SINGAPORE - More small and medium-sized enterprises (SMEs) are choosing to grow their business overseas, and only 8 per cent are expanding their presence in the local market, according to a survey of SMEs here released Tuesday.

This is less than half the number who chose to grow here last year, according to the 2014 SME Development Survey, which polled 2,836 SMEs in seven sectors here.

Some 15 per cent of SMEs are expecting losses this year, up 2 per cent from last year. Liquidity has also fallen with average cash reserves falling by 24 per cent between 2012 and 2013, continuing a three-year downtrend.

"Prevalent domestic issues such as rising business cost and manpower challenges have eroded SMEs' confidence in the local market," said Mr Ho Meng Kit, chief executive of the Singapore Business Federation at a media conference on Tuesday.

The survey also revealed that more SMEs are doing business overseas, but the proportion of international revenue they generate is falling.

Changing market conditions have also polarised the credit-worthiness of SMEs, with nearly half of them (45 per cent) receiving a high-risk credit rating and less than a quarter classed as investment grade.

"This is the largest portion of SMEs in high risk seen over the past six years," said Ms Chen Yew Nah, managing director of DP Information Group, which conducted the survey.

"SMEs with weak credit ratings can have a domino effect on the entire business ecosystem when they fail to pay vendors on time, which in turn leads to other companies experiencing weaker cashflow," cautioned Ms Chen. "This is a concern of which we have to be mindful."