Businesses could face rising costs, cash crunch amid supply-chain snafus: Gan

SMALL and medium-sized enterprises in Singapore may see cash flow challenges from global supply-chain disruptions, Minister for Trade and Industry Gan Kim Yong told the House in a written reply on Tuesday (Nov 2).

"Given rising cost pressures and a higher frequency of supply disruptions, businesses have to hold higher inventory buffers or provide more favourable payment terms to customers and suppliers, which will require higher working capital," he said.

Businesses affected by higher cost pressures include manufacturers that import intermediate inputs from abroad, the minister added.

Construction companies also face higher costs for materials such as steel bars, granite, cement and ready-mixed concrete, which he attributed in part to "a global supply crunch" as the world economy recovers.

Gan was responding to parliamentary questions from People's Action Party (PAP) Chong Kee Hiong (Bishan-Toa Payoh), about the impact of the supply-chain issues on the Singapore economy, including goods such as food, equipment and appliances, machinery, and construction materials.

Still, Gan added that trade agency Enterprise Singapore will continue to support small businesses with the Enterprise Financing Scheme, which offers government risk-sharing for funding arrangements such as trade and working capital loans.

"As an open economy, Singapore firms will feel the impact of global supply-chain disruptions to varying degrees, depending on their level of exposure to imported supplies and, more fundamentally, on their business practices," Gan said in his statement, but noted that the government closely monitors the prices of essential goods and "will continue to take action against businesses which seek to profiteer from the situation".