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SMEs upbeat about 2008 growth

84% see same or faster GDP expansion: HSBC poll

SMALL businesses across the Asia-Pacific region are optimistic about their respective country’s economic prospects, with more than half of Singapore firms expecting the country’s economy to grow at the same pace as it did in 2007. This is according to an HSBC survey conducted in the last quarter of 2007, in which the bank polled 2,700 small and medium-sized enterprises (SMEs) in nine Asia-Pacific territories, including China, Taiwan and Vietnam.

The survey found that 84 per cent of small businesses in Singapore expect the same or faster economic growth this year compared to 2007.

‘Singapore’s economy saw continued strong GDP growth in 2007, and the fact that most of the small businesses surveyed expect the same or higher level of growth in 2008 bodes well for the local economy as a whole, given the collective economic might the 130,000 SMEs in Singapore can assert,’ said Tan Siew Meng, head of commercial banking at HSBC Singapore.

Acting on their positive economic outlook, 90 per cent of small businesses here plan to maintain or increase their capital expenditure, with over a third of them planning to increase investment by a little or significantly.

The survey conducted by research company TNS covered 300 small businesses in each territory. The Singapore firms polled had annual sales of less than US$6 million.

Firms were asked about their local economic outlook for the next six months, their hiring and investment plans, and their view of trading prospects with China, Asia and the rest of the world.

Some 37 per cent of businesses in the region expect faster economic growth (37 per cent), compared to the 17 per cent that expect a slowdown.

Across the region, the emerging markets of Vietnam and India were the most optimistic. In Vietnam, 90 per cent of firms thought local economic growth would accelerate this year and three-quarters of them plan to increase investment. None of the respondents in both those countries had plans to reduce staff numbers.

More than half the companies surveyed in Singapore also said that they currently engage in cross-border trade.

Most said they expect to see an increase in trade with the rest of the world, especially in China. Interestingly, small businesses with cross-border trade expect to increase their capital expenditure more than those who do not trade with other countries.

HSBC’s Ms Tan said the survey results are a testament to the resilience of the small business sector, which is learning to adapt quickly to changing global economic conditions.

‘In the face of growing economic uncertainty in the United States, emerging markets still see great opportunity for growth as they seek advantage of the rising trade flows in the Asian region,’ she said.


Source: Business Times 5 Feb 08

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