A study into the concerns and behaviors of SMEs in Singapore, conducted by Western Union Business Solutions, a leader in international payment services, has revealed a significant softening of anxieties relating to credit availability compared to August 2013.

The report revealed that 47% of small and medium-sized enterprises (SMEs) in Singapore are concerned about credit availability, down from 62% in August 2013 and on average 20 percentage points less than their counterparts in Hong Kong (68%), Philippines (68%) and Malaysia (69%).1

This data comes following recent reports outlining Singapore’s first quarter growth of 5.1% (compared to the same time last year) on the back of strong advances in the manufacturing industry, which grew by 8% in the same period.2

While Singaporean SMEs’ fears over credit may be easing, they are most concerned about the health of the global economy (34%) and international regulations (30%). They also spend by far the most amount of time checking foreign exchange (FX) rates during the working day, with 27% doing so regularly each day compared to just 21% of SMEs in Hong Kong, 19% in the Philippines and 16% of SMEs in Malaysia.

This preoccupation with FX rates also reveals itself in wider business behaviors; 32% of Singaporean SMEs fix the cost of their international invoices when they receive them compared with the collective regional average of 13%.

The report also outlined that SMEs in Singapore are most likely to decrease profit margins if international payable costs run higher than expected (8 percentage points higher than any other country surveyed and 4 percentage points higher than in August 2013).

Peter Scully, Regional Divisional Director, Asia-Pacific, Western Union Business Solutions, said these findings suggest that Singaporean SMEs harbor significant concerns about factors and influences beyond their control.

“FX fluctuations and discourse about regulation and deregulation are worth keeping track of, but issues can arise if this interest begins eating too much into your work day.” 

“A wiser strategy is to spend time setting an overall FX and cash management strategy with your financial partner. Something as simple as creating a forward schedule that includes receivables, payables and cash flow combined with a long-term hedging plan can improve visibility into your invoices for months to come. This can provide piece of mind and enable business owners to remain flexible and profitable regardless of what the international FX markets throw up,” said Peter Scully.

That being said, Singaporean SMEs are by far the least concerned about the effect of political influences on their business (just 6% compared with 35% of SMEs in Malaysia, 29% of those in the Philippines and 25% of those in Hong Kong).

These figures suggest a sense of security with domestic issues and local market conditions, juxtaposed with a growing sense of anxiety about the global economy.

“It pays to get on the front foot with your budget and to set prices with your suppliers and customers by instituting forward contracts, which can protect your profit margins. It’s all about preparing for when times are good as well as bad and ensuring your business is well positioned to compete and succeed internationally,” Peter Scully concluded.

 

1. Western Union Asia Business FX market survey surveyed 1,400 SMEs across Singapore, Hong Kong, Malaysia and the Philippines in February 2014.
2. http://www.channelnewsasia.com/news/singapore/singapore-economy-grew-5/1070300.html