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Hesitation to digitalise causing Singapore SMEs to lose competitiveness
APPREHENSION about digitalisation among small and medium-sized enterprises (SMEs) in Singapore is causing them to fall behind in terms of preparedness for the future digital economy, a survey by QBE Insurance Singapore has found.
Published on Monday, the results of the annual survey's fifth edition revealed that Singapore SMEs "continue to approach new risks lightly with minimal contingency planning - a finding that has been consistent with previous survey results", QBE said.
For instance, while 34 per cent of the 400 SMEs surveyed expressed concern over unauthorised access into systems or computers, only 17 per cent had purchased business insurance for such incidents.
Findings were largely similar for the percentage of businesses concerned about data theft via the Internet, customer fraud and fraudulent payments via the Internet, and infringement of intellectual property rights, versus those who held insurance to protect against these issues.
QBE noted that the main deterrent for SMEs is the high cost of investment and a lack of financing and funds, even though the businesses are generally keen to digitalise. About 57 per cent of respondents said that financial support from the government was key in removing the barriers to digitalise.
However, only 31 per cent of the SMEs polled said they utilised available government support in 2019, although 71 per cent said they were aware of such support measures.
QBE said that given these results, more outreach and education is needed to ensure that the measures announced in Budget 2020 to help SMEs access more working capital and further digitalise their business do not end up underutilised too.
"SMEs are the key driving force for Singapore's economy. It is therefore critical for them to understand the importance of digitalising and scaling up to become more competitive in the marketplace," said Ronak Shah, CEO of QBE Insurance Singapore.
"Assistance provided by the government, especially more so in the recent Budget announcement, should provide SMEs with the resources to establish proper contingency plans. This helps to ensure that their overall long-term growth is both sustainable and safe."
The survey, which was conducted in December 2019 before the Covid-19 outbreak, found that businesses were slightly more optimistic about the economy and their own business growth in the next 12 months as compared to the same period in the previous year.
About 22 per cent of SMEs said they planned to internationalise, up 4 per cent from a year prior. Among SMEs that had already internationalised, larger SMEs showed more intent to internationalise further, compared to smaller ones.
The reverse was true for SMEs that had yet to internationalise but intended to within the coming year, and smaller domestic-only SMEs showed stronger intention to go abroad than did their medium and large-sized peers.
QBE noted that the increased interest in overseas expansion runs parallel to the Enterprise Grow Package announced at Budget 2020, which will help firms access more guidance and funding to expand.
Malaysia was the unanimous first choice for expansion, unsurprising given its proximity to Singapore. Hong Kong was the second destination of choice for 34 per cent of larger SMEs.