Credit Brief on Singapore SMEs Q4 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 Q4, from 20.35bps in September to 25.42bps in December. The weaker credit profile of Singapore SMEs is line with the slower than expected GDP growth at 2.2% in Q4 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 ongoing trade tensions and slower economic growth. The construction and engineering sector saw the biggest decline in sentiment and are among the sectors that anticipate negative profit growth.
To tackle the headwinds, the MTI has urged SMEs to develop their digital capabilities in order to compete more effectively. A new wholesale trade industry digital plan (IDP) has been launched for Singapore wholesale trade SMEs to assess their digital readiness and opportunities to go digital. This help SMEs to get ready for the digital economy and improve their competitiveness. SMEs can also obtain subsidized digital solutions provided by banks and telcos, ranging from accounting, human resource management system and cybersecurity through the Start Digital initiative which is part of the SMEs Go Digital programme.
Despite the more pessimistic outlook, SMEs in Singapore still look to expand in the near term with the signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Asean e-commerce agreements. Singapore SMEs are also looking forward to supporting measures that may be announced in Budget 2019 to help them tackle near-term challenges.