SMEAME_SustainingTradeGrowth

Success Series

Driven by trade SME Advisor recently hosted its first Success Series event in Sharjah, in conjunction with Hamriyah Free Zone Authority. We bring you complete coverage of the event.

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Joumana Saad CPI Business

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early 100 SME owners and managers gathered to network and listen to expert presentations at the event, which was entitled Sustaining Trade Growth. The SME Success Series event in Sharjah was the second of its kind this year and part of a larger road show bringing expert knowledge, advice and best practices to free zone companies throughout the UAE. The event was presented by Abu Dhabi Commercial Bank (ADCB), with du serving as the Exclusive Telecom Partner.

Other partners included Al Tamimi & Co., AIG, Dubai Knowledge Village, Zawya and Dubai Internet City.

The event began with a welcome speech by Nilanjan Ray, Senior Vice President and Head, Business Banking Division, ADCB. Nilanjan discussed the bank’s role in supporting

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all Success Series events, along with other SME-related initiatives. He explained how such seminars align with the bank’s goal of “helping to build an SME ecosystem where SMEs can derive knowledge and expertise and learn from international and national best practices.”

He discussed a number of existing trends in global trade as well as the main obstacles facing SMEs in this space. “It has become a more challenging environment for banks and SMEs to fuel international trade growth and there exist several barriers to trade in the region,” said Nilanjan. He added: “We are seeing many of our clients taking advantage of such trends, and you can see how trade activity is rising with the announcement of new projects in Dubai and KIZAD in Abu Dhabi. We hope to see Sharjah benefit from this expansion as well.”

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Nilanjan also praised HFZA’s competitive offering for SMEs and explained how the bank is aiming to expand its customer base in the Emirate. ADCB currently banks to about 200 companies in HFZA alone, with trade being a major area of focus in the financial landscape today in the regional market.

Building that banking relationship

Dhiraj Kunwar, Regional Head, SME Business, ADCB (Dubai, Sharjah and Northern Emirates) then gave a presentation on SME lending, where he outlined the most important elements banks look for when reviewing applications from SMEs. Among these, were the presence of a strong management team, nature of the business (target industry) and the related experience of the SME owner.

“SMEs should involve their management teams to guard against such areas of risk. Auditing should not be something that happens once a year for administrative purposes.

It’s a mechanism and process that helps SME owners continuously check on the health of their organisations by providing transparency,” advised Dhiraj.

When it comes to the screening process for loans, Dhiraj outlined a number of factors that banks take into consideration when reviewing SME applications.

For one, they will ask whether the company operates in a target industry. Next, they will take into account the age of the business and its profit potential. Finally, they will evaluate the risk position and see if any security would be offered. Dhiraj also emphasised the fact that funding is only the beginning for its customers, as advice has become a service that has become increasingly common among banks in the region. ADCB currently has a number of commercial centres operating across the UAE with trade officers available to offer advice to its SME customers.

The event attracted around 100 Sharjah-based SME owners and managers, who came to network and hear presentations that covered key trade issues in the UAE.

After the presentations concluded, attendees were invited to partake in one-on-one consultations with the guest speakers and industry experts.

requirements for SMEs. Dhiraj admitted that for the most part, financial institutions have responded by capping their lending by industries, and in particularly real estate, but have not developed a practical framework that can better integrate SMEs into the lending equation. Nilanjan also reiterated the bank’s important partnerships with Dubai SME 100 and Khalifa Fund, which have allowed the bank to fund and advise more high-potential SMEs and startups.

Insuring your business’ future

During the welcome speech, Nilanjan Ray, Senior Vice President and Head Business Banking Division, ADCB discussing shifting trends in the regional trade landscape, as well as the importance of such seminars in helping to build an stronger SME ecosystem.

Questions addressed from the audience centred on the margins involved when a Letter of Credit (LC) is being issued. Dhiraj made it clear that banks have their own definition of what companies are considered to be SMEs, or fall under the startup category. Another question focused on the lack of education on the part of banks about lending

Clint Draper, Head of Small Business at Zurich Middle East, started off his speech by explaining the underlying reasons why an SME would need insurance, as well as the various types of protection available to them. He also highlighted the “low demand and negative mindset” surrounding insurance in the UAE and how more needs to be done on the part of insurance companies to better educate the public and businesses about its key function.

“Underinsurance is one of the most common issues for businesses and SMEs who do get insurance; they do not end up getting coverage adequate enough to really protect them for the long-term,” says Clint.

Clint added that just like a relationship manager at a bank, an insurance broker needs to offer an SME customer expert advice as to what type of coverage they may need and to what degree they need to be covered.

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Success Series

Questions addressed by attendees touched on the lack of education on SME lending requirements as well as the necessary steps in registering company trademarks.

