Singapore SMEs are still apprehensive about digital adoption and are not taking the necessary steps needed to strengthen their business’ infrastructure amid an increasingly digitised economy, according to the fifth edition of QBE Insurance’s annual survey of Singapore SMEs.
While SMEs are generally keen to digitalise, their main deterrent to doing so is the high cost of investment. 41% of SMEs shared this sentiment, with the second most-cited reason being a lack of financing and funds. Alongside these obstacles, 57% of SMEs indicated that financial support from the Government was a key form of support needed to help lift the barriers to digitalising.
While measures announced in Singapore’s 2020 Budget will help SMEs access more working capital, and potentially further digitalise their businesses, more needs to be done in outreach and education around these assistance measures. QBE’s SME Survey results revealed that only 31% of SMEs have utilised the Government support available in 2019. This was despite 71% indicating their awareness of support measures, revealing a perceivable gap between awareness and uptake.
Unprepared for technology related business issues
Even as SMEs seek to broaden their businesses in an increasingly digital and data-driven economy, many remain unprepared to handle common business risks associated with the use of technology. While 34% of all SMEs expressed concern over unauthorised access into a system or computer, only 17% hold business insurance for it. Similarly, just 19% of businesses have protection for theft of sensitive data and information via the internet despite 37% expressing concern.
Additionally, only 18% and 16% of SMEs held insurance for customer fraud and fraudulent payments via the internet and infringement of intellectual property rights respectively, two issues which will grow in significance in the digital economy.
Overall, Singapore SMEs are progressing towards a future, digital economy. However, they continue to approach new risks lightly with minimal contingency planning – a finding that has been consistent with previous survey results.
Despite economic headwinds, SMEs still eager to expand
Businesses were generally slightly more optimistic about the economy and their own business growth in the next 12 months as compared to the same period last year, taking into account that the survey was conducted prior to the COVID-19 outbreak.
The survey also polled SMEs’ internationalisation and expansions plans, with 22% of all SMEs indicating an intention to internationalise – a 4% increase over last year. Of the pool of SMEs who had already internationalised, larger SMEs showed a greater intent to internationalise further than smaller ones.
The reverse proved to be true for domestic-only SMEs who intend to internationalise. Smaller domestic-only SMEs showed a stronger intention to go abroad as opposed to their medium and large-sized peers. Singapore SMEs’ eagerness to expand overseas also runs parallel to the Government’s Enterprise Grow Package announced at Budget 2020, allowing firms access to more guidance and funding to help SMEs achieve their ambitions to expand.
Of all international markets, Singapore SMEs have a unanimous preference to expand to Malaysia the most, which is understandable given the proximity between Singapore and Malaysia. However, it was interesting to note that the larger SMEs listed Hong Kong as their second destination of choice to expand to following Malaysia, with 34% of them indicating it as such.
Most SMEs continue to be indifferent towards climate change
Discussion on climate change has increased in Singapore. However, although a growing number of SMEs are seeing the relevance of the impacts of climate change on their businesses, a majority of them are still indifferent to the potential impacts on their business. Only 20% agreed that the impact of climate change was one of the most relevant social and environmental issues to their businesses.
Among all social and environmental issues, SMEs found employee health, safety and wellbeing, and labour conditions most relevant to their businesses, and ranked these at a higher importance than the impact of climate change. Many Singapore SMEs fail to perceive any impact from climate change on their businesses and continue to maintain their focus on more immediate needs and goals.