Dec 30, 2014

    SMEs set for slower growth next year

    SINGAPORE'S small and medium-sized enterprises (SMEs) are tempering their expectations for the first half of next year, as they seek new ways to sustain their businesses.

    Amid weaker market sentiment, an uneven global economy and existing domestic pressures, SMEs are predicting slower growth, according to the latest instalment of an index compiled by the Singapore Business Federation (SBF) and DP Information Group, and released yesterday.

    The index pulled back by 2 per cent this quarter to 54.4. A score of above 50 indicates that SMEs have a positive outlook for their business prospects over the next six months.

    Some 3,600 SME owners and managers across six industries were polled. The index also looked at SMEs' financial performance.

    This quarter, the index tracked for the first time the retail and food-and-beverage sector. Retailers posted an optimistic outlook of 54.7 due to better sales during the festive season, said the report.

    Overall, the fall in oil prices, the slowdown of the Chinese economy and market volatility reflect challenging times ahead for SMEs as well as opportunities for some, said the report.

    It added that while SMEs cut costs and make do with lower margins to stay afloat in the midst of a national restructuring effort, there are encouraging indicators emerging. It cited the manufacturing sector showing productivity gains of 2.1 per cent in the third quarter of this year.

    "Singapore SMEs are resilient and have found ways to sustain in their current mode," said Chen Yew Nah, managing director of DP Information Group.

    "However, they need to find the spark to pave the way for new growth opportunities amidst the restructuring phase and lacklustre market," she said.