SINGAPORE - More small and medium-sized enterprises (SMEs) in Singapore are expecting a decline in turnover this year, citing the challenging business environment as the main culprit for the dampened outlook, partly weighed down by the US-China trade war.
The 2018 SME Development Survey by DP Info found that 15 per cent of SMEs projected negative turnover growth for 2018, up from 11 per cent in 2017, and 12 per cent in 2016. Only two in five expect turnover growth this year.
The survey, now in its 16th edition, had 2,557 SMEs respondents and was conducted between June and August this year.
According to the report, 19 per cent of SMEs said that they have been affected by the ongoing trade conflict between the US and China.
Out of which 54 per cent said that it has affected the competitiveness of exports, while 40 per cent said that it reduced overseas sales. Some 28 per cent of SMEs said that it has affected or delayed their internationalisation plans.
Despite the trade headwinds, SMEs are still looking to expand abroad. Asia continues to be a focal point in SMEs' search for new markets, with greater interest seen in Asean, especially in the Philippines and Thailand this year, said the report.
High manpower costs continue to be the top concern for 36 per cent of SMEs, followed by increased domestic competition at 32 per cent. Findings also reflected a rise in labour-related issues, with more firms citing difficulty in hiring staff (28 per cent) and retaining staff (11 per cent) compared to last year.
Cash flow also remain a pertinent concern of SMEs. While one in three firms faced external finance-related issues, which was similar to last year, there was an increase in those facing delayed payments from customers.
Delayed payments from customers - which was the top finance-related issue faced by SMEs - went up from 81 per cent in 2017 to 84 per cent this year.
As a result, this had an impact on how SMEs manage their finances. Some 44 per cent of firms said that they face internal difficulties managing their finances.
In 2018, half of SMEs said that their top concern on this front was the difficulty in managing cash flow, liquidity and credit risk - up significantly from 38 per cent in 2017.
James Gothard, general manager, Credit Services & Strategy SEA of Experian (parent firm of DP Info) noted that SMEs are "facing tough and challenging times on multiple fronts", and that more can be done to increase opportunities for Singapore, such as to resolve their finance-related concerns.
But he said that he is heartened to see that firms are "proactively driving productivity improvements and business transformation", and heeding the calls of the government and industry leaders to take advantage of Singapore's digital economy push.