15 January 2013
Manpower Cost Worries Most SMEs
Donavan Lim

Some 88.4 per cent of Small and Medium Enterprises (SMEs) in Singapore expects manpower to be their greatest worry and main cause of cost increase for year 2013, according to the SME Business and Budget 2013 Sentiments survey report released by the Association of Small and Medium Enterprises (ASME).

The group has also released its recommendations for Budget 2013, noting that it hopes for more incentives to recruit local staff and talents.

“On our part, other than our ongoing efforts of bridging SMEs to talented pools of PMEs and students, we are also exploring other opportunities of bridging businesses to the alternative workforce,” said Chan Chong Beng, President, ASME.

The alternative workforce includes ex-offenders, undischarged bankrupts, back-to-work mothers and problem youths. ASME is looking at introducing a new initiative to develop employment opportunities in SMEs for them.

Further, a total of 45.3 per cent of SMEs’ key strategy is to expand to overseas market, while 57.8 per cent of SMEs would like to see more incentives for SMEs to expand overseas in Budget 2013.

Around 65.8 per cent of SMEs are looking to expand or relocate to neighbouring countries in the Southeast Asian countries within the region, out of which, the foremost choice was Malaysia.

ASME is looking to spearhead an initiative to assist local SMEs who are looking to relocate or expand, either partially or in entirety to the Iskandar Development Region in Malaysia. This strategic move was conceptualised to dispel some of the concerns and doubts SMEs face such as security, legal, incentives, customs, infrastructure, and administrative issues.

Still in its initial development stage, ASME is looking to setup a One-Stop Centre in Iskandar to assist SMEs who are interested or would like to find out more about the region.

“With a One-Stop Centre, ASME will source for properties, paying special attention to the quality of the development, amenities, legalities, infrastructure and security. The centre also seeks to provide SMEs with procedures to obtain business licenses, manpower, customs clearance,” said Chan.

Budget-wise, some 53.6 per cent of SMEs would like to see more initiatives to increase productivity for Budget 2013. Many SMEs have also voiced for the Productivity Innovation Credit (PIC) Scheme to extend to beyond 2015.

Further, ASME proposes increasing the cash payout from the current 60 per cent to 80 per cent for up to S$200,000 instead of the current S$100,000 of qualifying expenditure.

“2013 will be an even more challenging year for SMEs if current challenges are not mitigated. In the short run, most SMEs will face greater impact on their profit margins and bottom line. The way forward would be to help SMEs speed up productivity improvements and assist SMEs to find alternative solutions to cope with the current unfavourable challenges and measures,” Chan added.

The association believes that the recommendations for the PIC scheme are critical for SMEs to accelerate automation, productivity improvement in order to deal with the critical manpower shortage and cost escalation situation.

It will also benefit SMEs’ cashflow and better access to funding, especially so for micro SMEs.

Going forward, 87.7 per cent of SMEs expect and will continue to see their cost of operations increasing in 2013.

Singapore’s productivity is well below that of the most developed countries, according to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in a Facebook posting earlier.

- Source: Biz Daily