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Singapore – Labour costs and availability are top worry for SMEs: DBS survey
SMALL and medium-sized enterprises (SMEs) are largely confident of tackling the impending goods and services tax (GST) hike, rising global interest rates, and inflationary pressures – but their top concern for the year ahead is the cost and availability of labour, according to a DBS survey released on Mar 10.
That concern was cited by 48 per cent of respondents, followed by supply chain disruptions, which were cited by 20 per cent.
“While the global recovery from the Covid-19 pandemic has provided some room for optimism, the geopolitical risks emerging from the Ukraine crisis are a cause for concern, specifically with regards to the upside risks in energy, commodities and food prices globally,” said senior economist at DBS, Irvin Seah.
Over 85 per cent of respondents said that a high business priority was ensuring consistent cashflow and managing costs.
These were among the findings of the SME Pulse Check Survey, conducted with 250 SMEs after Budget 2022 – 71 are medium-sized enterprises, while the rest are small or micro enterprises.
All medium-sized enterprises surveyed were confident of weathering the impact of impending GST hikes, while 8 in 10 micro and small businesses said the same.
More than 9 in 10 medium-sized enterprises and 75 per cent of micro and small businesses were confident of weathering the impacts caused by the rising global interest rate environment.
And more than 8 in 10 medium-sized enterprises and 70 per cent of micro and small businesses were confident of managing inflationary pressures.
DBS defines companies with annual revenue between S$20 million and S$100 million as medium SMEs, and those with less revenue as small or micro.
Overall, respondents were generally positive about their growth prospects for 2022, with only 4 per cent indicating pessimism.
One factor contributing to this positive outlook could be that respondents were on the whole profitable in 2021, said DBS. Over 90 per cent were profitable in 2021, and over 40 per cent of this group reported profit increases of at least 10 per cent as compared to the year before.
“SMEs feel more confident about tackling cost challenges, which point to the more resilient position that the business community is in today as compared to a year ago at the height of the pandemic,” said group head of SME Banking at DBS, Joyce Tee.
Even as SMEs want to ride on the economic recovery to accelerate their growth, business owners are taking a prudent approach by placing strong emphasis on their cashflow, she noted.
Compared to medium-sized businesses, micro and small businesses were generally more worried about coping with rising costs, the survey showed.
DBS will increase efforts to proactively reach out to these businesses, which typically face more challenges than their bigger counterparts in managing their balance sheets, Tee said.
“For instance, we have leveraged artificial intelligence/machine learning algorithmic models to deploy a proactive risk management system. These models enable us to engage vulnerable SMEs at the earliest signs of trouble with advisory support and financing solutions to prevent the situation from becoming unsalvageable,” she added.
Source: https://www.businesstimes.com.sg/sme/labour-costs-and-availability-are-top-worry-for-smes-dbs-survey