Chart of the Day: Singapore businesses fail to weather cash-flow drought

Amid falling demand for products and services.

Singapore’s economy is a moderately healthy one, and has a heavily import and export led focus. According to a report by Atradius, economic growth is expected to be about 5% this year and next, back to the levels seen pre financial crisis.

Against this backdrop, the main challenge to profitability cited by Atradius’ survey respondents in Singapore was “maintaining adequate cash flow”, at 31.7%, although this was the second lowest response rate of all the Asia Pacific countries surveyed.

“Collection of outstanding invoices” was the second biggest challenge for Singapore’s respondents, though at 26% this was the highest response rate of the countries surveyed, suggesting that it is more of a problem for Singapore than other countries. It is this year – Singapore possible that this is attributable to Singapore’s close trading relationship with China, which has notoriously hostile collections regulations and legislation preventing foreign businesses from pursuing Chinese debts. 

Here's more from Atradius:

“Falling demand for products and services” was third most frequently cited challenge, noted by 24.5% of respondents in Singapore compared to 32.3%for the Asia Pacific region overall. Although, “bank lending restrictions”, which was the fourth most frequently noted challenge, cited by 17.8% of Singaporean respondents, still represented an above average risk compared to the regional average of 14%. In July 2014, Moody’s gave Singapore’s banks a negative outlook for the coming 12-18 months. 

Banks had grown both domestic and cross border loans in recent years and along with rising interest rates, this outlook could cause problems. This seems likely to be the cause of the strained lending environment.