More SMEs grapple with shrinking profit margins despite aggressive productivity drive

Sentiments dip as costs continue to rise.

A higher number of small and medium enterprises (SMEs) reported squeezed profit margins in the Singapore Chinese Chamber of Commerce & Industry’s (SCCCI) latest SME survey.

This is in spite of an increase in the adoption of productivity improvement measures.

Over half or 52% of SMEs reported a decline in profit margins in this year’s survey, compared to 46% last year. This indicates a decline in business sentiment, the survey said.

A staggering 83% of companies also said that they are facing rising business costs, relatively flat from 82% last year.

Business costs and manpower shortage remained the top challenges for SMEs, along with declining competitiveness due to stiff competition in both local and overseas markets.

SMEs also reported a sharp increase in compliance costs and levies, with 42% reporting a large increase in administrative fees.

In order to address rising business costs, the SCCCI urged the government to set up a Cost Review Committee to undertake a comprehensive review of major cost contributors such as rental, manpower, transport costs, and government fees and charges.