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     FrontPage Edition: Wed 27 September 2006

Survey shows manpower issues a growing concern for SMEs



SME Interest in Government Procurement Projects at a high of 63%

Free Credit Ratings for SMEs with Nationwide SME Credit Rating Initiative

Concern over manpower issues has risen markedly among local SMEs, highlighting the difficulty many SMEs face in finding and keeping good staff for their growth.
This is one of the major findings of the fourth annual SME Development Survey (SMEDS) - conducted by DP Information Group (DP Info), Singapore's leading provider of credit and business information services.
The strategic partners of the SMEDS are SPRING Singapore (SRPING) and IE Singapore (IES), with iDA as a supporting organisation. HSBC, Standard Chartered Bank, BDO Raffles and Microsoft are sponsors for the survey. A record 1,068 SMEs responded this year.
When asked to nominate the top three challenges to growth, 37% of SMEs nominated Manpower issues, up from 28% in last year's survey. The number of SMEs that nominated Manpower as their top concern leapt from 7% in 2005 to 14% in 2006.
Manpower issues are now the second biggest challenge faced by SMEs. The top concern remains Competition which was nominated by 45% of respondents, down from 52% last year.
Ms Chen Yew Nah, Managing Director of DP Info said improving economic conditions and the fall in unemployment had created strong competition in the job market for suitably qualified staff.
"For many employees, an SME may not be their first choice of employer, with many favouring a career with an MNC or a GLC. There is a perception that MNC/GLCs offer superior benefits, career opportunities and job security.
"However, SMEs can be dynamic and exciting places to work offering good remuneration, flexibility and high levels of job satisfaction. Working for an SME can often be a fast track to greater responsibility and experience."
"It remains a continuing challenge for SMEs to make themselves more attractive for potential employees to join them and to remain with them," Ms Chen concluded.
IE Singapore has already recognised the need to develop talent for overseas Manpower requirements and has in place programmes such as the Asian Business Fellowship (ABF) and the Overseas Manpower Programme (OMP) to support SMEs by sending their staff overseas for in-market training to develop a pool of talent with in-depth knowledge of their business environment.
According to the survey, improving Cost Efficiency/Productivity is the most popular business strategy among SMEs, with 22% adopting this approach to grow their business. The next most popular business strategy, entering New Overseas Markets, is the choice of 19% of SMEs.
Surprisingly, a high 17% of SMEs claim they have No Strategy at the present time - up from just 4% of SMEs in 2005. This implies many SMEs are consolidating their gains of the last few years and are adopting a 'wait and see' approach before embarking on further expansion.
With 59% of SMEs generating a proportion of their revenue from overseas, Singaporean companies are already active on the global business stage. Among companies with overseas operations, 64% have a presence in Malaysia, 51% in Indonesia and 41% in China.
This year's survey has revealed a growing number of SMEs have shifted their focus and are looking at opportunities in the emerging markets of India and the Middle East.
According to the findings, 32% of SMEs with overseas operations intend to explore the India market during the next 12 months. The next choice is the Middle East, which is the target of 27% of SMEs, followed by Vietnam with 25%.
Heightened public promotion of Free Trade Agreements (FTAs) and the benefits that may be reaped from them has resulted in 87% awareness among SMEs. SMEs that have utilised FTAs to their advantage have risen from 7% to 11%.
This may be attributed to the outreach efforts of IE Singapore to cultivate more multipliers (industry associations, law or accounting firms) to pass on the FTA skills they learn to their clients.
In addition to seminars and one-to-one consultations with companies, IE Singapore also operates a Train-the-trainers programme that is geared to nurture a pool of experts competent to advise companies on FTAs.
The key reason for SMEs not utilising FTAs today falls in the category of 'difficulty in Understanding FTAs'.
On the domestic front, this year's survey has revealed that out of 4 SMEs who have tried to tender for government projects, 3 have been successful.
However, there still a significant 63% of SMEs that are keen to explore opportunities in public projects but to date they have not taken any action. This group of SMEs need assistance to improve their access to tenders for public projects.
The relaxation of criteria for the GeBIZ system late last year has been integral in enabling SMEs to gain access to government procurement projects.
Since the rule change, suppliers, particularly SMEs, enjoyed lower business cost in the tendering process. Government Supplier Registration Services (GSRS) registration is not required for contracts up to $70,000 and a track record is also not necessary.
There is also no financial cap on start-ups or SMEs and the processing fee for GSRS registration is capped at $90 per application. The first user account per company is also free.

Source: Press Release 21 Aug 2006

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