Singapore SMEs halting growth plans in uncertain economy

BUSINESS GROWTH     TRENDS

Singapore – Banks in Singapore are seeing a slower growth in loans as small and medium enterprises (SMEs) try to conserve cash and put growth plans on hold amid the global macroeconomic uncertainty.

The biggest concern for a majority of SMEs is payment from the buyers as they face a slowdown in their payments, Tan Chor Sen, head of emerging business for enterprise banking at OCBC Bank, told Channel News Asia. Secondly, they are also “more careful with their inventory build-up, they tend to stock lesser”.

Based on data from the Monetary Authority of Singapore, lending to businesses grew 33.2% in March, marking its fourth straight month of slower year-on-year growth.

David Leow, head of small business in Singapore for cross border trade in Southeast Asia at Standard Chartered Bank, also noted the trend, which had become more distinct since the second half of last year as the Euro Zone crisis intensified.

"During this period, liquidity becomes critical for them so we're seeing more SMEs monetising their assets. So if they have a huge chunk of equity, for example in property, they may want to cash out,” he said.

“We have witnessed companies being more conservative in terms of their business expansion plans, and also more conservative when it comes to borrowing. So I'm sure there is an impact on SME banking business.”

The banks added currency hedging instruments are currently the popular choice among SMEs as they seek to save costs.
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