Singapore SMEs' sentiment sinks to second lowest level in seven years

SMALL and medium enterprises (SMEs) in Singapore are downbeat over their prospects for the next six months with profit expectations having sunk to the lowest level in seven years, according to a survey conducted to gauge business sentiment in the SME space.

The SBF-DP SME Index, which measured the business sentiment of SMEs for the next six months (Q4 2016 to Q1 2017), on an overall basis fell 3.3 per cent from the last quarter to a score of 50.2, making it the second lowest score - the first was just two quarters ago - in the index's seven-year history.

The index is a joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info).

More than 3,600 SMEs were surveyed in July-August 2016 on their outlook and sentiment, said SBF and DP Info in a joint statement.

"The lowest profit expectations and second lowest overall index in seven years indicate that our SMEs are barely keeping their heads above water," said SBF chief executive Ho Meng Kit.

This, he said, reflects the constraints of operating in Singapore where costs are high.

"If you confine your business in Singapore, be prepared for a long period of low growth or even declining profitability.

"We urge our SMEs to look overseas for growth especially in Asean which will enjoy good growth of 5.2 per cent over the next five years," he added.