More SMEs venturing overseas amid slowing economy: survey

PHOTO: More SMEs venturing overseas amid slowing economy: survey

SINGAPORE - More than half of Singapore companies are venturing overseas as a slowing economy and rising business costs crimp bottom lines.

Some 54 per cent of SMEs surveyed here have reported overseas revenue in 2012, up 10 per cent from a year ago.

And more Singapore firms are not only going overseas, but also generating a majority of their revenue from foreign markets.

This, according to the 2012 SME Development Survey, which found that 27 per cent of the 10,000 companies surveyed generated more than half of their total turnover from overseas markets this year, nearly double the 14 per cent who did so in 2011.

Contrary to the assumption that it is large Singapore companies that are expanding overseas, the survey showed that more SMEs, with a total turnover of between $500,000 and $10 million, had reported a higher percentage of their turnover coming from overseas.

Indeed, a smaller proportion of companies with a turnover of between $10 million and $80 million posted overseas revenue this year compared to the previous year.

This reflects the important contribution of overseas markets to the turnover growth of SMEs here.

The survey, which was conducted by DP Information Group, found that companies in the wholesale sector accounted for the largest increase in overseas presence, with 71 per cent of them registering overseas revenue, up 15 per cent from a year ago.

The transport/storage and manufacturing sectors, too, recorded a strong increase in the number of SMEs with overseas revenue this year.

About a third of firms in these three sectors generated more than 70 per cent of their total turnover from overseas, while 36 per cent of wholesale and transport/storage companies and 30 per cent of manufacturing SMEs did so.

The picture was different for construction firms, with 21 per cent of SMEs in this sector registering overseas revenue this year, down from 27 per cent last year.

The survey said that the high number of public projects slated for the next few years caused more SMEs in the construction industry to stay focused on the local market.

Even as more SMEs here are heading overseas, they are focusing their efforts in Asia, due partly to geographical proximity and familiarity with these markets.

Malaysia, Indonesia and Greater China remain as the top three destinations for Singapore SMEs.

Slower growth in China and stronger demand from Indonesia has resulted in the latter replacing China as the second most popular destination for Singapore SMEs.

Myanmar, Brunei and Cambodia have displaced the Middle East, US and Australia in the list of top 10 overseas markets for SMEs this year.

Most SMEs continued to engage overseas markets through export activities, with a quarter of firms using this as their main approach to earn overseas revenue.

However, fewer SMEs - at 14 per cent this year compared with 28 per cent last year - set up a physical presence overseas because of uncertainties in the global market.