In malaysia, the drops are significant as with less than 40 percent of businesses anticipating growth compared to close to 80 percent in 2012.Of the 79,000 registered companies in Malaysia, 98.5 percent are SMEs. They have fewer than 200 employees and a turnover of less than 50 million ringgit ($15.5 million) per year. Despite their number, their contributions to the economic growth are smaller than in developed economies. Speaking earlier this year, Deputy Prime Minister MuhyiddinYassin said SMEs account for 31 percent of GDP and as much as 59 percent of jobs in Malaysia. Ln most developed countries, SMEs account for between 40 and 60 percent of GDP. This could mean that SMEs are less efficient or that they are working through, says Glenn Levine of moody’s Analytics in Australia. The challeanges are also quite visible in lnaonesia, which has some 55 million SMEs, according to the lnternational Finance Corporation More Than 54 million of these are microenterprises, sinlge person seling goods such as food. These SMEs have a large impact on the econmy, acconting for more than 16 percent of lndonesia’s exports in areas ranging from handi crafts to fashion accessories, food and beverage, furniture and health products.“SME lending p;ays an important role in poverty alleviaton,” says SarveshSuri, the country managre for lndonesia at the IFC. Despite this, their representation in the economy has not grown significantly in recent years, despite a number of policies by the govern mrnt to facilitate access to techno logy, markets and, more importantly,finance. Fewer than a third of small businesses in lndonesia have access to finance, according to the IFC. Lack of finance hinders growth and, as any accountant will attest, a business that is not growing is dying. In November, the IFC singned a loan agreement for $75 million with Bank Danamonlndonesia to create business opportunities for SMEs This facility may have some sall impact on access to finance. On paper, it is easier to start a business in Asia than just about anywhere else in the world. Singapore ang HONG KONG typically top the World Bank’s annual Ease of Doing Business rankings. In this year’s survey, released in june, the World Bank ranked Singapore first and HONG KONG second. Malaysia is sixth and South Korea seventh. Taiwan is at 16 and Thailand 18. After that, it gets much harder. Japan comes in at number 27 and the next country on the list is Brunei, an ASEAN member, at 59. Lnterestingly, Brunei is rankeg 137 in terms of “starting” a business. China business in many ASEAN member countries, however, is relatively difficult. Vietnam is ranked at 99 and the government interventions, dspite the government interventions, comes in at 120, below El Salvador and Jordan. Camcodia is 137 and laos is 159. Myanmar is 182, just below Venezuela. Fetting finance or credit is also difficult. With the excetion of Malaysia, which is ranked first in terms of accessing credit, most other ASEAN economies are ranked much lower. Taiwan and Thailand are tied at 73. Lndonesia is at 86. The lack of finance may be a remaining side effect of the global financial crisis of 2008, says Moody’s Levine. The crisis five years ago evolved out of the financial system and was caused, in broad strokes, by the virtual elimination of credit. History shows that it takes types of crises than from those causend by other economic issues. The crash broke the system issues. The crash broke the systrm of finance and cut the flow of credit to businesses around the world. “this is not just an Asia story. This is a global phenomenon. This is the same issue we are seeing all around the globe,” Levine says. “It sholdn’tbe a surprise that the smallear businesses suffered more.” Despite the gloomy outlook that many SMEs share about the nearterm future, there are some singstherm future, there are some signsthat some kind of turning point is on the horizon. At least in Singapoer there are sings that SMEs are regaining confidence. More of Them are likely to invest in technology and assets over the next six months than at any time over the last four quarters last week by the Singapore Business Federation and the DP lnformation Group. A provider of business and credit information. “SMEs know they need to increase their. Productivity to stay competitive. That’s why they are buying machinery, IT hardware and software,” says Chen yew Nah, managing director of DP Information. “These investments have the added benefit of driving down costs over time .Investing in better equipment and automatiog is a sound strategy to combat rising manpower costs.” The overall capital investment index this quarter came in at 5.45, up from 5.09 a year ago. But even here, SMEs are struggling to define themselves. Most re facing higher barriers than in the past. Banks are less likely to lend and competition from large conglomerates is greater. As a result, most are more likely to increase profits rather than expamd, acconding to a different survey in SME Developmant by DP Information. Only 7 percent of more than 2,700businesses surveyed expect doubledigit growth. At the same time, fewer SMEs are doing international cusiness. Among respondents, 46 percent respondents, 46 percent reported doing business outside Singapore compared to 54 percent in 2012. In general, SMEs lack confidence and many fear another international shock, adds chen. Aecording to CPA Australia, fewer than 20 percrnt of Singapore businesses expect to grow over the next 12 months compared to around half last year more than 70 percent in 2010. Some recent singns of global economic growth could help SMEs across the region get some of their confidence back. “(This year) has seen a gradual stabilization in the global economy, as major downside risks emanating from Asia, US and the Eurozone sub side,” says Ho Maeng Kit, CEOofthesingapore Business Federation. This stabilization could take some time, at least as long as access to credit and finance remains tight, and that may not change for a couple of years yet. Governments are aware of the mportance of developing this particular sector. SMEs can help drive novation and shift the patterns of economic growth. SPEaking in Hong Kong earlier this year, Indonesian Finance MinsterChatibBasri drove this point home as he suggested that reforms would make it easier for business. “I don’t think a country like Indonesia can continue to rely on natural resources or cheap labor,” he said. “Indonesia needs to move up the technology ladder.”