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Helping Singapore's SMEs prepare for an uncertain 2020
A Perspective by Mr Mervyn Koh, Managing Director and Country Head, Business Banking Singapore, UOB
To understand the sentiment and priorities of the business community this year, UOB conducted a survey of 615 Singapore small- and medium-sized enterprises (SMEs) in Nov ’19 to understand the sentiment and priorities of the community as we step into 2020, which is expected to be a challenging year for business.
It is not surprising that the slowdown in global demand is the top concern. The ongoing US-China trade tensions are next, with almost one in five of the view that it will continue to have negative effects on the global economy.
In this uncertain backdrop, a whole new challenge has appeared in the form of the Novel Coronavirus (nCoV) outbreak. Apart from the health risks, the outbreak of the virus also has ripple effects on the economy. Transport and tourism sectors in Singapore have already been hit hard. Related sectors such as F&B and tour agents are also facing tremendous pressure as 80 to 90 per cent of their business relies on the Chinese market1. Given the deep linkages that Singapore has with the Chinese economy and its supply chain, the repercussions to business are bound to be felt for some time.
On the whole, less than half (46 per cent) of Singapore’s SMEs have a positive business outlook for 2020 and 31 per cent are neutral about business prospects. Despite the ongoing uncertainty, it is heartening to see that SMEs are gearing up to face these challenges while being supported by various stakeholders such as the government and banks in the business ecosystem. SMEs are thinking through ways to respond to tough operating environments - by increasing productivity (51 per cent), reducing costs (43 per cent) and developing new sources of revenue (43 per cent).
Preparing for 2020 digitally
SMEs once again hope to receive strong support from the government in the Singapore Budget 2020 that comes out later this month. Potential tax rate reductions, rebates for the upskilling of staff and support for overseas expansion are among the incentives SMEs hope this year’s budget will deliver2.
Additionally, SMEs look to receive continued support on their digital transformation from the government through the SMEs Go Digital programme, which was launched during the 2017 Budget. Last year, the scheme was expanded to include artificial intelligence and cybersecurity solutions to encourage SMEs to adopt these solutions3.
Efforts such as these will be well received, as they help to ease the challenges of a difficult economic environment. For 2020, 38 per cent of SMEs want to digitalise more processes - roughly a quarter of SMEs surveyed plan to use digital solutions for expense management, customer relationship management and sales management.
Singapore SMEs are also increasingly adopting payment solutions technology. Almost nine in 10 SMEs plan to increase their use of electronic payments in 2020. The desire to increase the use of electronic payments notwithstanding, a few hurdles still exist regarding the complete adoption of digital payment solutions. SMEs’ concerns include acceptance from their customers or suppliers, security issues and the need to provide employees with access to the account.
Going forward, the adoption and implementation of digital solutions - both for payments and otherwise - are going to be critical for the prospects of SMEs, as they help them meet the objectives of increasing efficiency, reducing costs and enhancing customer satisfaction.
UOB supports SMEs' digitalisation efforts with easy-to-access solutions and its strong network of ecosystem partners
Contrary to popular belief, SMEs do not need to invest large sums of money to digitalise. Services and solutions that they can adopt with ease and at little cost are available in the market.
SMEs can tap into solutions such as UOB BizSmart which is supported by the SMEs Go Digital Programme, defraying up to 70 per cent of the setup cost. This cloud-based solution allows SMEs to automate multiple core processes, including sales, payments and employee management. Regular digital clinics are conducted for interested SMEs to understand the benefits of the solution.
Appreciating the barriers around the use of electronic payments, UOB recently launched a new feature within BizSmart that provides a PayNow QR-based payment collections feature. The new solution has digitalised the cash-on-delivery model, helping to eliminate the risks associated with cash handling. SMEs can optimise cash flow by receiving funds directly into their bank accounts.
UOB has also partnered with Google to launch the SME Leadership Academy to provide complimentary training for SME leaders on digital marketing and workplace productivity.
SMEs are a key contributor to economic development in Singapore and UOB has been supporting these businesses for more than 80 years. We draw on our deep understanding of SMEs and have consistently created products and services to help them overcome their challenges and achieve business growth.
In the face of uncertain global economic conditions and continuing trade tensions, SMEs will play a very important role in Singapore’s economy in 2020. However, to successfully navigate the challenging economic environment, they must digitalise.
One of the ways UOB helps SMEs in their digitalisation efforts is to develop and to provide SMEs with access to digital solutions and services that are cost-effective and easy to use. By taking the first step to digitalise, SMEs will be able to participate in and to seize opportunities in the digital economy, a market that in ASEAN is expected to grow to $300 billion by 20254.
Disclaimers:
UOB BizSmart Important Notes and Disclaimers apply. Please visit www.uob.com.sg/bizsmart for full information. The information provided in this document is intended for informational purposes only and may be subject to change at UOB's sole discretion.
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