SME hopes pick up, but environment remains challenging

SME hopes pick up, but environment remains challenging

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SINGAPORE: Small and medium enterprises (SME) in Singapore have turned slightly optimistic about their prospects for the next six months, with firms in all industry sectors showing improvement in their outlooks, a survey by the Singapore Business Federation (SBF) and DP Information Group has shown.

The latest SBF-DP SME Index, published on Thursday (March 30), showed a reading of 50.4, up 0.6 point from the previous survey’s 49.8, which was the first time the quarterly survey showed negative sentiment since it was started seven years ago. The index seeks to measure the six-monthly outlook among SMEs, with a reading above 50 indicating optimism and one below 50 reflecting pessimism.

SBF chief executive Ho Meng Kit said: “This is positive news aligned with the better outlook of the global economy and a more upbeat assessment of the Singapore economy for 2017. However, it is too early to say that the worse is behind us for the SME sector. While there are some indications that SMEs are adapting to the changing economic climate and technological advances, we have not detected a firm trend of improvement.”

The survey, which polled more than 3,600 SMEs in January and February, recorded improvements in all sectors — commerce/trading, construction/engineering, manufacturing, retail/food and beverage, business services, as well as transport/storage. In the previous survey, declines were recorded in five out of six sectors, with business services the only exception.

Despite the uplift in sentiment, Mr Sonny Tan, General Manager of DP Info, warned that the business environment faced by SMEs remains challenging.

“SMEs need to adjust to slower sales growth while managing ongoing cost pressures such as high rents and wages. The good news is that SMEs are still prepared to make capital investments. This is welcome as it shows SMEs are confident enough to commit additional funds into the growth of their businesses,” he said.

“Improvements in accessing funding will also help SMEs looking to expand their businesses or invest in equipment to boost productivity or capacity,” he added.