Over half of SMEs in Asean optimistic about economic outlook: study

OVER half of the small and medium-sized enterprises (SMEs) surveyed in 5 major Asean markets are optimistic about the economic outlook, as countries across the region reopen borders and reinstate quarantine-free travel, according to the Asean SME Transformation Study 2022.

Of 1,500 SMEs surveyed in Singapore, Indonesia, Malaysia, Thailand and Vietnam, 55 per cent were optimistic about business growth. Those in Indonesia were by far the most optimistic, with 75 per cent expressing confidence in the economy – in contrast to a minority of 42 per cent in Singapore. Optimism levels in the other 3 countries ranged from 50 per cent to 54 per cent.

This third edition of the study was conducted in Q1 2022 by UOB, Accenture and Dun & Bradstreet, following previous editions in 2018 and 2020.

Audrey Chia, chief executive officer at Dun & Bradstreet, said the outlook for Asean “will remain moderately upbeat” but highlighted downside risks in the form of ongoing geopolitical uncertainties, inflation and interest rate hikes in the United States.

The latest survey found that 74 per cent of respondents intend to expand within Asean. Thailand, the Philippines and Indonesia were the top 3 destinations of choice for the next 3 years, cited by 40 per cent, 39 per cent, and 33 per cent respectively.

The survey also shows that “SMEs are keen to invest for growth, especially in technologies to improve their marketing, customer engagement, network management and operations”, said Lawrence Loh, head of group business banking at UOB. “Building on these insights, we will develop products and solutions that will help our clients achieve their growth ambitions,” he added.

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Most SMEs surveyed intended to improve their customer engagement, with the top choices being the latest technology and systems (59 per cent), easy-to-use and convenient platforms (58 per cent), and user-friendliness (56 per cent).

While recovering from the pandemic, however, more than 4 in 5 SMEs indicated that they needed more financing. Cash flow was cited as a key concern by 44 per cent of SMEs, while 54 per cent said that their existing cash flow can sustain operations for less than 6 months.

The top services that SMEs seek from banks were cash management as well as payments and collections services, each cited by 79 per cent of respondents. This was followed closely by working capital loans at 78 per cent.

As for governmental aid, financing schemes were the top choice, cited by 74 per cent of respondents, up from just 34 per cent in the previous 2020 survey. Some 56 per cent of SMEs also welcomed non-financial support schemes such as mentorship and peer support networks.

Paul Ng, managing director and financial services lead for South-east Asia at Accenture, said: “We are encouraged to see many SMEs moving forward with significant digital transformations to re-imagine their customer experience, but more remains to be done in other critical areas like sustainability.”

“Embedding sustainability across the organisation can help strengthen the bottom line and is a long-term capability that businesses can leverage to access new opportunities and gain a competitive advantage,” he added.

In the survey, 2 out of 3 respondents said sustainability was an area of importance and concern. The top focus areas for sustainability were developing new business models, products and services (57 per cent), and improving energy, water and resource efficiency (52 per cent).