Smaller firms in Singapore reported lower revenues and profits on average last year due to the tighter labour market and rising business costs, according to a survey by the Singapore Business Federation (SBF).
Higher wage, rental and transport expenses, coupled with the subdued global economy last year, also resulted in cash flow problems for many local small and medium-sized enterprises (SMEs), the SBF said.
As such, its SME committee hopes the Government can take more proactive measures in this year's Budget to help these SMEs cope with higher costs and get easier access to working capital, it said at a press briefing on Tuesday.
The measures it is proposing include supporting health-care and medical costs for SME employees, providing more affordable industrial space for firms, and enhancing some existing schemes meant to help firms become more productive.
"This is a difficult transition period for SMEs as many grapple for survival with persistent rising business costs and tight manpower and resource constraints," said Mr Lawrence Leow, chairman of the SME Committee.
At the same time, SMEs now need to position themselves for growth against the backdrop of a recovering global economy and expanding regional development, he added.
"There is an urgency to prepare them so that they do not miss out on these opportunities while regional competitors are also fast catching up," Mr Leow said.
The SME Committee also noted that the measures introduced in last year's Budget to help companies mitigate costs worked better for larger companies - including multinationals and government- or Temasek-linked enterprises - rather than smaller ones.
A third of larger companies said Budget 2013 helped lower business costs to some extent, compared to only a quarter of smaller firms. This indicates a need for more differentiated policies specifically targeting SMEs in this year's Budget measures, the committee said.
SBF's survey polled 1,014 companies from several sectors of the Singapore economy. About eight in 10 respondents were SMEs, with multinationals and large local companies making up the rest.