Helping SMEs get back on the road to recovery

We are all aware that our SMEs are a key engine of Singapore's economy. Making up 99% of all businesses here, these local enterprises contribute to almost half of the country's GDP, and close to two-thirds of its workforce. And as more of them spread their wings abroad, SMEs are positioning themselves to be a future driver of Singapore's growth.

Unfortunately, when the economy is adversely impacted by a crisis like the COVID-19 outbreak, it is our SMEs and their employees who bear with the brunt of the fallout. In early February, we conducted a dipstick poll of about 100 of our SME clients to find out what their top financial challenges were during this uncertain period. Most were concerned that their cash flows would be choked off as a result of the sharp falloff in demand, in addition to dealing with operational costs such as rental and salaries.

The spread of the coronavirus has hit the tourism, retail and F&B sectors hard. Supply chains have also been disrupted, affecting the manufacturing sector. This has an unfortunate knock-on effect, as SMEs are unable to complete and fulfil orders by retailers. The building and construction sector is grappling with similar challenges. SMEs also face workforce issues, especially in the delayed return of their migrant workforce after the Lunar New Year holiday, resulting in lower productivity and delayed project delivery.

Welcome Budget relief Recognising that businesses were suffering as a result of COVID-19, I am pleased that the Singapore Government unveiled a highly-expansionary Budget on 18 February 2020 to help tide them over the crisis. Budget measures included a S$4 billion Stabilisation and Support Package which includes a Jobs Support Scheme to subsidise the wages of local workers, as well as a 25% corporate income tax rebate for all tax-paying companies in 2020, capped at S$15,000 per company.

Meanwhile, the existing Enterprise Financing Scheme's Working Capital Loan will see its maximum loan quantum doubled to S$600,000, giving SMEs easier access to working capital. Tenants and lessees of government-managed properties can also request for more flexible rental payments.

Encouragingly, the Government has not neglected its ongoing efforts to help businesses transform in the long run, even as it provides relief in the near term. In this regard, a new Enterprise Grow Package was announced to help enterprises adopt digital solutions and support their internationalisation efforts. An Enterprise Transform Package was also launched to groom business leaders of promising SMEs.

While the business community has welcomed the generous assistance, some market watchers warn that additional help may be needed if the current outbreak is not resolved soon, and the Singapore economy is pulled into an extended slump.

Standing by our SMEs in their time of need I believe other players in the business value chain can step up to complement the Government's efforts to support our SMEs. Financial institutions, for instance, have a vital role to play in alleviating the pain businesses are feeling.

DBS has introduced measures that directly address the most urgent priority as indicated in our poll - that of meeting cash flow needs in light of the COVID-19 situation.

These include a six-month principal repayment moratorium for SME property loans, an extension of import facilities of up to 60 day, and a Digital Business Loan where businesses need not submit any financials for funds up to S$50,000 that they can access the next working day upon loan acceptance.

Aside from help with tackling immediate cash flow challenges, SMEs could also benefit from initiatives aimed at minimising business disruption during this period, especially as our way of life has adapted in the short-term to cope with the public health situation. For instance, in a first for a Singapore bank, DBS introduced a comprehensive suite of "contact-free" trade financing digital solutions to eliminate the need for the physical submission and manual processing of paper-based applications for 11 everyday trade financing services. This was designed to help businesses ensure that their operations can continue, even with the precautionary measures to protect the health and safety of their employees and the public.

Supporting our national upskilling efforts We also support the Government's call for businesses to take this temporary downtime to deepen their digital capabilities so that they will in a stronger position to capitalise on the eventual recovery. There is a wide range of courses readily available online, including those offered by DBS' SME Academy, to enable SME owners and employees to continue upskilling themselves in the safety of their homes and offices. These courses also tend to be in easily digestible formats, allowing SMEs to level up their capabilities even as they manage their business operations. By making the most of these upgrading opportunities, SMEs will position themselves better for recovery and to seize the growth opportunities that we know will emerge when the crisis passes.

Our SME community is an important part of Singapore's economy, and embodies the essence of our nation's entrepreneurial spirit. DBS will do its part and stand by our SME customers during these trying times, but I believe everybody needs to step up during this period to support our SMEs. Because if we don't, who will?