But High Labour Costs a Concern for SMEs in Singapore
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Press Release
Singapore, April 4, 2007 - Singapore's Small- and
Medium-sized Enterprises (SMEs) are optimistic that the country's economy will
maintain strong growth momentum in 2007 as prospects across the region continue
to improve, according to the UPS Asia Business Monitor 2007 (UPS ABM). However,
the favourable domestic conditions are expected to lead to a tighter job market
resulting in higher labour cost and problems in talent retention.
The UPS ABM 2007 is an annual survey designed to gauge the competitiveness of
SMEs in Asia. The survey was conducted based on interviews with 1,200 business
executives of SMEs across 12 markets in the Asia Pacific region. The study
revealed that Singapore SMEs are progressively more optimistic about economic
growth in the country, with 66% of SMEs in Singapore expecting economic growth
improvement in 2007; 54% expecting the same a year ago; and 53% in 2005. More
Singapore SMEs also expect their business prospects to improve in 2007.
Reflecting Singapore's improving relations with the Middle East, SMEs here
are the most positive in the region about the prospect of bilateral trade growth
with the Middle East. According to the study, 81% of respondents here expect
trade volume with the Middle East to increase, compared with just 43% a year
ago. In addition, Singapore SMEs' prospects for trade volume growth with other
Asian countries are also expected to remain strong in 2007.
"Globalization is increasingly seen by SMEs across the region as key to
increased business opportunities. In fact, according to the UPS ABM, SMEs also
expect growth in trade with other countries in Asia and the Middle East to
outpace that of Europe and the U.S.," said Mary Yeo, Managing Director of UPS
Singapore.
"We expect 2007 to be a challenging year for SMEs in Singapore with the
proposed changes to the Goods and Services Tax and Central Provident Fund
contribution. Therefore, we believe SMEs need to focus on ways to grow their
business, including diversifying business operations and venturing overseas. It
is imperative that they continue to tap on the strong growth momentum in
Singapore and the region, to meet rising operating costs," she added.
In view of the anticipated business growth, 98% of SMEs in Singapore expect
to increase or maintain their staff strength. However, high labour costs
continue to be seen as the major obstacle to SME competitiveness, followed by
the lack of entrepreneurial spirit and innovation. In addition, 68% of SMEs
believe that Singapore needs to groom local talents and attract foreign workers
for the nation to achieve long-term economic growth.
"Staff turnover, labour shortages and talent retention are likely to become
major challenges for SMEs here as Singapore's economy continues to race ahead.
We expect this to be especially acute in the financial, hospitality and
manufacturing sectors. This could eventually lead to adjustments in the labour
market as companies compete for top talent, which would prompt the need for SMEs
to groom local talent to achieve long-term business growth. This emphasises the
need for strategic HR practices as well as enhancing the role of line managers
to be effective people managers," said David Ang, Executive Director of
Singapore Human Resources Institute (SHRI), who was present at the UPS ABM 2007
launch in Singapore as an independent spokesperson for the survey.
The UPS ABM 2007 also found that SME leaders in the region rank China as the
country with the greatest prospects for economic growth, followed by India and
Hong Kong. SMEs in China are seen as the most competitive in the region,
followed by its counterparts in Japan, Hong Kong, Korea and Singapore. In 2007,
SMEs in India are also the most confident about their companies' growth
prospects, with 89% of local SME leaders expecting greater economic
prospects.
In the survey, SME leaders around the region cite additional factors which
they see as crucial to achieving positive growth, such as innovation, the
availability of a qualified workforce, and access to funding and working
capital.
Other Highlights on Singapore:
- Financial performance, customer loyalty, retention of a qualified workforce
are the top business issues on the minds of SME leaders in Singapore (pg.
25)
- When it came to financing, 40% of SMEs in Singapore cite difficulties in
obtaining funding and building capital as there is a lack of institution willing
to lend to small businesses (pg. 26)
- Seventy-four percent (74%) of Singapore SME leaders agree that efficient
supply chain solutions have helped them save time and money (pg. 27)
- Eighty-six percent (86%) of Singapore SME leaders believe that India's
growth will benefit local SMEs (pg. 33)
- SMEs in Singapore are of the strongest view that China's predominance will
benefit
their businesses - 53% (pg. 29)
- More SMEs in Singapore see India's growth as beneficial - 86% (pg. 33)
- Singapore SMEs expect strong growth momentum in the building &
construction,
leisure & tourism, and biotechnology sectors in 2007 (pg.
7)
Highlights of the UPS ABM 2007 regional findings
include:
CHINA TO REPLACE THE U.S. AS No. 1 ECONOMY (Pg. 3 and Pg.
31)
- Ninety-two percent of SME leaders across the region rate China as the market
with the greatest prospects of economic growth in 2007, with 57% of them
anticipating China to catch up with the U.S. as the world's biggest consumer
market within 10 years.
INDIA: THE MOVER OF ASIAN TRADE (Pg. 33)
- Seventy-three percent of SME leaders across the region believe that India's
growth will benefit Asian SMEs.
CROSS REGIONAL ALLIANCES KEY TO TRADE OPPORTUNITIES
- Cross regional trade is also witnessing growth, with the Middle East viewed
by Singapore (81%) and Malaysia (79%) as the region with greatest trade growth
prospects in 2007.
JOB PROSPECTS IN ASIA BRIGHTEST IN YEARS (Pg. 5)
- The positive job outlook for 2007 bodes favourably for employees, with more
than 89% of respondents across all countries expecting to maintain, if not
increase, the size of their workforce.
UPS, which celebrates its 100th anniversary in 2007, is the world's largest
package delivery company
and a global leader in supply chain services,
offering an extensive range of options for synchronizing the movement of goods,
information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200
countries and territories worldwide. UPS's stock trades on the New York
Stock Exchange (UPS) and the company can be found on the Web at UPS.com.
Notes to Editors
- UPS ABM series provides the latest insights into the changing opinions,
attitudes and habits of business leaders from the region's small and medium
sized enterprises.
- UPS ABM 2007 surveyed 1,200 decision-makers of SMEs between November 15,
2006 and January 10, 2007. Interviews were conducted by an independent research
organisation, TNS, in Hong Kong using the respondents' native language. SMEs are
defined as companies with fewer than 250 employees.
- Interviews were conducted in the following 12 markets: Australia (100
respondents), China (150), Hong Kong (100), India (100), Indonesia (50), Japan
(100), Korea (100), Malaysia (100), the Philippines (100), Singapore (100),
Taiwan (100) and Thailand (100).
- Respondents were from a range of industries: automotive, electronics &
electricals, garments & textiles, gifts & housewares, healthcare &
pharmaceuticals, timepieces, jewellery & optical goods, toys & sporting
goods, and others.
- A majority of the SMEs interviewed had an approximate annual turnover
between US$500,000 and US$10 million. The average SME has been in business for
nearly 21 years.
- The UPS Asia Business Monitor is available for download at www.ups.com/abm.
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