SMEs remain positive about first half 2011 outlook
SBF-DP SME Index moderates, but peak capital utilization
not matched by increase in capital investment
16 February 2011 [Singapore] - While the rate of economic growth is expected to moderate, Singapore's SMEs remain positive about their outlook for the first half of 2011, according to the latest SBF-DP SME Index.
The SBF-DP SME Index (Index) is a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info).
The Index is a forward-looking measure of SMEs' sentiments for the coming six months. It is based on interviews with 3,000 SME business owners and management, and takes into account the actual financial performance reported by 3,000 SMEs.
The 4Q10 Index moderated slightly from 60 to 58, however, this still represents a strong positive outlook for the next two quarters.
Mr Victor Tay, Acting Chief Executive Officer of SBF, said that having seen the economy emerged sharply in 2010 after a year of solid gains, it was not unexpected to see some tapering in the outlook of small and medium companies.
"In 3Q10, many SMEs were looking forward to the increased demand from the festive season. As SMEs look past the Christmas and Chinese New Year celebrations, they see themselves realising a more moderate and sustainable growth. However, we note that the expectation of the capacity utilization by Manufacturing and Services sectors seem to spike sharply for next 6 months while the capital investment has not followed in tandem. This shows that SMEs are still relying on traditional manpower to fulfil delivery and has not invested enough in automation to gather productivity gain".
"SMEs can explore embarking on SBF Business Process Innovation courses conducted in collaboration with Motorola University or leveraging on numerous government incentives like Productivity and Innovation Credits to accelerate their productivity initiatives," Mr Tay said.
Managing Director of DP Info, Ms Chen Yew Nah said the Index shows SMEs plan to be less aggressive in their business expansion, new hires and capital expenditure during the next six months.
"Our interviews with SME leaders indicate concerns over rising costs and staffing issues are the main reasons why SME sentiments adjusted slightly in the last quarter of 2010.
"All four industry sectors have become more cautious, as they expect rising interest rates, inflation and operational costs in the next six months."
"In the labour intensive sectors of Services and Manufacturing, SMEs are currently operating at or near capacity, partly due to the difficulty SMEs have getting and retaining staff," Ms Chen said.
Fourth Quarter 2010 SBF-SME Index
Results for 4Q10 (Click here)
Appendix A - Index Methodology (Click here)
About DP Information Group (Click here)