In an uncertain financial climate, what are some of the challenges that more than 130,000 local Small-Medium Enterprises (SMEs) in Singapore face?

Mr Andrew Chua Thiam Chwee (BBA 1976), Managing Director, Corporate & Investment Banking Group at DBS Bank Ltd cites the recent rise of property prices in Singapore as one of the challenges these companies face.

"The economic boom had led to an unanticipated rise in demand for office space that could not be met in the short term," Mr Chua points out. "This meant that office space which was already being rented out at a high rate, increased further, causing SMEs to face higher operating costs."

Apart from property price woes, SMEs, which account for a large percentage of employment in Singapore's workforce and contribute to more than a quarter of Singapore's GDP, have to keep up with technology change and rising costs.

"SMEs that are developing capabilities to expand into overseas markets also face strong challenges due to globalization forces," adds the graduate of NUS Business School. He points to the common complaint among SMEs with regard to managing cash flow for overseas expansion plans. "They need trade and working capital, and yet loans offered by both local and overseas banks often do not cover enough of their costs to have sufficient impact."

But can Small-Medium Enterprises (SMEs) in Singapore really brave the challenges presented by an uncertain financial climate?

Mr Chua, who services key accounts for SMEs in both local and foreign countries, is optimistic that there are ways for SMEs to overcome the challenges.

"If SMEs want to reduce their operational costs due to the higher rental costs of their workspace, they will have to find creative solutions around that," advises Mr Chua. "A reduction in office space may be a good start, or working on a more fluid basis where employees are mobile could potentially be a more efficient mode of working for them."

Mr Chua also suggested for SMEs to be better aware of their financing options. And this is where Mr Chua feels the banks can play a part - to provide information and service.

Mr Andrew Chua Thiam Chwee, Managing Director of Enterprise Banking, Corporate & Investment Banking Group at DBS Bank Ltd, has had over 25 years of investment and wealth management experience. He graduated from NUS Business School in 1976.

Back to e-Newsletter