Navigating 2024: Challenges And Opportunities For SMEs

As we enter the Year of the Dragon, the road ahead for local businesses continues to be an uncertain one. Whether it’s due to economic volatility or technological disruption, SMEs must be prepared to navigate challenges on multiple fronts and proactively explore ways to enhance their business resilience. 

At our DBS Market Outlook 2024 event hosted by DBS BusinessClass for SMEs, industry experts shared their insights on the key issues facing local enterprises, focusing not just on the economic environment but also the priority areas of sustainability, internationalisation and digitalisation.

“At DBS, we are not just your financial partner. We want to make sure that SMEs have the insights to navigate the global changes and trends to help grow their business and to support them in building resilience and competitiveness in the areas of regional connectivity, sustainability and digitalisation. By leveraging DBS’ strong presence in five core markets beyond Singapore’s shores – China, Hong Kong, India, Indonesia and Taiwan – businesses can get ahead of the curve and scale”, said Koh Kar Siong, Group Head of Corporate and SME Banking at DBS in his opening remarks.

DBS Economist Chua Han Teng kicked off the event by giving an outlook for Singapore’s economy in 2024 across 7 themes. Globally, he expects interest rates to fall this year as the U.S. Federal Reserve cuts rates in response to easing inflation. For Singapore, it will be a year of growth recovery led by external sectors, bumpy but moderating inflation, and likely change in the country’s leadership. 

“Globally, interest rates have peaked, and we see room for cuts in 2024, which would help with credit costs. As for Singapore, it will be a year of renewal, where growth will recover but in a fragile manner. Inflation will be bumpy, but hopefully moderate, and that will ease business cost pressures somewhat. Lastly, let’s watch out for the leadership transition,” said Mr Chua.
 

Kickstart ESG Reporting

Sustainability reporting has become a priority in recent years for many companies, including SMEs. While SMEs typically do not meet the revenue threshold that would require them to disclose sustainability data to regulators, their MNC or large corporate customers may require them to do so as SMEs form a part of these company’s Scope 3 emissions, which covers indirect emissions that occur in the upstream and downstream activities of an organisation.

In her presentation, Liu Simin of Gprnt.ai shed light on its platform designed to assist SMEs in their sustainability reporting efforts and decision making. 

Recognising the challenges that SMEs face in putting together the data required for sustainability reporting, Gprnt.ai’s solution enables businesses to not only respond to disclosure requests, but also seize ESG-related opportunities. Beyond reporting, Gprnt.ai provides businesses with comparative insights, forecasts, and opportunities for sustainable growth. 

“Our solution helps businesses measure their emissions and related ESG data, and provides useful insights for decision making, such as how you stack up against your peers, and ways to reduce your carbon footprint,” said Ms Liu.

Gprnt.ai is collaborating with DBS to offer access to its solution to the bank’s SME customers under a pilot sustainability programme that will be launched in the first half of 2024.  

Make the Leap Abroad

Singaporean companies are navigating international waters with cautious optimism, according to Ray Kwan, Director of SAMEA International Business Division at the Singapore Business Federation. While there is an expected decrease in overseas ventures in 2024, the success rate of those who did venture abroad is encouraging.

According to SBF data, Singaporean companies primarily target Malaysia, China, and Indonesia for their international expansion, with a strong focus on Southeast Asia. However, Mr. Kwan urged businesses not to limit themselves to these familiar markets. He highlighted the potential of exploring emerging economies like Saudi Arabia, India, Africa and Central Asia, where multiple opportunities in built environment, manufacturing, technology, and logistics opportunities abound.

Government support plays a pivotal role in Singaporean companies' internationalisation efforts. To this end, SBF connects businesses with foreign governments, facilitating meetings with ministries and agencies to streamline market entry. This government support greatly improves the chances of success when venturing abroad.

“One of SBF’s agendas is to help Singapore companies connect directly with the different ministries or investment agencies of your target country. So you don’t have to start from scratch,” explained Mr Kwan.

Singaporean companies should also consider the differences in economic status between economies, as this will determine level of investments and technology input, thus affecting job creation. This provides an opportunity for Singaporean firms to not only expand their operations, but also contribute positively to the economies of host countries.

Understanding the challenges faced by businesses expanding overseas for business growth, DBS collaborates with government agencies, associations, and partners to organise seminars, workshops and trade visits. These initiatives provide businesses with a comprehensive understanding of international landscape and opportunities to network and build valuable connections. 

Harness Digitalisation for Growth

Rounding off the event, Daniel Wee of the Infocomm Media Development Authority (IMDA) highlighted ways that SMEs can leverage digitalisation to expand their businesses. He noted that digital transformation involved three stages: digitisation, digitalisation, and digital transformation. The “real” benefits come from the comprehensive re-evaluation of business models and operational processes in the transformation phase.

“Research has shown that digitally progressive companies experience higher revenue growth of more than 10% year on year,” said Mr Wee. “Companies aiming to become digital leaders must have a clear strategy, build in-house digital capabilities, and foster a culture of innovation and learning.”, he added. 

IMDA offers a Digital Leaders Programme that supports local enterprises in their digital transformation initiatives, enabling them to leverage digital and emerging technologies to capture growth opportunities.

For enterprises seeking to embark on a gradual digital transformation, DBS Start Digital offers tailored solutions designed to boost business productivity.
 

Holistic Support for SMEs

In supporting businesses as they navigate through the challenges ahead, DBS offers its own assistance schemes, such as unsecured working capital loans, sustainability financing for eco-friendly renovations, as well as programmes that support the digitalisation and upskilling efforts of local firms.

For enterprises seeking to embark on their digital transformation journey, the DBS Start Digital programme provides a diverse range of digital solutions designed to boost business productivity. Businesses can register for any two digital solutions and benefit from a minimum of 6-months free subscription.

For local companies seeking to future-ready their workforce through skills development, DBS SME Skills Booster programme supports SMEs upskilling in the four areas of sustainability; business growth, banking & finance; digitalisation; and cyber wellness. Companies who join the programme will receive benefits such as access to free masterclass and learning plan development.