Overseas business activity expected to drive revenue growth this year: Survey
However, in the survey by SBF and Standard Chartered Bank, SMEs cite limited access to funds as one of the main challenges in regional expansion.
- Posted 21 Jan 2016 00:06
SINGAPORE: Overseas business activity is expected to help drive revenue growth in the coming year, according to the SME Growth and Financing Survey 2016 by the Singapore Business Federation and Standard Chartered Bank.
However, small and medium enterprises (SMEs) have cited limited access to funds as one of the main challenges in regional expansion.
India was a top pick among Asian markets that Singapore firms are eyeing opportunities in this year, based on the survey. About a quarter of these firms expect business activities overseas to drive revenue growth.
Observers said regional trade initiatives like the Trans-Pacific Partnership (TPP) can help further improve access to new markets.
Mr Koh Tat Liang, assistant executive director of the Capacity Building Division at Singapore Business Federation, said: “While the macroeconomic environment seems a little fuzzy at this point in time, I also think companies should take a longer term view and capitalise on a lot of new initiatives like the AEC (ASEAN Economic Community) and TPP.
“It helps to open new markets such as the US, and Japan, and also more importantly, if you look at the TPP, it actually helps to open new markets such as Canada and Mexico to Singapore where there are no bilateral trade agreements between these countries and Singapore."
As Singapore SMEs seek to expand abroad, they said the main difficulty is in getting financing without a proven track record in that country. Forty-two per cent of respondents in the survey said they are willing to engage a new banking partner overseas. But observers said existing banking relationships can be tapped instead.
Standard Chartered Bank said it is taking a prudent approach to lending. Still, it continues to serve businesses that already bank with it.
Said Ms Vanessa Leung, managing director and head of commercial banking Singapore at Standard Chartered Bank: "International banks operate out of Singapore where our SMEs want to go. They are able to look at the SMEs’ track record in Singapore in the host country, see that there is that prudency in their expansion growth plans, understand how they operate, and therefore, will be able to support them in the new market where they're trying to grow.
“We have an approach that allows us to do holistic view or financing when we do know the company in their home market in Singapore; we use that knowledge to support them in their growth aspirations elsewhere."
OCBC Bank said it is expanding its footprint by connecting with local banks in other markets in the region.
Mr Tan Chor Sen, head of international and global commercial banking at OCBC Bank, commented: “For countries that we may have limited presence, for example Myanmar, solutions would come in the form of offshore and onshore financing.
"That allows for greater capacity for the customer to expand. And for the country penetration, we will partner local banks to help them in their financial services."
To meet funding needs, the study showed that businesses are also looking at alternative means, such as peer-to-peer lending and digital platforms.