Singapore businesses have a cautious economic outlook, as new data from Airwallex reveals that 7 in 10 small and medium-sized enterprises (SMEs) here are bracing for a potential recession within the next two years.
The independent research considered the challenges SMEs in Singapore would face amid the current economic uncertainty, how they would get around them, and how fintechs could support their future growth.
SMEs look to optimise operations with technology and fiscal discipline to manage rising costs
Rising costs is among the top 3 pain points for two-thirds of Singapore SMEs.Rising costs from suppliers (35 per cent) accounts for the highest rise in business cost, followed by employee costs (30 per cent) and logistical disruption costs (23 per cent) likely due to the pandemic.
“The challenges identified by SMEs in the survey findings are consistent with what we have been hearing from our customers, with rising costs and ways to manage it being a consistent theme in conversations,” said Low Cher Hao, Director, SME and Growth, Singapore, at Airwallex.
To optimise their operations amid an increasingly uncertain environment, SMEs are taking a prudent approach to their financial spending, with nearly two-thirds looking to reduce business spending and/or optimise operations through technology in the next 6-12 months. Improving efficiency (42 per cent), growing revenue (40 per cent), and market share (33 per cent) were the top three priorities for SMEs surveyed.
“SMEs contribute significantly to Singapore’s economy and the findings emphasises the need for better solutions to manage their top concerns and encourage their growth and success,” Cher Hao added.
Trust in fintech and digital platforms and willingness to adopt are high
While SMEs continue to maintain a high level of confidence in traditional banking providers, the survey found that 93% of businesses in Singapore hold a high level of trust in fintech and digital platforms to support their business activities.
More than 9 in 10 SMEs have already adopted or are planning to adopt digital or fintech solutions to support their businesses’ financial needs. The clear benefits of going digital include saving time (58 per cent), ease of access (50 per cent) and greater control over transactions (48 per cent).
SMEs in Singapore remain focused on geographic growth, particularly across Southeast Asia
Amid a challenging economic environment, businesses in Singapore retain a strong appetite for growth and expansion. The survey found that nearly two-thirds (64 per cent) of SMEs plan to expand their business overseas in the next 12 months.
Southeast Asia remains a top expansion region, with almost one in two SMEs (43 per cent) looking to expand across the region. The top five favoured markets for expansion include Malaysia, the Netherlands, Indonesia, Vietnam and the Philippines.
“Singaporean businesses are entrepreneurial. They are constantly looking for ways to globalise their products and services. We see ourselves playing a critical role in helping them achieve their international ambitions,” said Cher Hao.
“Over a thousand SMEs in Singapore trust Airwallex to support the financial needs of their business; we are looking to empower them further, and welcome more like-minded businesses to join us.”