CONFIDENCE among small and medium enterprises (SMEs) in Singapore is showing signs of recovery, according to the Kadence Business Confidence Index.
The study also compared SME business confidence in other Asian markets and found that although it is growing here, Singapore's SMEs are some of the least optimistic.
Market research company Kadence International tracked the business sentiment of 300 SMEs in Singapore. Its findings show business confidence rose from 40 in April this year to 47 in June - the second increase following a sharp drop in confidence last year.
Piers Lee, Asia-Pacific managing director of Kadence International and architect of the index, said that 'SMEs with large regular clients, including government departments, have been less affected by the economic downturn generally and feel more confident about the future', although 'there is no recovery for some sectors, such as luxury good businesses which have witnessed declining sales'.
Although business confidence among Singapore SMEs has increased, the index score of 47 is low compared with other countries in the region, especially India and Indonesia, where the scores are 71 and 66 respectively. Mr Lee said that there could be many reasons for this - for example, high rents. But the major reason he cited is the global downturn, which affects Singapore significantly because 'two-thirds of Singapore SMEs depend on international trade, whereas only 5 per cent of India's and 10 per cent of Indonesia's economy depend on international trade'.
Mr Lee said that because 'trading makes up 50 per cent of the business of Singapore SMEs, the exposure to the global economic slowdown is significantly higher than in countries that performed better on the index'.
The index did not factor in an important aspect - pessimism. 'People in emerging markets tend to be more optimistic, while Singaporeans are not as optimistic,' Mr Lee said.
