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Level 2: Singapore SMEs need to rediscover their appetite for growth or risk a period of decline,according to the latest SME Development Survey
Speech by Ms Chen Yew Nah
Managing Director,DP Information Group
At the “11th Annual SME Development Conference 2013”
Media Conference
November 21, 2013
1Ladies and Gentlemen,
2On behalf of DP Information Group, I would like to thank you for attending this morning’s media conference to announce the findings of the11th AnnualSME Development Survey.
3This Survey is the definitive quantitative research on the state of Singapore’s SME sector, capturing the priorities, challenges and opportunities SMEs are facing.
4This year we had a record 2,708 SMEs taking part, making it the most comprehensive survey we have ever undertaken.
5I would like to take you through the three most significant findings on SME Growth, Productivity and Manpower, followed by a presentation on the detailed data we captured during the survey.
SMEs NEED TO PURSUE GROWTH
6This year's survey comes at a time when the global economic indicators are the most consistently positive we have seen in years.
7So this year's survey has a slightly different focus. Rather than seeing how SMEs are responding to threats, we examined whether SMEs have regained their optimism and are pursuing growth.
8Unfortunately, the survey found that SMEs remain cautious and lack the confidence or the will to push for expansion.
9Some SMEs fear another international economic shock. They are sitting back waiting for a perfect time to expand when that perfect time may never eventuate.
10Others lack the ambition to grow as they do not want to take any further risks.
11A few years ago during the economic crisis it was an achievement to just survive from one year to the next. Many SMEs still have this mindset - that surviving is good enough. They are happy for each year to be the same as the last.
12There are several indicators showing SMEs have lost their appetite for growth. For example, this year's survey found:
Only seven per cent of SMEs expect to achieve double digit growth - the lowest level in the survey's 11 year history;
Nearly half of all SMEs (44 per cent) expect no discernible growth while another nine per cent expect their turnover to go backwards;
Fewer SMEs are doing business overseas (54 per cent in 2012 to 46 per cent in 2013);
Fewer SMEs have a business strategy (85 per cent in 2012 to 75 per cent in 2013) with one in four having no strategy at all ; and
Fewer SMEs are looking for debt or equity financing - a key indicator they are not looking to fund expansion.
13After a period of stagnant growth the balance sheets of SMEs have weakened and more SMEs are now considered to be high credit risks.
14SMEs need to understand that the riskiest thing they can do is to stand still. Their competitors in other countries are definitely not standing still and Singapore companies risk losing out on opportunities by being too timid.
15This survey should be seen as a 'call to arms' for all SME managers to come out of the bunker and rediscover their appetite for growth and expansion.
16It's time for Singapore SMEs to get their 'mojo' back and again pursue the expansion and growth that made them such a powerful force within the regional economy.
About Singapore Business Federation (SBF)
As the apex business chamber, the Singapore Business Federation (SBF) champions the interests of the business community in Singapore, in trade, investment and industrial relations. Nationally, SBF acts as the bridge between the government and businesses in Singapore to create a conducive business environment. Internationally, SBF represents the business community in bilateral, regional and multilateral fora for the purpose of trade expansion and business networking. For more information, please visit our website:
PRODUCTIVITY
17Another important thing this year's survey tells us is where SMEs are at in relation to productivity.
18The good news is that SME owners and managers have embraced the productivity agenda with 58 per cent planning to improve productivity during the next 12 months.
19However, when we asked the leadership of our SMEs what is holding them back from achieving further productivity gains, the biggest is the attitude and aptitude of the staff - 29 per cent lack the right mind-set while 22 per cent lack the skills.
20So SMEs need to get their staff on board by selling the benefits of productivity. Without the right mindset, all the tools and training in the world will only yield modest productivity gains.
21They must do more to convince their workforce that there are benefits in embracing productivity reforms and explain to their staff that only by being more productive can they expect increased wages, bonuses, as well as greater job security.
MANPOWER
22A third area I would like to highlight is that of manpower.
23We are all familiar with the Government's changes to its foreign labour policy. This year's survey examines the impact these changes have had on SMEs and how they have responded to them.
24The survey found that SMEs plan to drastically reduce the number of foreign workers they employ.
25The percentage of SMEs employing foreign workers is predicted to drop from the current 74 per cent to just 35 per cent in three years time.
26In other words more than half of the SMEs currently employing foreign workers have plans to stop doing so by 2016.
27Obviously if our SMEs are employing fewer foreign workers they will need to replace them with local hires. However, this is not an easy thing for them to do.
28When it comes to employing locals, the smaller the company, the bigger the problems they face.
29Fewer local employees want to work for a small SME, believing their careers are better served in a larger company.
30And the cost of employing a local is rising as larger companies with deeper pockets offer wages and benefits that smaller companies cannot match.
31So while the survey shows the intention of SMEs is to employ fewer foreign employees, there is no certainty they will be able to get the staff they need.
32Let me now turn to the detailed findings in this year’s survey.
33SMEDS Slides (Sharing)
ACKNOWLEDGEMENTS
34There is a lot of information in this year’s results that SMEs can use to help build a sustainable business model and to prepare for the possibility of another downturn.
35As in previous years, DP Info received invaluable support and input from our strategic partners - SPRING Singapore, IE Singapore, IDA Singapore and the Singapore Business Federation.
36A very special mention must go to our supporting organisations Standard Chartered, BDO, DBS SME Banking and ANZ Bank.
37I would now like to invite any questions you have about the survey.
38Thank you.
END
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