The impact of trade tensions may be starting to affect Singapore SMEs that are most exposed to global trade, a payment data study of some 120,000 Singapore-based companies has indicated.
The study was conducted by Experian, a global information services company, during the past few months.
The payment patterns of SMEs across eight major sectors – including hospitality, manufacturing and information — were analysed in terms of timeliness – payment within terms, within 90 days and above 90 days. The proportion of SMEs in the commerce-wholesale sector that made their payments within terms declined from 45% to 41% quarter on quarter (QoQ), for the period ending September 2018. For the transport/storage sector, it decreased from 43% to 39% for the same period.
These two sectors also registered a marginal increase in the proportion of SMEs that are more than 90 days delinquent. The proportion of SMEs in the commerce-wholesale sector which were more than 90 days delinquent went up from 9% to 11% QoQ. For the transport/storage sector, it increased from 11% to 13%. However, in general, delinquency rates across the SME sector were stable.
Mr James Gothard, General Manager, Credit Services & Strategy SEA of Experian, said: “Over the past year, there has been an increase in US-China trade tensions, associated with tariffs, which may be beginning to show its effect. Commerce-wholesale and transport/storage are the sectors that can be impacted by global trade tensions.”
He added: “Trade tariffs, through their downstream effects, have the potential to impact Singapore’s SMEs in a number of ways – by reducing the competitiveness of their exports and by affecting sales in overseas markets. Even if a specific country is not the target of tariffs, demand for intermediate goods from a country that is the target can be impacted.”
