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MEDIA CONFERENCE 6 October 2008 SME DEVELOPMENT SURVEY 2008 - Conducted by DP Information Group Enhancing Business Competitiveness Among Singapore’s SMEs. SME Development Survey 2008 - Survey Objectives. Understand & highlight following issues relating to SMEs:

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MEDIA CONFERENCE

6 October 2008

SME DEVELOPMENT SURVEY 2008

- Conducted by DP Information Group

Enhancing Business Competitiveness Among Singapore’s SMEs


SME Development Survey 2008

- Survey Objectives

Understand & highlight following issues relating to SMEs:

  • Business strategies & challenges faced locally & overseas

  • Extent of internationalization & contribution to Singapore economy

  • New financing requirements in next 1 year

  • Rate & benefits of technology adoption & innovation

  • IT spending in next 1-2 years

  • Staff development & succession planning


SME Development Survey 2008

- Characteristics of Respondents

5% increase in participation from SME Community

  • 1,656 companies

    responded to this

    year’s survey

    (last year: 1,206

    respondents)

  • 23% repeat

    respondents from

    last year’s survey


SME Development Survey 2008

- Characteristics of Respondents

Respondents by Paid-Up Capital

7% increase in participation from SMEs with smaller capital

  • 7% increase in smaller

    SMEs with paid-up

    capital of no more than

    S$0.5m

  • Percentage of SMEs with

    >S$1m in paid-up capital

    reduced from 39% to

    33%


SME Development Survey 2008

- Characteristics of Respondents

  • More experienced SMEs

    responding to survey:

    - 76% in business for

    >10 yrs (4% increase)

    - Continued decline in

    Start-up participation

    from 6% to 2%

  • No. of companies

    experiencing accelerating

    turnover growth increasing

    but at slower pace

  • Mature & Decline companies

    on the rise

  • Stages of Development

  • Start-up: First 3 years of operation

  • Accelerating Growth: turnover growth of > 10% p.a.

  • Moderate Growth: turnover growth of up to 10% p.a.

  • Mature: Zero turnover growth

  • Decline: Negative turnover growth


SME Development Survey 2008

- Characteristics of Respondents

SMEs registered stronger profitability

  • Further drop in no. of

    loss-making companies

    from 21% to 13%

  • Almost a quarter (24%)

    generated profit >S$1m

  • Upward trend in

    respondents generating

    >S$0.1m in after-tax profit


SME Development Survey 2008

- Business Strategies

SMEs looking more to expansionary plans to grow

sales in locally & overseas

  • Improve Cost Efficiency /

    Productivity remain top

    strategy but accorded less

    emphasis

  • Increasing emphasis on

    expansion:

    - New overseas market

  • - New products/ services

  • - Expand local distribution

  • channels

  • Growing importance :

    - Improve Customer Service

    (key strategy for those in Retail)

    - Branding


SME Development Survey 2008

- Challenges to Growth

Increasing operating costs foremost in minds of SMEs

  • Increasing operating costs

    (58%) overtook Increasing

    competition (49%) as top

    obstacle

  • Manpower remains one of top

    3 concerns; more so for SMEs

    in Start-up (42%) &

    Accelerating Growth (50%)

    stages

  • Concerns regarding Cash flow

    & New Financing have

    fallen; Cash flow more of a

    concern for those in Start-up

    (37%) & Decline (28%) stages

  • Downward trend continue

    for Difficulty in accessing biz

    opportunities & Market size constraint


SME Development Survey 2008

- Challenges to Growth

  • Increasing Labour cost key cost

    component affecting SMEs’

    profitability in next 1-2 yrs

    Most affected are those in

    Information & Communications

    (73%), Construction (68%) &

    Services (63%)

  • Increasing Cost of sales ie. raw

    materials will continue to have

    major impact on SMEs’ profitability;

    SMEs in Construction (82%),

    Manufacturing (81%) & Wholesale

    (59%) greatly affected

  • Rental costs remain a challenge for

    most SMEs

  • More SMEs reducing their

    expenditures on optional cost factors

    Advertising & Promotion less regarded

    as key cost component


SME Development Survey 2008

- Overseas Expansion

Export growth to Asian region reached an unprecedented level – All Top 10 overseas countries from Asia

  • Upward trend in SMEs serving

    China & India markets

  • China overtook Indonesia &

    catching up with Malaysia as

    most favoured destination

  • Japan & Korea did not get into

    the top 10 last yr, but overtook

    Australia & USA to emerge

    among the top 10 this yr

  • At least three-fifths of SMEs

    that ventured to Middle East

    are serving Saudi Arabia & UAE

  • Cambodia, Myanmar & Taiwan

    increasing in popularity


SME Development Survey 2008

- Financing/ Funding

  • Local Enterprise Finance Scheme

    (LEFS) remains the most popular

    scheme but SMEs accessing down 10%

  • More SMEs accessing :

