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A Perspective by Mr Mervyn Koh, Managing Director and Country Head, Business Banking Singapore, UOB.
After a harrowing 2020, we have found ourselves well into a new year – a fresh start.
It may seem like not much has changed – we still have to mask up whenever we leave home and travelling for leisure will probably take a while to happen. But look beyond these, and you will see that there are grounds for optimism.
While advance estimates from the Ministry of Trade and Industry showed that Singapore’s gross domestic product (GDP) contracted by 5.8%1 in the whole of 2020, a closer look at the data would reveal that the economy had continued to improve since the second quarter of 2020.
In fact, our UOB Global Economics & Markets Research team believes Singapore’s economy remains on track to expand 5% this year2, helped by a favourable global backdrop that includes US President Joe Biden taking on a more constructive and multilateral approach towards trade with other countries. With the rollout of vaccines looking to accelerate over the next few months, we believe that things are getting better.
Not yet out of the woods, but there’s a clearing ahead
But while economic recovery is on the way, many businesses are still worried about the resurgence of the virus.
In the UOB SME Outlook Study 2021 Survey, we spoke to 782 local SMEs at the end of last year in a bid to understand their views, challenges and priorities for 2021. It’s not surprising that the pandemic and the ‘circuit breaker’ have had devastating impacts on their business, resulting in a good number of SMEs3 feeling less positive or neutral (56%) about their business prospect. For them, their priorities continue to be about reducing costs (39%) and growing their revenue base (31%).
But the good news is: Even among the SMEs that feel less positive about this year, a recovery is not out of the picture. About two-thirds of them are seeing green shoots of recovery this year and expect the Singapore economy to rebound in 2022.
UOB Budget 2021 Preview – Charting The Path to Recovery
All eyes are now on the upcoming Budget 2021 for further measures that can help shore up SMEs in these trying times. Our Singapore economist, Mr. Barnabas Gan, expects the Budget to continue to focus on helping the country recover from COVID-19 and emerge stronger. Key thrusts could focus on providing more liquidity for businesses, as well as creating and preserving jobs. For many SMEs out there, this would continue to provide the support that they need.
In this new climate, and in facing the uncertainties ahead, businesses have to rebuild, pivot, and take steps to future-proof themselves. But in the short-term, many are hoping for direct help, according to our poll.
About a third of Singapore SMEs said that they have benefitted from the Job Support Scheme (JSS) and the Wage Credit Scheme (WCS). And in 2021, more than half of SMEs want these two schemes to be extended.
Other forms of help they hope to see in this year’s Budget include measures to ease cash flow problems such as tax incentives, easier access to grants and assistance to apply for these government grants.
How UOB can help SMEs
Beyond government support, there are avenues out there for businesses to take charge of their own paths to recovery.
B2B platforms like OneSME are one way for SMEs to enter new markets and expand their customer base. By connecting Singapore businesses to a buying base of four million companies in China, OneSME offers an ecosystem of buyers, sellers, financiers and digital solution providers across Asian markets. This enables SMEs to unlock cross-border trade opportunities and obtain the necessary resources to tap these opportunities.
With COVID-19 pandemic further blurring the lines between the online and physical spaces, businesses must also adapt. Tools such as Google My Business allow SMEs to grow their digital presence, reaching out to more customers in the process.
In particular, the way forward will revolve around digitalisation. A common perception among many SME owners is that digitalisation requires large investments. But there are services and solutions in the market that they can adopt with ease and at little cost.
Digital solutions offered under the UOB BizSmart programme, for instance, are supported by the government's Start Digital Programme, that can help to defray setup costs for two solutions for the first 12 months. SMEs can select any two cloud-based solutions to automate key functions such as Accounting, Human Resource and Digital Transactions.
To support SMEs in their journey as they rebuild and revitalise their business with our industry-based solutions, UOB has also partnered with Google to launch the SME Leadership Academy to provide complimentary training for SME leaders on digital marketing and workplace productivity.
Going digital is absolutely essential, and UOB is here to support that shift and keep our Singapore businesses going. For SMEs, the key here is to take the time to build up digital capabilities in small steps, so they can be ready for the new economy. It’s going to take patience, time and perseverance but we must always remind ourselves it is always darkest before dawn.
1The Business Times, Singapore GDP shrinks 5.7% in 2020; contraction slowed in Q4, 4 January 2021
2UOB Economics and Markets Research, Singapore Budget 2021 Preview: Charting The Path to Recovery, 27 January 2021
3SMEs with less than S$10mil turnover