SINGAPORE small and medium-sized enterprises which responded to a global SME performance review appear to be happy with government initiatives, helping the city-state maintain its position as the most SME-friendly economy for the second year running.
According to the survey which was conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), 37 per cent of SMEs in Singapore are of the view that government spending in the medium term will roughly be at the right level.
Verbatim responses by businesses on economic developments reveal a “strong theme of positive government support”, noted the report, particularly in providing grants and tax benefits for training purposes.
“Access to finance, and thus the ability to grow businesses, has increased dramatically over the years here. So it is no surprise that they (SMEs) are flourishing as much as they are because SMEs here are getting support from the government to nurture them,” said Leong Soo Yee, head of ACCA Singapore.
“Of particular significance are the various financial and fiscal incentives provided by the government to help SMEs enhance their productivity, lower their operating costs and develop plans for internationalisation, placing them in a better position to seize global opportunities.”
While SMEs in Singapore consistently report higher levels of government support for investment than do SMEs in other countries, they noted that government support decreased in the 2013/2014 period. Apart from Singapore, SMEs in mainland China, Hong Kong and Malaysia turned in similar reports, with China and Hong Kong seeing the biggest drops.
China’s liquidity crunch in 2013 has had a big impact on SMEs’ access to capital. In addition to the clampdown on banks to control their credit expansion and lending practices, the increased scrutiny on “shadow banking” will also have contributed to the restrictions on finance experienced by SMEs. Such drastic developments in a major market such as China were bound to have wider effects across the region, said the report.
Overall, the SME recovery has broadly followed that of the wider real economy, but SMEs are waking up to the recovery by seizing opportunities to benefit from new developments – opportunities arising through innovation, entering new markets and building strong supplier relationships, noted the report.
This is reflected in the fact that businesses, regardless of size, were more likely to have taken action to build capacity in 2013/2014. This included new hires, capital spending, or investment in staff development.
This is the second ACCA-IMA global SME performance review, and covered the period between the third quarter of 2013 and the second quarter of 2014.
Among the major ACCA and IMA economies, those with consistently highest SME ratings for government responses were led by Singapore and the UAE. At the other end of the spectrum, SMEs in the US consistently provided the lowest ratings. This is also true of the large corporates in each economy, respectively.
Separately, a UOB Small Business Survey on succession planning has found that one in two small businesses (defined as firms with annual turnover of up to S$20 million) is at risk of not being adequately insured against the loss of their key person.
A key challenge highlighted by small businesses was the difficulty of finding a suitable successor to replace their key person, especially in today’s tight labour market. In fact, one in two small businesses predicted that it would take at least nine months to find the right candidate.
The survey was conducted in August among 200 small businesses in Singapore. Half of the respondents have an annual turnover of below S$10 million.