SMEs could see growth in 2024

Photo by Stijn Dijkstra

Although the global landscape continues to be marked by uncertainty, DBS expects 2024 to be a year of economic renewal for Singapore, with the manufacturing, trade-related services, finance and insurance sectors emerging as key drivers of growth.

Rising foreign direct investment inflows into Singapore also represent an opportunity for small and medium enterprises (SMEs) as they stand to benefit from the transfer of new technology and innovation, as well as technical know-how and other spillover effects, arising from the FDIs.

In addition, the anticipated softer labour market will ease wage growth, mitigating cost pressures for SMEs, experts at DBS said.

These were the insights shared at the inaugural DBS Market Outlook Series held on 22 January at DBS Asia X campus in Fusionopolis. The event, which included research presented by the DBS Economics and Strategy team, as well as findings from the Singapore Business Federation, is designed to help SMEs better navigate an increasingly complex global landscape. Over 70 companies from 12 sectors attended the two-hour dialogue.

Koh Kar Siong, Managing Director and Group Head for Corporate and SME Banking, DBS, said, “Our operating environment, both at home and globally, is marked by uncertainty and change. The world is increasingly fractured, with an unpredictable economic landscape. Businesses are sandwiched between rising costs and managing consumers’ expectations of low prices. But amidst these challenges, there are windows of opportunity to be captured.”

“Singapore continues to attract sizeable foreign investment thanks to its business-friendly environment, extensive regional connectivity, and availability of highly skilled talent. This represents a significant opportunity for local SMEs.

“For example, when multinational corporations diversify and decarbonise their supply chains across Asia, SMEs with a sustainable edge would be in a prime position to support this expansion. Companies that can deepen their talent pools in these areas, while leveraging digital solutions to improve productivity and scale their businesses, will be well-placed to capture growth opportunities,” he added.

On overseas development, Ray Kwan, Director of South Asia, Middle East and Africa (SAMEA) International Business Division, Singapore Business Federation, presented findings from the recent SBF National Business Survey 23/24 which showed that although business sentiment had turned cautious, more than half of local businesses remained keen on potential overseas expansion.

SMEs with existing ventures overseas can anticipate a stronger trajectory of business growth, he said. Working with an ecosystem of financial and business partners with a deep understanding of overseas markets including Indonesia and Vietnam, would also help businesses better navigate uncertainties, he noted.

Additionally, expectations of a softer labour market point to the prospect of easing wage pressure for businesses, said DBS economist Chua Han Teng. “One significant theme to watch this year is the evolution of Singapore’s labour market. As demand cools and shortfalls ease, we anticipate a softer labour market.

“This may result in a marginal increase in the overall unemployment rate and easing wage growth as firms strive to manage cost pressures in the face of ongoing economic uncertainties.”