    - Microloan (up 3%)

    - Loan Insurance Scheme (up 1%)

    - Internationalisation Finance

    Scheme (up 2%)

  • Start-up Enterprise Development

    Scheme (SEEDs) assisted 5% of

    respondents in Start-up stage

  • Low take-up rate (1%) for

    Internationalisation Finance Scheme

    (IFS) among those in Accelerating

    Growth stage


SME Development Survey 2008

- Financing/ Funding

Majority of SMEs are sufficiently funded

  • 70% do not see the need

    to seek new financing in

    the next 1 yr

  • Among those who seek

    new financing, majority

    (60%) looking at

    >S$0.5m in new financing


SME Development Survey 2008

- Information Technology & Innovation

Majority reported an improvement in actual turnover or profit through technology innovation.

  • 2 most prominent benefits reaped

    from technology innovation:

    - Increased Productivity

    - Improved Cost Efficiency

  • Good opportunity to share with

    SME community especially since

    Improving Cost Efficiency will be

    adopted by 26% as top business

    strategy in the next 1 year


SME Development Survey 2008

- Information Technology & Innovation

More than half of respondents plan to adopt technology innovation in the next 1-2 yrs

  • Among those who have

    already adopted technology

    innovation, a high majority

    (88%) plan to further embrace

    technology innovation in the

    next 1-2 yrs

  • Half of those who have not

    adopted technology innovation

    are considering making their

    first attempt in the next 1-2

    yrs


SME Development Survey 2008

- Information Technology & Innovation

SMEs have very little budget for technology innovation

  • 51% who intend to adopt

    technology innovation in

    next 1-2 yrs do not wish to

    incur any costs on such

    adoption

  • Only 12% willing to spend

    beyond S$100,000 on

    technology innovation


SME Development Survey 2008

- Training & Management Development

SMEs are willing to invest in training

  • 79% find it useful to send

    their staff for training

  • Majority looking for training

    to upgrade Technical / Job

    Related Skills

  • With more SMEs identifying

    Improve Customer Service as

    their key business strategy in

    next 1-2 yrs, Customer

    Service is the 2nd most cited

    area where training is needed

    Note: Technical / Job Related Skills and Customer Service were not provided as options on last year’s survey


SME Development Survey 2008

- Training & Management Development

Though SMEs are supportive of staff training, close to half (46%) set aside <1% of staff budget for training

  • Available training options may be

    limited for those who budget <S$100

    per employee for training

  • Only 55% set aside training budget

    of >S$300 per employee

  • Respondents from Manufacturing have

    set a lower budget for staff training

    compared to other business sectors

  • 34% not willing to spend >S$100

    per staff


SME Development Survey 2008

- DP Credit Ratings

SMEs have demonstrated an improved credit risk profile

  • Increase in Investment

    Grade (DP1 – DP4)

    companies (Up 3%)

  • Increase in High Yield

    (DP5 – DP6) companies

    (Up 3%)

  • Drop in High Risk

    (DP7 – DP8) companies

    (Down 6%)

Distribution of Respondents by DP Credit Rating



SME Development Survey 2008

- Recommendations

  • Strategizing for International Growth

    • Encouraging SMEs to collaborate and pool together their resources in bidding for overseas projects.

  • SMEs to Collaborate in Overseas Ventures

    • Assisting SMEs who are keen on internationalising to develop and implement a sustainable overseas growth strategy.

  • SMEs to Change Mindset on Technology as Investment & to Embrace Technology to Improve Cost Efficiency

    • Encouraging SMEs to have a mindset change on technology (cost vs investment) & to embrace technology through greater use of managed or hosted services to improve cost efficiency.

  • Banks to Review Evaluation of Innovative & Deserving SMEs

    • Reviewing existing lending criteria for innovative SMEs using DP Credit Rating.

  • Groom present & future leaders among SMEs

    • Facilitating SMEs’ bosses and key managers in training and capabilities development through greater funding support, customised curriculum and at flexible timing.



SME DEVELOPMENT SURVEY CONFERENCE 2008

Wednesday, 15 October 2008

8.45am – 1pm

NTUC Auditorium

NTUC Centre, One Marina Boulevard

Special presentations

1. Mr Sareth Menon, US State Representative from Pennsylvania

– “An Insight into American SMEs”

2. Mr Terence Swee, Founder and CEO of muvee technologies

- “moving muvee” – home-grown technology company

Supported by SPRING Singapore, IE Singapore & [email protected]

Sponsored by HSBC



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