Owners of local small and medium-sized enterprises expect to increase spending on new technology and assets in the coming months.
According to a survey conducted by the Singapore Business Federation and DP Information Group, firms are hoping to achieve lower operating costs with these new investments, and combat rising business expenses in the process.
Outlook for capital investments by SMES has increased steadily for the last four quarters, with construction and engineering companies coming in highest in the capital investment index score. This means that firms in the construction and engineering sectors are likely to be spending the most on capital.
The survey tracks SME sentiment of 5 industry sectors, including business services, commerce and trading, construction and engineering, manufacturing, and transport and storage.
Its results are based on 3,000 interviews with SME owners and managers, and their firms’ financial performance. It started from October this year and will end in March next year.
Rikvin acknowledges that this is a sign of firms reacting positively towards the current restructuring which is going on in the Singapore economy. While restructuring and sinking money into new technology and assets may seem painful at first to SME owners, it is the correct step moving forward.
Mr Satish Bakhda, Chief Operating Officer, Rikvin said expanding in ways which require more manpower is a thing of the past and no longer sustainable.
“Focusing on productivity and restructuring their businesses where necessary can bring about more long-term benefits for SMEs. This includes higher-wage, better-quality growth, and allows SMES to stay competitive and provide better jobs for local workers,” he said.
In addition, business owners can tap on government funded schemes like the Productivity and Innovation Credit (PIC) Scheme to defray the costs of funding these new technology purchases. The PIC Scheme allows for 400% tax deductions and/or 60% cash payout for investments in innovation and productivity improvements, such as acquiring or leasing PIC information technology and automation equipment.
“SMEs should make full use of tax incentives or government funded schemes to lower the expenses of investing in these new capital equipment. Those who are unsure of which schemes to make use of should approach professional service providers who can help them apply for such grants,” Mr Bakhda said.