Brighter year ahead for SMEs, stronger sales and profits expected for next 6 months

SINGAPORE – Singapore’s small-and-medium enterprises (SMEs) are expecting stronger sales and profits for January to June next year, as they anticipate better business conditions amid an improved economy, said a survey.

The latest Singapore Business Federation (SBF) - DP Information Group SME Index, a joint initiative by the SBF and DP, showed that sentiment has improved across all six industries, with each recording a score above 50 points, indicating an expectation of growth. The industries are: commerce/trading, construction/engineering, manufacturing, retail/food and beverage, business services, transport/storage.

Overall, the score was 51.2 points, a 1.2 per cent increase compared to the previous quarter and the highest since the last six months of last year, which was 51.9 points.

Among the industries, business services recorded the highest score of 52.1 points, SBF and DP said in the press release. They also added that it is a key supporting sector for other industries, and that when the level of economic activity rises across other sectors, demand for business services also tends to increase.

The construction and engineering sector, which contracted in the previous quarter, returned to optimism at 50.4 points. “The expectation of stronger pipeline of public sector projects and the launch of the Industry Transformation Map for the construction sector have added to the sector’s positive outlook,” said SBF and DP.

All industries saw improvements in turnover and profitability expectations, with the indexes rising 0.1 point to 5.15 points and 0.24 point to 5.1 points, respectively. 
Among the other indicators, SMEs also showed that they are looking for new opportunities to grow their business and generate more revenue, as well as a greater confidence to secure financing. 
Meanwhile, the capital investment index eased from the previous quarter, indicating that many SMEs may be “holding back new capital expenditure” as they “await next year’s Government budget,” SBF and DP noted.

Mr Dev Dhiman, managing director, South East Asia & Emerging Markets for Experian - which DP Information is a part of - said the outlook of SMEs has been lifted by better economic news both at home and abroad.

However, he cautioned that external risks could dent the confidence of the SMEs. “A conflict on the Korean peninsula or the Middle East, or moves to wind back free trade and introduce protectionist measures all have the potential to push SMEs back into pessimism,” he said.

SBF chief executive officer Ho Meng Kit added: “SMEs’ business sentiments have been deteriorating over the past three years, so this latest survey that SMEs across all sectors are feeling positive about their outlook for next year is welcome news. Our improved export performance and better performing service sectors have contributed to better sentiments of our smaller companies.”

Mr Ho urged SMEs to ride on the tailwind of “better times ahead” to “undertake serious effort to transform their companies.” He stressed that SMEs should embrace digitalisation, and strive to be more innovative and competitive.

The SBF will continue to advocate for the business community, work with other trade associations and chambers, as well as the Government to improve the state of local SMEs, he added.