49% of Singapore SMEs are Optimistic About Growth Prospects According to a DBS Survey

varsha sarkar

May 31, 2023

3:41 pm

49% of Singapore SMEs are Optimistic About Growth Prospects According to a DBS Survey

A challenging road lies ahead for Singapore’s enterprises in 2023 due to escalating global headwinds. Supply chain interruptions, rising interest rates, high inflation, and a global economic recession combine to create a perfect storm of growth hurdles for SMEs.

Over 60% of local SMEs listed first-time overseas expansion and investigating further new markets as key business goals, and 49% of them are optimistic about their development prospects for 2023. As compared to 75% who said they were the least important last year. The business’s owners continued to give top attention to controlling costs and guaranteeing steady cash flow. Their main worries were inflation, increasing global interest rates, and the cost and availability of labor. The results presented are from DBS’ yearly SME Pulse Check survey.

Due to the ongoingly difficult economic environment, “Ensuring consistent cash flow and controlling Costs” (62%) continued to be the top concern for SMEs. The easing of borders and aid from government programs like the improved Enterprise Financing Scheme, which was announced at Budget 2023, were cited as motivating factors for the second-and third-ranked actions, respectively, of expanding their firms into new markets (33%) and going abroad for the first time (31%). The next three priorities were “hiring, retention, and upgrading manpower” (29%), “sustainability and greening their businesses” (25%), and “digital transition and innovating new business models” (21%).

SMEs are searching for reliable financial partners to help them accomplish their objectives. The majority of SMEs (58%) identified having a trustworthy banking partner with experience assisting firms as being very critical. Only 1% of SMEs wanted a partner in “pure digital banking.” The accessibility and infrastructure of the banking partner were rated as being the most crucial (42%) for SMEs’ development into emerging markets.

Rising worldwide interest rates (50%) and poor labor supply and costs (43%) were the top worries for SMEs, followed by inflation (36%), a GST increase (26%), and “supply chain disruptions” (25%).

Globally, rising inflation has caused interest rates to reach all-time highs as central banks rapidly raised rates. The US Federal Reserve increased its standard interest rate in December 2022 to levels not seen since before the global financial meltdown. The outcome has been a decline in trade and worries about repayment amid record-high levels of global debt ratios, which has increased operational expenses for enterprises.

Nevertheless, companies might anticipate some relief in 2023. In his keynote address on the “Global and Singapore Economic Outlook for 2023,” Irvin said that “global inflation has reached its peak and is decreasing, and consumer prices have reached their highest point as well.”

The primary obstacle to creating a sustainable company, according to the vast majority of SMEs, is the return on sustainability (35%) followed by the cost of deployment (27%), and a lack of government support (19%), respectively. Just a fraction of the respondents (4% of the SMEs) claimed they did not want to create a sustainable/green company, while 16% said they were unsure about how to begin.

“SMEs are the fundamental foundation of Singapore’s economy and have weathered various business and economic difficulties throughout the last few years,” said Koh Kar Siong, Group Head of SME Banking at DBS.

They are strong and energetic, as evidenced by our poll. I am confident that our connectivity throughout the area with our rich ecosystem of partners, along with the appropriate government-sponsored schemes, will give them the support they need to take their business to the next level of development as they discover emerging markets and expand internationally with borders reopening.

He issued a warning that SMEs would continue to face challenges from growing worldwide inflation and high-interest rates, which will increase their operating costs. As a result, controlling cash flow and liquidity requirements as well as credit risk management will be essential to their success.

Since the pandemic began in early 2020, DBS has constantly tapped into developing technology that can help SMEs, particularly micro and small businesses, in managing their credit risk. “DBS has created algorithmic models that use advanced data analytics and artificial intelligence to warn us when our clients may be in difficulty. Over 80% of at-risk borrowers avoided risk thanks to these tools, according to Koh.

To gain a greater insight into the requirements and worries of the SME community, DBS conducted its standard SME Pulse Check Survey with 116 SMEs from a variety of industries.

varsha sarkar

May 31, 2023

3:41 pm

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