SMEs report lowest optimism on overseas expansion

One in two said geopolitical instability is their biggest challenge.

Leaders of small and medium-sized enterprises (SMEs) in Singapore are the least optimistic about international expansion in the current business climate, according to a new report from international accountancy network Kreston Global.

Singapore's "interpreneurs," or internationally minded entrepreneurs, scored their optimism at an average of 7.2 out of 10, the lowest of the 11 markets surveyed and below the global average of 8.2.

Respondents named geopolitical instability as their most significant threat at 52%, the highest amongst the countries surveyed and above the global average of 45%. Supply chain disruption followed at 43%, also the highest globally against a 31% average, whilst tariff-related cost increases were cited by 42%, slightly above the global figure of 40%.

Helmi Talib, Managing Partner at Kreston Helmi Talib, Singapore, attributed the caution to the economy's reliance on trade.

"Singapore is one of the world's most open economies, with a GDP-to-trade ratio consistently exceeding 300%, based on the recent reports generated by the World Bank," Talib said. "As a city that heavily relies on trade, global headwinds such as geopolitical tensions and supply chain disruption have a direct and profound impact on the economy and business confidence."

Talib added that ambition remained strong but that businesses were taking a more cautious and selective approach to expanding overseas.

Despite the guarded outlook, 66% of Singapore interpreneurs expect the environment for international expansion to become more favourable over the next two to three years, compared with 86% of their global peers. 40% expect it to be very or somewhat difficult to expand overseas at present.

When assessing destinations for expansion, respondents prioritised future economic growth prospects (46%), favourable tax policies (44%), trade agreements (44%) and alignment with long-term growth strategy (43%). Access to skills and talent and digital infrastructure were each cited by 38%.

Looking ahead, interpreneurs identified access to new customer markets (52%), the formation of strategic partnerships or joint ventures (51%) and the ability to lower production or operating costs (43%) as their most significant opportunities for international growth.