THE rapidly growing small and medium-sized enterprise (SME) sector accounts for a third of global banking giant Standard Chartered Bank's (Stanchart) fast expanding business in Southeast Asia.

Given the sizeable share of the SME business in its regional operations, the bank pays special attention to meeting the needs of this specific sector.

Stanchart's strength lies in its ability to provide cross-border linkages and open new business opportunities for SMEs all over the region, says Mr Wilson Y.H. Chia, regional head of Southeast Asia in consumer banking.

He oversees the bank's regional SME operations.

'Our network of over 400 branches and 15,000 staff in the region puts us in a very strong position to serve our SME customers all over South-east Asia,' he says.

Mr Chia says that Stanchart's footprint and strong presence in the region is unmatched by other financial institutions when it comes to supporting the SME sector, as all its 400 branches actively service the SMEs.

'I look at all of South-east Asia as borderless,' says Mr Chia. He and his staff in the region help the SMEs to find new business partners across geographical boundaries, given their vast network and knowledge of the markets.

Though there is considerable cultural diversity among the countries of the region, the behaviour and aspirations of the SMEs are quite similar, he points out.

For instance, SMEs in most countries want to grow their businesses beyond the national borders, and those who have done so successfully aspire to extend their reach even further. Countries such as Vietnam, Thailand, Indonesia and Malaysia have sizeable young populations.

Compared to the past, 'the young today are more forward- looking and aggressive in their business approach, which is healthy for the growth of the vital SME sector', says Mr Chia.

'Research had shown that SMEs constitute over 90 per cent of registered companies in most of our markets and contribute between 50 and 60 per cent to Gross Domestic Product,' he adds.

Most governments recognise the significant contributions of the SME sector and have drawn up many schemes to support the growth of this vital sector, but there are many challenges along the way.

Similarly, lending institutions like Stanchart are mindful of the challenges of serving the SMEs. The biggest obstacle for the banks is not having enough information on the SMEs.

Therefore it is critical for governments, owners of SMEs and the banks to work closely together in a triangular relationship, bridging the information gap in the process, to help the SMEs to grow to a higher level so that some of them can become large businesses, says Mr Chia.

The biggest challenge for SMEs is to raise more capital to finance their expansion. But for the banks, SMEs are a high-risk group. This is because the SMEs are often seen to be lacking in financial discipline, cash flow management, financial design and good management.

As lenders, the banks have inadequate information on the financial behaviour of SMEs and their activities.

So when an SME seeks financial assistance, it should provide as much information as possible about itself to win its support. If an SME is able to show that it has a good track record, it will have a high chance of securing more financing from the bank.

The bank will also be able to advise the SMEs on some government schemes they may be able to tap. Besides Singapore, Malaysia and Thailand also have various government schemes to help the SME sector.

Mr Chia's advice to SMEs is to focus on people management. Not only do SMEs need to develop this capability, they also have to develop the ability to recruit and retain talent.

At the same time, SMEs should work to improve productivity by investing in new equipment to grow their business, he adds. 'As SMEs need to be more creative going forward, they should be open to ideas. They should recruit talented people with ideas and listen to young staff by adopting a modern management approach,' he says.