SMEs to suffer sluggish growth despite stellar business outlook

The next 6 months will be grim.

As Singapore’s economy undergoes restructuring, the growth of Singapore’s SMEs will be weak despite having a positive outlook at 54.9.

According to the latest SBF-DP SME Index, a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info), the Overall Index for this quarter rose by a mere 0.5 points to 54.9. A score above 50 indicates that SMEs have a positive outlook for their business prospects for the next six months. However, while positive in their overall outlook, the index indicates that SMEs are slightly dampened in their momentum for growth.

Mr Ho Meng Kit, CEO of Singapore Business Federation, comments that SMEs’ sentiments have stayed muted over the past two years. He says that it is not negative but it is not in great positive territory either.

Here’s more from DP Info:

Certainly this dampened sentiment is not reflective of the global economic situation with the recovery of the G3 markets and good expectations for growth in Asia. Clearly our SMEs are affected by the domestic constraints in Singapore. Meanwhile, the policy measures introduced by the Government for economic restructuring have not borne fruit yet but there are encouraging signs that they will, with SMEs tapping on incentives and investing in capital. SMEs need to move away from reactive correction to a more transformational approach to achieve robust and sustained growth.

“We urge Singapore SMEs to come to terms with their restructuring challenges and focus on rediscovering their drive for growth and expansion.” Mr Ho said.

He also called upon Government to do more to help SMEs, in particular smaller SMEs, take on more or larger projects. “It is a positive sign that Budget 2014 saw commitment to nurturing tech start-ups in the IT sector through government procurement. Perhaps similar initiatives could be done to benefit more sectors “, Mr Ho added.