be averted by taking up such a policy.

In turbulent times, SMEs should look for opportunities in overseas markets to expand their reach. Before doing so, they should really understand the market risk and have the right management tools, Adissadikin said at The Star Outstanding Business Awards (SOBA) 2011 roundtable discussion at Menara Star. Other speakers at the event were Bursa Malaysia issuer development, securities department head Arulnathan Michael Dass, Associated Chinese Chambers of Commerce and Industry Malaysia SMEs deputy chairman Koong Lin Loong and SMI Association of Malaysia national president Chua Tiam Wee.

Adissadikin said that over the last five years, the bank had provided total financing worth RM3bil to companies of which 80% were SMEs and the remaining corporates.

 At the roundtable are (from left) Koong, Arulnathan, Star executive editor and moderator of the event Errol Oh, Chua and Adissadikin

During this period, Exim Bank had also offered financing to more than 500 borrowers and close to 2,000 trade credit insurance policies were issued in facilitating cross-border ventures.

Chua said SMEs, in the current trying times, should keep a close eye on market changes and obtain the latest market information from relevant industry experts so that they could make informed business decisions.

They should also keep close contact with their key customers, suppliers and bankers to further support the growth of their businesses.

Cash management, Chua said, was an important tool as it was important to get the right market views to avoid making wrong decisions.He added that an SME had to be an opportunist to gain its competitors' market share when they exit the market. “For example, a company should not expand when customers are downsizing their stocks but instead it should conserve cash and other resources.

“SMEs can also scout for talent during a slowing economy when this pool of people are being released by multinational companies. This will boost the business of SMEs by having a skilled and talented workforce,'' Chua said.

Arulnathan, however, felt that companies needed to take charge of their business and not the other way around and fundamentally “rethink the whole business strategy”.

For example, they need to look at their portfolios and whether it is better for them to divest or pursue an acquisition trail, launch new products or venture into new markets, according to him.

He felt that smaller companies or those driven by entrepreneurs were able to take more risks compared with the larger ones as they had lower opportunity costs and could shift resources and take advantage of opportunities, unlike their larger counterparts who were tied down to various processes.

Meanwhile, Koong said SMEs must not be too pessimistic during an economic slowdown. He cited a Chinese proverb that “when there are risks, there is also plenty of opportunities”. He advocated SMEs to conform to the “4Ms” money, machinery (IT), men (human resource) and marketing to grow their businesses.

Koong said branding was an important marketing tool for SMEs to venture overseas, adding that a change of mindset was needed to achieve this initiative.

SOBA 2011 is organised by The Star with Exim Bank as presenter and BMW Malaysia as gold sponsor. It is supported by Bursa Malaysia and audited by BDO. The Royale Chulan Kuala Lumpur is the official hotel partner, Bernama TV the official TV news partner, Shang Hai the official business magazine and 98.8FM the official radio station.

The SOBA 2011 Awards ceremony will be held at The Royale Chulan, Kuala Lumpur. Find out what makes the chosen few stand out from the rest. Call Star Events at 03-7967 1388 ext 1475, 1436 or 1244 for enquiries and reservations.