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SBF’s Response to the SME Development Survey 2016

Attributed to Mr Ho Meng Kit, CEO of SBF

2 November 2015 [Singapore]
 –The SME Development Survey 2016 marks the fifth year that we have been partnering DP Information Group to gather important insights on our SME sector. The results of this survey are especially significant to us, as the majority of SBF’s 22,500 members are SMEs. As most of the survey respondents are our members, this set of results provides a good overview of our SME members’ sentiments.

I will now make a few observations on this year’s survey findings:

  • In general, the survey results are not surprising as our SMEs are currently grappling with the impact of a prolonged economic downturn, with SMEs in some sectors are probably bracing themselves for a possible recession. There are no alarming findings to indicate a nosedive in SMEs’ performance, but neither are there results showing marked improvements. This latest survey does not indicate that the SME sector is in a crisis. There are no sharp deterioration or disruptions.  We are well aware of the issues and challenges faced by the SMEs as they deal with the on-going economic restructuring and the uncertain global environment.  This survey shows how our small businesses are gradually evolving to deal with them.

  • One area of concern is in the area of financing. 22% of SMEs report facing financing-related challenges, an 8% increase from last year. In particular, the cost of financing has risen and credit available to SMEs has been tightened. While this is a foreseeable trend as more SMEs are seeking external financing to supplement their working capital during this challenging period, it is reassuring to see that the success rate for bank financing applications remain high at 98%. We will be monitoring the situation closely to assess if current government-backed loans for SMEs are sufficient to support the SME sector, or whether more help is needed.
  • Manpower concerns continue to plague SMEs, with 82% of them expressing difficulty in attracting young talent. However, we see a majority of SMEs adapting to the manpower crunch by recruiting professional, managers, executives (PMEs) above the age of 40, mainly as full-time employees. These PMEs are experienced individuals who are able to contribute meaningfully to the growth of SMEs. The Government has recently revised its schemes to help PMEs retrain and provided placement support for these PMEs at SMEs. More SMEs should tap on these enhanced schemes to support their hiring of mature PMEs.

  • The slow economic growth presents a deeper underlying set of challenges plaguing the SME sector - there is insufficient demand to ensure survival, let alone propel growth within the sector. Greater emphasis should be placed on helping our SMEs venture overseas where there are more opportunities. This year’s survey shows that 52% of SMEs have an overseas presence. Although it is quite a respectable number, there is room for growth. The government and business community should collaborate and work towards enabling more companies to internationalise by providing support in areas such as identifying suitable business partners, and providing greater access to detailed market information.

As the economic downturn is expected to be protracted, SBF will be undertaking these initiatives to help our SMEs survive and grow:

  1. Budget 2017 Recommendations – The SME Committee (SMEC) has been putting up a set of recommendations for Budget to the government since 2012, and will continue to do so in 2017. Results of the SME Development Survey 2016 help sharpen some of the observations and feedback from the business community.

  2. Helping SMEs negotiate fairer tenancy agreements – Rental continues to feature as a prominent business concern in this survey though the rental costs have abated somewhat with rising supply. To address this, the SMEC is currently engaging more landlords to explore the feasibility of adopting the Fair Tenancy Framework (FTF), either in part or in full, so that SME tenants are not subjected to overly onerous lease terms. We are planning more outreach workshops next year to share how businesses may leverage the FTF when negotiating tenancy agreements. Recognising the importance of data transparency, SMEC is also collaborating with government agencies to release rental data that is more comprehensive. More details will be shared, when these are finalised.

SME Development Survey 2016 Media Release

SME Development Survey 2016 Media Statement by SPRING


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