SINGAPORE'S economy is forecast to grow around 2.5 per cent this year, and -1.0 to 2.0 per cent next year. Competition will intensify, particularly for SMEs. Companies worldwide will likely cut back their spending and curtail their activities. Our SMEs too need to keep an eye on costs and watch their cash flow. Beyond this, it is also critical that our SMEs redouble their efforts to improve productivity and efficiency.

The strong economy in the last few years has enabled our companies to develop new capabilities and establish themselves in niche and new markets. These include process improvements & re-engineering, management capabilities, leveraging on innovation technologies and manpower training. We should continue to strengthen these capabilities. For a wider impact, companies should also come together to address common industry issues and inefficiencies.

Leverage on SPRING's assistance programmes

SPRING Singapore has various capability development programmes that provide funding support and resources to help SMEs develop new capabilities, harness IT and even form alliances with other service providers to offer a wider and more complete value-chain of services. More than 1,000 SMEs have tapped these programmes to grow over the first nine months of this year.

Companies can also take advantage of SPRING's Business Leaders Initiative to train their senior managers and promising executives in business management capabilities at our local universities.

During this challenging period, SMEs may find themselves hit by the tighter credit conditions. Some banks are now stepping in to launch new products to address specific business needs of new and smaller firms, while others are promoting non-traditional avenues of funding as alternative sources to SMEs.

The business financing measures announced earlier aim to help local firms gain access to credit in this current economic slowdown. The enhancements include increasing loan quantums, raising government risk sharing of loan defaults and extending business financing schemes to all local enterprises. Ultimately, these measures are in place to help SMEs continue their focus on growth.

SMEs requiring financing can tap the loan schemes that SPRING offers through the financial institutions - Local Enterprise Finance Scheme (LEFS), Micro Loan programme, Loan Insurance Scheme (LIS) and the new Bridging Loan Programme (BLP).

More than 13,000 loans and $2 billion worth of loans have been granted during the last round of off-budget enhancement (end-2001 to Dec 2004).

Last year alone, SPRING has extended some $716 million worth of loans to 3,500 SMEs under the Micro Loan, LEFS and LIS. The total amount of loans given out through these schemes has increased by more than 50 per cent in the first 10 months of this year versus the same period last year.

While the global economic slowdown requires all companies to hunker down and reduce costs, we should continue to look long term and invest in productivity improvements and new capabilities. Let's take this opportunity to either widen our lead against our competitors, or close the gap with the market leaders. This will position us well to ride the upturn.

This article was contributed by SPRING Singapore.

This article was first published in The Business Times on December 16, 2008.