Friday, 13 November 2015

Most SMEs in Singapore don't expect growth in revenue

SME Development Survey 2015
Survey's bright spot is that firms are turning to automation and IT to raise productivity
By Chia Yan Min, Economics Correspondent, The Straits Times, 12 Nov 2015

The majority of small and medium-sized enterprises in Singapore expect flatlining or falling revenue this year amid a lacklustre global economy, according to a new survey.

However, there is still scope for optimism. The survey by DP Information Group also showed companies are increasingly using automation and information technology to raise productivity.

The annual SME Development Survey released yesterday found 47 per cent of respondents do not expect turnover growth this year, up from 40 per cent last year.

Six per cent of those polled in this year's survey expect to see sales decline, similar to the 7 per cent in last year's poll.

The survey, into its 13th year, is sent out to about 10,000 firms, with an average response rate of roughly 30 per cent. This year, a record 2,847 SMEs took part.

The findings are "not surprising" and show that while the position of SMEs is not improving significantly, it is also not deteriorating sharply, Singapore Business Federation (SBF) chief executive Ho Meng Kit told a media briefing yesterday.

"SMEs appear to be still treading water... The journey of economic restructuring (for many SMEs) is going to take a much longer time than anticipated."

He also noted a decline in the proportion of less established SMEs responding to the survey.

Only 10 per cent this year were less than 10 years old, compared with 37 per cent in 2012.

The three- to 10-year period is a critical one for SMEs, Mr Ho said. While it might merely indicate fewer such SMEs responded, it could also be a sign that firms are not surviving past this growth stage amid the challenging growth environment, he added.

Still, it is not all doom and gloom. DP Information's chief operating officer Lincoln Teo noted that 68 per cent of SMEs in the latest survey invested in technology and innovation, up from 64 per cent last year.

Firms have also moved beyond relooking their business models - a top strategy to raise productivity in last year's survey - and are now implementing changes, such as improving customer service and growing their market presence.

Ms Leung Wai Ling, assistant chief executive at enterprise development agency SPRING Singapore, noted other positive signs. Among the two-thirds of firms hit by the tight labour market, 74 per cent said they have plans to raise salaries, improve productivity to remove low-value jobs, and enhance their human resource capabilities.

As part of its efforts to help SMEs grow, Mr Ho said SBF aims to help smaller firms get better access to government procurement contracts. "This will help them establish credibility, build a track record and create a brand name."

More SMEs looking overseas
By Chia Yan Min, The Straits Times, 12 Nov 2015

The annual SME Development Survey polled companies here about their business outlook, key strategies and overseas expansion plans. Here are some key findings from this year's survey of 2,847 small and medium-sized enterprises (SMEs), which were released yesterday.


More than half of the SMEs here expect flatlining or falling revenue this year amid a lacklustre global economy.

The survey showed 47 per cent of the respondents do not expect any turnover growth this year, up from 40 per cent last year. Six per cent of those polled this year expect to see sales decline, similar to 7 per cent in the 2014 poll.


Manpower remains the main cost challenge, with 75 per cent of the respondents citing it as their top concern. This is followed by materials and rental costs. The share of those affected by rental costs fell from 50 per cent in last year's survey to 36 per cent, as the slowing economy put a cap on demand for retail and commercial space.


The share of respondents with overseas revenue has grown from 46 per cent in 2013 and 50 per cent in 2014, to 54 per cent this year. Myanmar has attracted the most interest, with a quarter of the respondents saying they plan to venture there. This is followed closely by Indonesia, which 23 per cent of respondents are keen on.


About 71 per cent of the respondents said they have embarked on a productivity drive this year, from 87 per cent in last year's survey.

Among these companies, 47 per cent have introduced automation, while 35 per cent have fine-tuned business processes. Another 33 per cent said they improved productivity by optimising the use of manpower.

Of the remaining 29 per cent not looking to raise productivity, 91 per cent said they do not see the need to do so.

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