SMEs downbeat about next 6 months

Office workers in Raffles Place.
Office workers in Raffles Place. PHOTO: ST FILE

Businesses less optimistic about all aspects of operations; slower growth predicted: Poll

Small and medium-sized enterprises (SMEs) are expecting tough times in the first half of the new year, according to a survey out yesterday.

They predict slower growth amid weak market sentiment, an uneven global economy and domestic pressures.

The downbeat mood generated a reading of 51.1 on a quarterly index compiled by the Singapore Business Federation (SBF) and DP Information Group (DP Info).

This is down from a reading of 51.9 recorded in the previous poll.

A score above 50 indicates that SMEs are positive about the next six months. However, the readings have been sliding for five consecutive quarters.

About 3,600 SME owners and managers across six industries were polled for the index, which measured sentiment about the January to June period.

All major components that make up the index recorded a lower reading compared with the previous quarter - the first time this has occurred since the index was introduced in 2010.

This means SMEs are less optimistic about all aspects of their operations, from hiring to business expansion and capital investment.

Sentiment weakened or remained flat across all six industries polled: commerce and trading; transport and storage; construction and engineering; manufacturing; retail and food and beverage; and business services.

The sluggish global economy is weighing on the outlook of Singapore SMEs, said Mr Lincoln Teo, chief operating officer of DP Info.

"With the island's industrial production falling and the consumer price index at its lowest in recent memory, demand is weak within the business and consumer space."

SBF chief executive Ho Meng Kit said five straight quarters of falling sentiment is "a worrying trend" and SMEs need to jolt themselves out of a "stagnation mindset".

He said: "With the recent emphasis on value creation, it is no longer possible for businesses to continue adopting the same business models that brought us growth in the past."

Mr Johnny Mok, assistant general manager of electronic component assembly firm Add-Plus, said market sentiment is poor and business is expected to slide further in 2016.

"There's been a big difference this year compared with last year. We're usually quite busy in November and December but this year customers have had fewer orders."

Mr Mok attributed this to the slowdown in China, as well as tepid growth in Europe and uncertainties over the recovery in the US.

"It'll be worse next year, everyone can feel it. Not just in manufacturing but also sectors like oil and gas, and marine and offshore."

A version of this article appeared in the print edition of The Straits Times on December 30, 2015, with the headline 'SMEs downbeat about next 6 months'. Print Edition | Subscribe