SMEs cite rising business, household costs as biggest challenge to growth
By Jessica Lim
RISING business and household costs is the biggest challenge facing small and medium-sized enterprises (SME) in singapore, according to an industry-wide survey.
Over eight in 10 firms (85 per cent) polled in a pre-Budget survey by the Singapore Chinese Chamber of Commerce and Industry cited rising costs as 'an immediate and significant obstacle' to their growth. This was higher than 2006's 64 per cent.
The 76 respondents included goods and services producing industries such as manufacturing, construction, wholesale and retail.
They pointed to escalating taxes, higher costs of supplies and surge in office rent as the main causes of the spike in operating costs. And their worry over falling domestic sales also factored high on their list of concerns.
This comes as no surprise as an SCCCI price comparison of 84 common household items showed that these have risen by 4.3 per cent - more than double the 2 per cent increase in the Goods and Services Tax (GST) in July last year.
To counter this rising price trend, most SMEs said they have plans in place to boost their competitiveness in the long run.
The survey revleaed that 51 per cent have plans to diversify into other seas of business, 47 per cent are thinking of overseas expansion, 45 per cent are moving into higher value-added products and services and 19 per cent are merging with their competititors.
Nearly 40 per cent said their top Budget wish was for the government to 'address spiralling taxes, levies and charges' which have added to costs of doing business here. They also hope for a further reduction of corporate income tax, a control on fuel prices and lowering of the salary threshold for hiring foreign workers so they can easier fill their staffing needs.
Smaller firms could also do with help to 'grow and thrive in the globalised economy' by, for example, provision of 'training for workers and keeping a rein on the appreication of the Singapore Dollar'.