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Singapore's SME outlook hits three-year low: survey

THE outlook for small and medium-sized enterprises in Singapore has fallen to a three-year low with weaker sales and profit forecasts over the next six months across all industries, according to a latest survey.

The SBF-DP SME Index showed that optimism has fallen every quarter this year dragging the index to its lowest level since the first quarter of 2013 and since the eurozone debt crisis.

The index - a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info) and launched in 2010 - measures the business sentiment of SMEs for the next six months. Some 3,600 SMEs were interviewed.

Singapore's three key and largest sectors - commerce and trading, construction and engineering as well as manufacturing - recorded significant declines in their business outlooks, all of which outweighed the slight increase in optimism among the retail/F&B, business services and transport/storage sectors, said SBF and DP Info in a statement issued on Wednesday.

All six industries also recorded lower expectation for turnover and profit in the final quarter of 2015. As SMEs are major employers, contributing to 70 per cent of jobs, the weak outlook could lead to lower job creation and this needs to be closely monitored, said SBF chief executive Ho Meng Kit.

"The continuing decline in SME business sentiment is worrying," he said. "With global demand for our goods and services remaining weak and Singapore's top two trading partners, China and Malaysia, going through a bad patch, the Singapore economy could be hovering on the edge of recession. Our economy and businesses, particularly SMEs, will be impacted."

China's slowing economy and a slump in commodities prices are also weighing on regional currencies while China's sudden move to devalue the yuan has clouded the SME outlook.

"Domestically, the strong Singapore dollar and lower tourist arrivals have also added on to the reasons as to why SMEs are feeling nervous," said DP Info's chief operating officer Lincoln Teo.

"The fall in the index does not mean SMEs are facing a doom and gloom scenario. What it does indicate is that SMEs expect their rate of sales and profit growth to be slow," Mr Teo added.