Rising foreign direct investments, easing wage growth could benefit SMEs in 2024

Singapore.23 Jan 2024

DBS committed to supporting SMEs across its key markets on regionalisation, sustainability and digitalisation

Singapore, 23 Jan 2024 - Although the global landscape continues to be marked by uncertainty, DBS expects 2024 to be a year of economic renewal for Singapore, with the manufacturing, trade-related services, finance and insurance sectors emerging as key drivers of growth. Rising foreign direct investment inflows into Singapore also represent an opportunity for small and medium enterprises (SMEs) as they stand to benefit from the transfer of new technology and innovation, as well as technical know-how and other spillover effects, arising from the FDIs. In addition, the anticipated softer labour market will ease wage growth, mitigating cost pressures for SMEs, experts at DBS said.

Koh Kar Siong, Managing Director and Group Head for Corporate and SME Banking, DBS,
at the inaugural DBS Market Outlook Series held on 22 January at DBS Asia X campus in Fusionopolis.

These were the insights shared at the inaugural DBS Market Outlook Series held on 22 January at DBS Asia X campus in Fusionopolis. The event, which included research presented by the DBS Economics and Strategy team, as well as findings from the Singapore Business Federation, is designed to help SMEs better navigate an increasingly complex global landscape. Over 70 companies from 12 sectors attended the two-hour dialogue.

Koh Kar Siong, Managing Director and Group Head for Corporate and SME Banking, DBS, said, “Our operating environment, both at home and globally, is marked by uncertainty and change. The world is increasingly fractured, with an unpredictable economic landscape. Businesses are sandwiched between rising costs and managing consumers’ expectations of low prices. But amidst these challenges, there are windows of opportunity to be captured."

“Singapore continues to attract sizeable foreign investment thanks to its business-friendly environment, extensive regional connectivity, and availability of highly skilled talent. This represents a significant opportunity for local SMEs. For example, when multinational corporations diversify and decarbonise their supply chains across Asia, SMEs with a sustainable edge would be in a prime position to support this expansion. Companies that can deepen their talent pools in these areas, while leveraging digital solutions to improve productivity and scale their businesses, will be well-placed to capture growth opportunities. Underpinning this is DBS’ unwavering commitment to support SMEs across our core markets. We are committed to being more than a financial partner – we are also here to enable clients on their regionalisation, sustainability and digitalisation agendas,” he added.

DBS is committed to working with SMEs to build resilience and competitiveness in the areas of regional connectivity, sustainability and digitalisation. By leveraging DBS’ strong presence in five core markets beyond Singapore’s shores – China, Hong Kong, India, Indonesia and Taiwan – SMEs can get ahead of the curve and scale their business.

For example, on the environmental, social and governance (ESG) front, DBS has been offering a suite of financing solutions for companies to accelerate the adoption of sustainability solutions, to overcome potential cost barriers associated with such transformation. DBS launched the Eco Renovate Loan in 2023, a first-of-its-kind financing solution to enable SMEs to borrow up to 100% of the cost of using resource efficient or energy optimisation solutions for a greener renovation.

On overseas development, Ray Kwan, Director of South Asia, Middle East and Africa (SAMEA) International Business Division, Singapore Business Federation, presented findings from the recent SBF National Business Survey 23/24 which showed that although business sentiment had turned cautious, more than half of local businesses remained keen on potential overseas expansion. SMEs with existing ventures overseas can anticipate a stronger trajectory of business growth, he said. Working with an ecosystem of financial and business partners with a deep understanding of overseas markets including Indonesia and Vietnam, would also help businesses better navigate uncertainties, he noted.

Additionally, expectations of a softer labour market point to the prospect of easing wage pressure for businesses, said DBS economist Chua Han Teng. “One significant theme to watch this year is the evolution of Singapore's labour market. As demand cools and shortfalls ease, we anticipate a softer labour market. This may result in a marginal increase in the overall unemployment rate and easing wage growth as firms strive to manage cost pressures in the face of ongoing economic uncertainties.”

Representatives from Gprnt.ai and Infocomm Media Development Authority (IMDA) were also present to share more on sustainability and digital transformation. Liu Simin, Head of Product, Gprnt.ai, demonstrated how technology can help SMEs simplify ESG disclosures. Meanwhile, IMDA shared its Digital Leaders Programme that supports local enterprises in digital transformation and called on businesses to harness digitalisation to capture growth opportunities.


About DBS
DBS is a leading financial services group in Asia with a presence in 19 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 Global Finance, “World’s Best Bank” by Euromoney and “Global Bank of the Year” by The Banker. 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 and the world’s “Most Innovative in Digital Banking” by The Banker. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 15 consecutive years from 2009 to 2023.

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, as it banks the Asian way. Through the DBS Foundation, the bank creates impact beyond banking by supporting businesses for impact: enterprises with a double bottom-line of profit and social and/or environmental impact. DBS Foundation also gives back to society in various ways, including equipping underserved communities with future-ready skills and helping them to build food resilience.

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.