Debt payment behaviour of Singapore SMEs worsened in 2017

The construction sector fared the worst among the industries last year, with the proportion of severely delinquent debts at 24 per cent.
The construction sector fared the worst among the industries last year, with the proportion of severely delinquent debts at 24 per cent.PHOTO: STEPHANIE YEOW

SINGAPORE - Debt payment behaviour of Singapore's small and medium-sized enterprises (SMEs) took a turn for the worse last year, with the proportion of severely delinquent debts at 14 per cent in 2017, up from 12 per cent in 2016.

Severely delinquent debts are those which remain unpaid more than 90 days after falling due.

However, this is still an improvement from 2014, when almost a quarter of firms had such late debts.

The construction sector fared the worst among the industries last year, with the proportion of severely delinquent debts at 24 per cent. This was up from 18 per cent in 2016.

The information and communications sector came in a close second at 23 per cent, but it was an improvement from 27 per cent in 2016.

Other industries which saw severely delinquent debts climb include commerce-retail at 5 per cent, up from 3 per cent previously; and transport storage at 9 per cent, up from 8 per cent a year ago.

But despite the slight uptick in 2017, Dev Dhiman, managing director, South-east Asia and emerging markets for Experian, pointed to a downward trend in severely delinquent debts since 2014.

Reasons for this include better trading conditions in the local and global economies, an improved economy, as well as better exports and tourist numbers, he said.

The US and the euro zone are both showing stronger-than-expected growth while Chinese growth remains strong.

"During the last three years, SMEs have adjusted to the restrictions on foreign manpower and the need to invest in technology and innovation. As these adjustments have been made, the cash flow position of most SMEs has improved, freeing up funds for the prompt settlement of debts," he said.