As Singapore exits Phase 2 Heightened Alert (P2HA), about 35% of micro and small enterprises in Singapore’s F&B and retail sectors indicated that their earnings have dropped by more than half since the start of P2HA. This is marginally better than last year’s Circuit Breaker, when about 40% saw a drop in earnings of more than half.

These findings emerged from the latest edition of the DBS SME Pulse Check Survey which the bank conducted with close to 200 micro and small enterprises in the F&B and retail sectors in early June to understand the impact of P2HA on SMEs. The dipstick poll focused on the F&B and retail sectors as these were most directly affected by P2HA.

SMEs’ decision to digitally transform their operations may have gone some way in cushioning the impact of P2HA. Overall, close to nine in ten respondents have incorporated digital solutions into their businesses since last year’s Circuit Breaker. Of these, 82% have introduced digital payment solutions, 46% have launched online storefronts, and 41% have digitalised their backend operations, such as payroll, accounting and invoicing.

In a sign of souring business sentiment, only three in ten respondents say that they do not see a need to downsize their operations or let workers go to stay afloat. This is significantly lower than the 85% that expressed optimism for business expansion in a survey done by DBS in February this year. Despite the less optimistic outlook, the remaining seven in ten respondents did not express an immediate risk of closing down, which speaks to the resilience of Singapore’s SME community.

Commenting on the survey results, Joyce Tee, Group Head of SME Banking at DBS, shared that P2HA was an undoubtedly challenging time for the F&B and retail sectors, but the resilience and resolve displayed by enterprises during this period was inspiring. Nevertheless, the silver lining was that digital transformation efforts since last year’s Circuit Breaker have put SMEs in a generally better position to cope with P2HA.

“Throughout P2HA, our bankers were out in force engaging our SME customers to understand the support they needed. Since late last year, we have also put in place an automated, data-driven system that alerts us if SMEs are at risk of running out of working capital, enabling our teams to engage these businesses early with intervention plans before the situation becomes unsalvageable. With our proactive engagement, the delinquency rates among our SME customers continued to remain low even throughout P2HA. We expect most businesses to turn the corner as Singapore’s economy gradually reopens and we learn to live with Covid-19, but do not allow it to dominate our lives. We will continue to work with SMEs and extend the working capital and business transformation support they need to emerge stronger in this new normal of doing business amid Covid-19,” Tee said.

Cashflow concerns top of mind for businesses coming out of P2HA

Micro and small enterprises in the F&B and retail sectors shared that their top business priorities emerging from P2HA were ensuring sufficient cashflow and managing overhead costs. With business owners now more likely to conserve working capital, digital transformation is being put on the backburner for now, with about one quarter of respondents saying that they were not looking to invest in the adoption of new technologies.

Amongst respondents from the F&B sector, one in two wanted the Government’s assistance to offset or lower commission costs charged by food delivery platforms. Such support includes the reintroduction of the Food Delivery Booster Package offered by Enterprise Singapore, which has been extended to 15 July 2021. When asked what further support they would like from the authorities, close to three in ten survey respondents indicated rental relief, while about a quarter wanted enhancements to the Jobs Support Scheme.

To help SMEs in the F&B sector go digital on their own, DBS launched its F&B Digital Relief Package in March 2020, enabling F&B establishments to build a digital presence and create online income streams in as little as three days. In doing so, F&B businesses did not need to worry about commissions eating into the margins of every sale they made. The F&B Digital Relief Package has benefitted over 1,000 F&B establishments to date, with the bulk of them comprising micro and small enterprises.

In 2020, DBS approved over 10,000 collateral-free loans totalling more than SGD 5 billion to SMEs in Singapore, with over 90% of the loans going to micro and small enterprises.

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About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 12 consecutive years from 2009 to 2020.

DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.

With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com.

DBS survey indicates that micro and small enterprises in F&B and retail sectors coping better during P2HA than last year’s Circuit Breaker