Why It Matters

New year, new hope for SMEs

A recent survey has found that small and medium-sized enterprises (SMEs) in Singapore are increasingly optimistic about future business prospects, as more of them anticipate improvements in the wider economy to filter through to them in the coming year.

The Singapore Business Federation-DP Information Group (DP Info) SME Index also showed that this optimism is widespread, with business sentiment for the next six months rising across all six industries polled.

More than 3,000 SMEs were surveyed in October and last month.

The survey results are significant because they reflect a turning of the tide, at least where business confidence is concerned.

The same survey had shown a deterioration in business sentiment in the past three years, and this brighter outlook for next year means that business leaders are finally starting to see economic growth filtering through to their top and bottom lines.

Even the construction and engineering industry, which had a pessimistic outlook in the same survey conducted earlier this year, indicated that it now expects growth in the new year.

The survey found, too, that corporate leaders are optimistic about various aspects of their business - turnover, profit, access to finance, business expansion and capacity utilisation.

Capital investment was the only component in the index that faltered, but that could be because SMEs are holding back on new capital expenditure as they await next year's government Budget.

Still, while the outlook for next year is positive, it would not take much for the confidence of SMEs to be dented, warned Mr Dev Dhiman, managing director for South-east Asia and emerging markets at Experian, the parent company of DP Info.

"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.

A version of this article appeared in the print edition of The Straits Times on December 30, 2017, with the headline 'New year, new hope for SMEs'. Print Edition | Subscribe