What Filipino small businesses need to compete in Asean

ASEAN integration can open new markets for Filipino businesses. A food producer might find buyers in Singapore or Malaysia, while a clothing company could connect with distributors across Southeast Asia.

For small businesses juggling payroll, expenses and day-to-day operations, the question is whether they can afford to take on those opportunities.

At the recent Asean Micro, Small and Medium Enterprises Summit hosted by the Department of Trade and Industry, First Circle joined entrepreneurs and other private-sector participants as a financing partner to discuss how Filipino businesses can prepare for a more connected regional economy. We thank Trade Secretary Cristina Roque for including businesses like ours in the discussion.

Access to working capital is a practical concern. A company may only have a week to buy equipment, purchase materials or ramp up production for a new order. Banks remain an important source of credit, but applications can take time, particularly for businesses with short operating histories or limited financial records.

Alternative lenders can give eligible businesses another option. At First Circle, we use technology to streamline credit assessments and can make decisions in as little as one to two business days.

Exchange rates also matter. A weaker peso raises the local cost of dollar-denominated purchases even when suppliers’ prices stay the same. First Circle offers eligible businesses the option to receive financing in US dollars at the prevailing market exchange rate. Businesses with regular dollar expenses should weigh that option against their cash flows and currency exposure.

Competing regionally

Access to capital also came up at the Mastercard Asean Inclusive Growth Summit on Nov. 11 in Manila. One session explored how financing and digital tools can help small businesses and rural entrepreneurs reach new markets.

We thank Shamina Singh and Shuba Chandran of the Mastercard Center for Inclusive Growth for welcoming First Circle to the summit.

To compete regionally, businesses may also need to improve their products, train employees, adopt technology, and learn the standards and export requirements of their target markets.

Government agencies can make trade information and support programs easier to access. Financial institutions can offer credit suited to different business needs, and larger companies can bring smaller suppliers into their networks.

For a Filipino business, the test of regional integration can be as concrete as a first overseas order. Can it meet the buyer’s standards, pay for the materials and deliver on time? That is where better access to information, financing and business networks can make a difference.

Matthew Nalos is an acquisition manager at First Circle, a fintech company providing financing solutions to small- and medium-sized enterprises in the Philippines.