SMEs in Singapore are projecting a slump in turnover in 2018 according to the SME Development Survey by DP Info owing to challenges of the business environment that have emerged as a result of the US-China trade war.
The 16th edition of the survey, which had 2,557 participants, reported that 15 per cent of SMEs predicted negative turnover growth for 2018, more than 11 per cent in 2017, and 12 per cent in 2016. Only 40 per cent of the small and medium sized businesses are expecting turnover growth this year.
The conflict between US and China seems to have affected 19 per cent of SMEs by its impact on export competitiveness and a dip in overseas sales. Moreover, globalization plans also seem to have taken a hit.
The ASEAN markets are still lucrative and SMEs are looking at the economies in the Philippines and Thailand to grow their bases in. While mounting manpower costs still trouble more than one-third of the SME sample surveyed, they do need to manage the people puzzle to tackle the rise in domestic competition. Firms also reported difficulties in recruiting and retaining their staff due to an increase in labour issues.
James Gothard, General Manager, Credit Services & Strategy SEA of Experian noted that while SMEs are "facing tough and challenging times on multiple fronts", it is heartening to see that they are" proactively driving productivity improvements and business transformation.”
A throttled cash flow due to delayed payments from customers (up from 81 per cent in 2017 to 84 per cent in 2018) has had an effect in the SME outlook towards managing finances. Will the focus now shift to how the government and industry leaders drive the digital economy in Singapore? Creating a business environment conducive to SMEs, while subject to multiple external factors, would be an easier process with sustained efforts from within. This would also lead to an environment where employees feel secure in working with these firms despite external contingencies.