Australia is one of the wealthiest nations today with the world’s 12th largest economy. Yet many of the country’s banks are reluctant to fund local SMEs, forcing them to resort to unfavourable financing option. Craig West, Chairman of the SME Association of Australia (SMEAA), tells MSME News Network why this is happening, and what his association is doing to support Australian small medium enterprises (SMEs), who make up 96% of all private businesses in the country
In a vast continent nation like Australia, opportunities flourish as much as challenges abound. For SME that are looking to expand, and for start-ups eager to take off, the commercial landscape is especially fraught with difficulties.
“I think this is a four-pronged issue; (firstly)lacks of knowledge – most people go into business as they are really good at a particular trade, service or profession, such as hairdressing, air-conditioning and architecture. Unfortunately those skills do not prepare for the vital skill of running the business,” West explains.
The second issue facing Australian SMEs, he notes, is the lack of resources – mainly in capital but also resources in terms of people and equipment. In addition, the sector is in need of a ready-made support network to go to for assistance, knowledge or capital.
Finally, many SMEs in Australia lack the ability to keep up to date with the massively complicated rules, restrictions, regulation that they must ‘not only know but manage in their business’, as West highlights.
Government action needed
Despite the fact that Australia’s annual gross domestic product (GDP) of AUD1.6b (US$1.49b) made it the world’s 12th largest economy, according to the International Monetary Fund’s 2013 statistics, government bodies are not doing enough to support the SME sector.
“Governments at various have been talking a lot about small business – unfortunately, there has not been much action. Repeal Day is a good initiative but has not really yielded any visible time of cost savings for SMEs as yet – hopefully that is to come,” an optimistic West states.
Earlier this year in March, Australia’s Council of Small Business launched the first competition policy review since 1939, sparking a debate over the policy’s wide-ranging scope.
The Australian Industry Group stated that the policy needs to be narrowed down since it covered a ‘vast amount of ground’. Over the next 12 months, the review will work to identify gaps in the law, particularly around anti-competitive pricing, among other areas of reform that need to be better defined.
by My Varthagam
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