9 in 10 SMEs foresee manpower to be main cause of cost increase in 2013

9 in 10 SMEs foresee manpower to be main cause of cost increase in 2013

Singapore - The Association of Small and Medium Enterprises (ASME) reports that 88.4 per cent of Small and Medium Enterprises (SMEs) expects manpower to be their greatest worry and main cause of cost increase for year 2013. ASME has released its SME Business and Budget 2013 Sentiments survey report, together with its recommendations for Budget 2013, focusing on the main challenges faced by local SMEs.

87.9 per cent of SMEs reported an increase in current cost of operations for year 2012, of which most of them attributed the increase to manpower, followed by rental and foreign worker levy. Going forward, 87.7 per cent of SMEs expect and will continue to see their cost of operations increasing in 2013.

"68.8 per cent of SMEs are hoping that Budget 2013 would have more incentives to help SMEs recruit local staff and talents. On our part, other than our ongoing efforts of bridging SMEs to talented pools of PMEs and students, we are also exploring other opportunities of bridging businesses to the alternative workforce," commented Mr Chan Chong Beng, President, ASME.

This alternative workforce includes ex-offenders, undischarged bankrupts, back-to-work mothers and problem youths. ASME is looking at introducing a new initiative to develop employment opportunities in SMEs for them.

45.3 per cent of SMEs' key strategy is to expand to overseas market, while 57.8 per cent of SMEs would like to see more incentives for SMEs to expand overseas in Budget 2013. 65.8% of SMEs are looking to expand or relocate to neighbouring countries in the South East Asian countries within the region, out of which, the most popular choice was Malaysia.

ASME is looking to spearhead an initiative to assist local SMEs who are looking to relocate or expand, either partially or in entirety to the Iskandar Development Region in Malaysia. This strategic move was conceptualized to dispel some of the concerns and doubts SMEs face such as security, legal, incentives, customs, infrastructure, administrative etc. issues. Still in its initial development stage, ASME is looking to setup a One-Stop Centre in Iskandar to assist SMEs who are interested or would like to find out more about the region.

"The level of interest and enquiries on the Iskandar Development Region are rather high, but many SMEs are still apprehensive about the region. With a One-Stop Centre, ASME will source for properties, paying special attention to the quality of the development, amenities, legalities, infrastructure and security. The centre also seeks to provide SMEs with procedures to obtain business licenses, manpower, customs clearance," said Mr Chan.

53.6 per cent of SMEs would like to see more initiatives to increase productivity for Budget 2013. Many SMEs have also voiced for the Productivity Innovation Credit (PIC) Scheme to extend to beyond 2015. In addition, ASME proposes increasing the cash payout from the current 60 per cent to 80 per cent for up to S$200,000 instead of the current S$100,000 of qualifying expenditure.

"2013 will be an even more challenging year for SMEs if current challenges are not mitigated. In the short run, most SMEs will face greater impact on their profit margins and bottom line. The way forward would be to help SMEs speed up productivity improvements and assist SMEs to find alternative solutions to cope with the current unfavourable challenges and measures," Mr Chan added.

The association believes that the recommendations for the PIC scheme are critical for SMEs to accelerate automation, productivity improvement in order to deal with the critical manpower shortage and cost escalation situation. It will also benefit SMEs' cashflow and better access to funding, especially so for micro SMEs.

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