(SINGAPORE) The world may be bracing for a slowdown, not to mention the uncertainty ahead, but Singapore's small and medium enterprises (SMEs) have never had it so good.

Of course, not all SMEs are doing well but for many in sectors such as construction, services, food and beverage, tourism, and oil and gas, business is booming and bank support is right behind them. Not doing so well are those in real estate and manufacturing.

'Banks are encouraging me to get more projects, they are very supportive,' said Annie Gan, managing director and founder of Jian Huang Construction Co. Ms Gan noted that she now has at least five banks competing to provide financing compared with just one three years ago.

According to Lawrence Leow, president of the Association of Small and Medium Enterprises, a survey last year showed that financing is no longer the No 1 problem faced by SMEs.

'Competition is now the biggest headache,' he said.

The association has 5,000 members.

For years, obtaining enough bank credit was the biggest hurdle for SMEs, but this has changed due to concerted efforts by the government, robust economic growth plus the need for banks to earn higher returns. Banks earn higher margins lending to SMEs compared with loans to multinationals or the largest local corporations.

Between 2004 and 2007, Singapore's economy grew by an average of 8 per cent a year, while others in the region expanded even faster. This breakneck speed has translated into enormous business opportunities for SMEs.

Ms Gan's Jian Huang, a contractor specialising in erecting commercial and industrial buildings, expects to double its turnover to $200 million this year from 2007. She said that banks now are very supportive, unlike a few years ago when they would only provide her with some facilities for letters of credit.

Bankers began calling her after Jian Huang made it to the Enterprise 50 ranking in 2006, she revealed. 'They can see we are making money, we have repeat customers, they can see the results,' said Ms Gan, who started her business in 1996.

Bankers say that SME clients continue to be growing their businesses without any indication of slowing down despite the gloomy headlines elsewhere.

Ajay Kanwal, head of consumer banking at Standard Chartered Bank, Singapore, said that, at this point, it appears to be business as usual and the bank has not witnessed a directional shift in the market.

'We have not seen a slowdown in trade inflows in either the imports or exports side. In fact, trade volumes have picked up after the Chinese New Year break. Loan volumes and requests are also running at normal levels,' he noted.

Rajiv Singh is one entrepreneur who hopes to double his sales this year to $100 million. His eight-year-old company, Sims, sells copper products to regional countries and the Indian sub-continent.

'In terms of sales, we can achieve; selling is not a problem but unless we get sufficient banking support, it's not possible,' said Mr Singh.

He worries that banks might tighten credit because of the global financial volatility though he is not facing any problem getting funding for his business. Sims has about five banks providing financing, and because of the competition, the interest rates have dropped, he said.

'It's definitely better to be an SME right now in Asia,' he added.

But it was not always so. And for those starting new, with no track record, it can be still be hard to get banks to lend them money.

'To be honest, it's much easier than earlier. We have a proven track record now,' said Mr Singh.

The estimated 140,000 SMEs here, hiring more than 50 per cent of the local workforce, are very critical to the economy, and their contribution is finally being recognised, said Mr Leow.

Government schemes, such as the $3 billion Loan Insurance Scheme laun-ched last year to help SMEs, are also paying off.

But clouds are gathering. According to ABN Amro senior vice-president Walter Tan, the business environment has become more challenging.

He said that the offshore risk premiums of countries in the region have risen 10 to 75 basis points over the last six months.

While he expects the bank's SME business to grow at double-digit rates this year, he said that it would be at a more measured pace. 'It is business as usual. We are growing the business in a more cautious manner and are more selective,' Mr Tan pointed out.

SMEs exporting in US dollars are also facing exchange loss due to the depreciation of the greenback.

Citibank Singapore business director Tan Chia Seng said that the most pressing needs for most clients are in the areas of yield enhancement and foreign exchange (FX) hedging.

'Yield enhancement received renewed focus because cash-flush clients are facing declining deposit rates,' said Mr Tan.

'In the case of FX hedging, it becomes more important now due to the FX volatility, particularly against the US dollar.'

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