SMEs' confidence dips despite improved outlook for global economy

SMEs' confidence dips despite improved outlook for global economy

    By Wong Siew Ying
    POSTED: 22 Apr 2013 9:47 PM
  
Small-and-medium sized enterprises (SMEs) have wound back their expectations for sales and profits in the second and third quarters of 2013, according to the Singapore Business Federation and DP Information Group's SME Index.

SINGAPORE: Confidence among Singapore's business owners has dimmed, despite an improved outlook for the global economy.

Small-and-medium sized enterprises (SMEs) have wound back their expectations for sales and profits in the second and third quarters of 2013, according to the Singapore Business Federation (SBF) and DP Information Group's SME Index.

The score for turnover expectations fell from 5.44 to 5.36, while profit expectations fell from 5.33 to 5.12 compared to the previous six months.

SMEs also expect it to be more difficult to borrow money during the next two quarters, with the access to funding index score dropping to 5.02 from 5.06 previously.

This, in spite of a three-point increase in the overall outlook for SMEs to 55 points, amid signs of recovery in the US, growth in China and the Eurozone averting a financial crisis.

In a joint statement, SBF and DP Information said improvements in the global economy are not expected to translate into improved sales and profits.

"Inflation, high business costs and tightened foreign workers policy continue to be a drag on businesses and the economy," said Ho Meng Kit, CEO of Singapore Business Federation.

"Businesses are mindful that they need to urgently raise productivity through capital investment, as well as look to alternative markets to make up for the shortfall from traditional trading partners," he said.

However, despite the downbeat expectations for growth, SMEs are still investing in technology and equipment to raise efficiency.

"This increased capital expenditure comes at a time when SMEs are less positive about their profit outlook," said Chen Yew Nah, managing director of DP Information Group.

"It means Singapore SMEs understand they need to make productivity improvements now. It is investment they can no longer put off," Mr Chen said.

The SME Index is based on 3,000 interviews with SME owners and managers, as well as companies' actual financial performance.

- CNA/ck

- wong chee tat :)