Trade tensions 'may impact debt payments among SMEs'

Singapore

THE ongoing Sino-US trade conflict may be making its impact felt on Singapore small and medium-sized enterprises (SMEs) that are most exposed to global trade, according to a study of payment data from more than 120,000 firms in Singapore.

The two sectors most vulnerable to global trade tensions in particular are the commerce-wholesale sector and the transport/storage sector, which also showed the biggest declines when it came to payment within terms.

In the third quarter, the proportion of SMEs in the commerce-wholesale sector that made their payments within terms fell to 41 per cent from 45 per cent a quarter ago, according to the latest findings by DP Information Group (DP Info).

The proportion of those in the transport/storage sector that made their payments within terms also fell from 43 per cent to 39 per cent for the same period.

The two sectors also showed slight increases in the percentage of SMEs that are more than 90 days delinquent.

In the commerce-wholesale sector, the figure ticked up from 9 per cent to 11 per cent quarter on quarter. Similarly, the transport/

storage sector also edged up from 11 per cent to 13 per cent.

James Gothard, general manager, Credit Services & Strategy SEA of Experian, said: "Trade tariffs, through their downstream effects, have the potential to impact Singapore's SMEs in a number of ways - by reducing the competitiveness of their exports and by affecting sales in overseas markets."

He added: "Even if a specific country is not the target of tariffs, demand for intermediate goods from a country that is the target can be impacted."

The DP Info study covered eight sectors altogether. Aside from the transport/storage and commerce-wholesale sectors, the rest include commerce-retail, construction, hospitality/food & beverage, information & communications, manufacturing, and services.

When it came to payment within terms, the two sectors that showed the biggest improvements are the information & communications sector, which went up five percentage points to 38 per cent. This was followed by the construction sector, which went up four percentage points to come in at 36 per cent in Q3.

However, the information & communications sector still had the highest percentage of SMEs that are more than 90 days delinquent, although it did fall two percentage points to 20 per cent from a quarter ago. The construction sector came in second, maintaining at 18 per cent.

In general, delinquency rates across SMEs still remained stable across the board.