SINGAPORE (Jan 7): Only four in 10 small- and medium-sized enterprises (SMEs) in Singapore have made plans to manage a planned increase in goods and services tax (GST) to 9%, according to a survey by United Overseas Bank (UOB).
In addition, the survey found that small businesses with less than $20 million in revenue were less prepared for the GST increase.
Less than a quarter of these companies reported having started implementing measures to mitigate the GST increase, such as investing in technology, raising productivity, and moving up the value chain.
“The measures chosen by SMEs to manage the anticipated increase in GST suggest that are looking for ways to mitigate the increase in costs without passing it on to customers. This will ensure that they remain competitive without jeopardising customer loyalty,” says Mervyn Koh, UOB’s managing director and country head of business banking in Singapore.
According to the survey, SMEs plan to focus on boosting productivity this year, as they grapple with a mixed business outlook.
“Our survey results indicate that factors such as trade tensions are weighing down on SMEs’ outlook,” Koh says. “One of the ways SMEs are planning to achieve their productivity goals is to increase their investments in technology, which not only helps with increasing efficiency but also enhances their competitiveness in the long term.”
Amid the uncertainty, some 43% of SMEs say they will also be looking to reduce costs in 2020, while 42% intend to develop new sources of revenue.
The survey also found that SMEs across all sectors are taking the need to digitalise seriously, with close to two-thirds already using digital solutions in at least one area of their business, including accounting, payroll, and marketing processes.
“In particular, as SMEs increase the use of technology to digitalise their business processes, they should also consider electronic invoicing which provides an added benefit of helping the entire payments value chain. By doing so, businesses will not only become more efficient but also benefit from the ability to invoice their customers more quickly for better cash flow,” Koh adds.
Some 88% of SMEs also indicated that they plan to increase their use of electronic payments this year.
UOB says the survey, which was conducted in late November 2019 among 615 local SMEs with revenues of less than $100 million, is aimed at understanding how SMEs plan to achieve their business objectives in 2020.
