The city-state of Singapore holds a unique position in the Asian region. It is an economical, tourism, and financial powerhouse despite being a small country. It is a favorite destination for international brands. It is the only South-East Asian nation to reach a high-income classification, according to the World Bank (WB). But like other countries, the future of Singapore lies in small businesses. It then begs the question: how are they doing?
The State of Small Businesses in Singapore
Based on the 10th annual survey by CPA Australia, Singapore’s small business growth and outlook are mixed. It’s a combination of opportunities and challenges. More than half of the surveyed enterprises experienced growth between 2017 and 2018. By 2019, it should increase to 60.7%, which will be the highest it will ever be since 2013. About 33% might add more employees this year.
The industry growth indicated Singapore outperformed other Asian countries. These included Taiwan and Hong Kong. It fared even better than the Oceana nations. But it paled in comparison to the growth of Indonesia and Malaysia at 86.6% and 65.5%, respectively. These countries were not part of the high-income nations of WB.
Finding the Solutions to Boost Growth
What’s holding up the sector’s growth in Singapore? There are at least three factors: business costs, immigration policies, and aging population. CPA Australia’s report revealed many Singaporeans with small businesses struggle with high business costs. They also found securing financing difficult. Only 12% of them said they had easy access to external funding.
Fortunately, this is about to change. It’s possible for a small company to obtain a business loan in Singapore. They can also look forward to more favorable conditions. These include no minimum loan size and annual turnover. Such financing can also be available for both locals and foreigners.
Another challenge is immigration policy. The country has decided to impose stricter rules for skilled foreign workers. This is to provide more domestic jobs and reduce public discontent. As a result, the number of permits approved declined from 32,000 to only 3,000 annually, according to the Ministry of Manpower.
The problem is these policies prevent companies from hiring competent employees. Worsening the issue is the fact Singapore is an aging nation. Statistics Singapore revealed the population of people 65 years old and above increased from less than 9% in 2008 to almost 14% in 2018. By 2050, they will comprise half of the city-state’s residents.
What should they do if the country maintains its immigration regulations? Irvin Sheah, a DBS senior economist, encourages small businesses to venture abroad. They would have to learn to expand, especially within the region.
These will have many potential benefits. One, they can take advantage of the growing economies of countries like Indonesia and Thailand. Vietnam, Malaysia, and the Philippines are also possible target markets. Second, they can increase their corporate tax earnings. These will boost the funds available for Singapore’s social services, particularly for the aged. Third, they can take advantage of different skills without having to deal with the tight immigration policies of Singapore.
Indeed, small businesses are and will remain to be Singapore’s economic backbone. But both public and private sectors should ensure they succeed. They should help them find solutions to their challenges and discover opportunities for expansion.