“When choosing a broker, you will need to make sure that person will take the time to understand your business. Price is important, but it shouldn’t be the only deciding factor; integrity is far more important,” says Clint. “You need to ask them the important pressing questions, such as what would you do for me in case something drastic happens? If I need to relocate my business with they provide help?” he added.

Protecting your intellectual property rights

The last presentation of the day was given by Waldo Steyn, Senior Associate, Al Tamimi & Co., who outlined the various legal issues related to intellectual property and business. He began by defining what does and does not constitute intellectual property and warning of potential risks that a business could be exposed to if they fail to register their trademarks. He noted that “in the UAE,

L-R: VR Shahjehan, General Manager, Mumtaj International; GB Basandani, Managing Director, 3M Star Computers LLC; Sanjay Gandhi, Director Consultancy, Quest Business Solutions; K. Ramu Iyer, B.Com, FCA, ICWA Managing Partner, Al Kttbi & Associates Chartered Accountants

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unregistered trademarks are constantly violated and you are in weak position to protect if nothing is registered.” He also pointed the high level of misunderstanding surrounding copyrights in the region.

Often arising among businesses is the issue of communal copyright, where more than one employee or worker is associated with a copyrighted item. In this scenario, Waldo stresses the need for businesses to provide as much clarity as possible in legal documents that outline the rights to copyrighted item beforehand.

“We advise clients to make sure their employment contracts and legal documents include all information relevant to intellectual property. Agreements must include policies to protect businesses against any potential risks in the future,” said Waldo. He also added that in a fast-paced business environment, SMEs should expect to circulate such legal documents periodically in their organisation, as employees enter and leave the company.

Following the main presentations, SME owners and representatives who attended event were able to partake in one-on-one consultations with industry experts and guest speakers. Shaikh Mehmood, Sales Executive of Apex Alliance International, described the networking and legal presentation as the “most beneficial aspects” of the event.

Regarding next event, Shaikh explained how he would like “to see some more participants and presentations associated to increase the business globally; such as the inclusion of more high-profile companies and government officials.”

A majority of the SME owners and managers who attended the event represented trading companies part of Hamriyah Free Zone. Since its establishment in 1995, HFZA has been tasked with providing competitive incentives and unique opportunities to establish a business in a tax-free environment, full company ownership, exemptions from all commercial levies and repatriation of capital and profits. The free zone manages an area of approximately 22 million square metres of prime industrial and commercial land and a 14 metre deep water port which includes room for expansion.

Sharjah is known to be a major industrial force in the UAE hosting 40% of the total number of industries in the country, the most common lines of trading being textiles, petrochemicals, leather and basic non-metal industries.

The Emirate also contains a number of logistical hubs, including Sharjah International Airport, Port Khalid, Port Khorfakkan and Hamriyah Free Zone Port.

In a recent interview with Trade & Export ME, Rashid Al Leem summed up the key attributes that makes Hamriyah Free Zone truly unique: “The important step that we took was the integration among the industries.

We found a way to link the SMEs, the micro and the big companies together. This means we have provided offices for these startups, built distribution centre and warehouse.”

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L - R: Jeff Jover, Finance Executive, GTT Foods; and Michell Lapuz, Finance Executive, GTT Trading

He added: “We also started clustering the companies and I came up with a concept called zoning the zone, so companies from the same industry were put together because they understand each other’s language. And this is unique to HFZA and has brought a lot of companies here as it saves communication and transport costs.”

The SME Success Series road show will kick off 2013 with an event in Dubai. For more information on the SME Success series, or to see coverage of past events, please visit: http://www.smeadvisor.com/successseries/

Waldo Steyn, Senior Associate, Al Tamimi & Co., outlined various types of intellectual property and the best ways for businesses to protect their rights.

L - R: Nadeem A. Khan, General Manager, Windsor FZE; and Malin Myrin, Marketing Officer, ADCB

Panel of speakers Nilanjan Ray Senior Vice President and Head, Business Banking Division, ADCB

We are seeing many of our clients taking advantage of such trends, and you can see how trade acitivity is rising with the announcement of new projects in Dubai and KIZAD in Abu Dhabi. We hope to see Sharjah benefit from this expansion as well.”

Clint Draper

Head of Small Business, Zurich Middle East

“Underinsurance is one of the most common issues for businesses and SMEs who do get insurance; they do not end up getting coverage adequate enough to really protect them for the long-term.”

Dhiraj Kunwar

Waldo Steyn

Regional Head, SME Business, ADCB (Dubai & Sharjah)

Senior Associate, Al Tamimi & Co.

“SMEs should involve their management teams to guard against such areas of risk. Auditing should not be something that happens once a year for administrative purposes. It’s a mechanism and process that helps SME owners continuously check on the health of their organisations by providing transparency.”

“We advise clients to make sure their employment contracts and legal documents include all information relevant to intellectual property. Agreements must include policies to protect businesses against any potential risks in the future.”

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