SINGAPORE: Over 60% of small and medium enterprises (SMEs) in Singapore say their key business priorities in 2023 are to explore new markets and to expand overseas, a survey has found.
This is compared with 75% who ranked these as their lowest priority in 2022.
Business owners continued to place high priority on ensuring consistent cash flow and managing cost.
On the other hand, they were most concerned about rising interest rates, labour costs and availability, as well as inflation.
These were some results of DBS’ annual SME Pulse Check survey, which covered 116 SMEs across a broad spectrum of industries.
With the persistent challenging business environment, 62% of respondents said ensuring consistent cash flow and managing cost remained the SMEs’ top business priority.
Exploring additional new markets for their businesses (33%) and first-time overseas expansion (31%) were ranked next, driven by the reopening of borders along with support from government schemes such as the enhanced Enterprise Financing Scheme announced in Budget 2023, the survey noted.
This was followed by hiring, retaining and upskilling manpower (29%), sustainability and greening their businesses (25%) and digital transformation and innovating new business models (21%).
To achieve these goals, SMEs are looking for strong banking partners, the survey said.
The majority of SMEs surveyed (58%) ranked a “trusted and reliable banking partner with a long track record of supporting businesses” as most important.
Only 1% of SMEs preferred a “purely digital banking partner”.
Besides rising interest rates and labour issues, other concerns that the SMEs highlighted were the goods and services tax (GST) hike and supply chain disruptions.
On Jan 1, GST was raised from 7% to 8% and will be increased by another percentage point to 9% in 2024.
On moving towards sustainability, firms say the return on doing so, as well as “cost of deployment” and “lack of government incentives/funding” are some barriers that they face.
Moreover, 16% of SMEs said they did not know how to begin building a green business.
Koh Kar Siong, group head of SME Banking in DBS, cautioned that continued headwinds from rising global inflation and high interest rates would add to SMEs’ operating expenses.
Therefore, managing cash flow and liquidity needs, along with effective credit risk management, would be critical to their success, he said. “SMEs are the backbone of our economy and have weathered different business and economic challenges over the last few years. They are resilient and optimistic as our survey has shown,” Koh said. — The Straits Times/ANN