Credit Brief on Singapore SMEs Q3 2018
This is a quarterly report jointly published by the CRI at the Risk Management Institute of National University of Singapore and Validus Capital. Read the full report here →
Overall, the NUS-CRI 1-year PD increased during Q3, from 18.10bps in June to 19.30bps in September. The weaker credit profile of Singapore SMEs is in line with the slower than expected GDP growth at 2.6% in Q3 2018 based on advance estimates from the Ministry of Trade and Industry (MTI).
According to the survey conducted by the Singapore Business Federation and DP Information Group, Singapore SMEs show greater caution amid trade tensions. The manufacturing sector has a more pessimistic outlook compared to the other sectors due to fears of increased input costs which will have an impact on profitability. All sectors are expecting a decrease in growth outlook.
To tackle the headwinds, the MTI has urged trade associations and chambers to play a greater role in helping local SMEs to grow locally and overseas. Trade associations and chambers can organize the SMEs by sector and provide support in terms of training workers and conducting post-implementation reviews. Another approach is to group SMEs together and go overseas and explore opportunities beyond the local market.
Singapore’s Economic Development Board also launched a new industry network to help companies accelerate the implementation of their own industry transformation programs. The network will help companies to evaluate the state of their own facilities against a national benchmark.
Despite the more pessimistic outlook, SMEs in Singapore still look to expand in the near term and the assistance by associations and the government may help tackle the headwinds.