THE vast majority – almost 80 per cent – of companies in South-east Asia and Greater China are positive about the current business environment, with a quarter of them expecting their business performance to “vastly improve” in 2024.

This was one of the key findings of UOB’s latest Business Outlook Study (SMEs & Large Enterprises), which polled 4,000 small and medium-sized enterprises (SMEs) and larger companies in seven markets across Asean and Greater China.

The survey – conducted from the end of last December to the middle of January – found that many businesses were keeping a close eye on the impact of rising inflation and higher operating costs, with many indicating that they were still recovering from the overall economic slowdown.

Many respondents also said they intended to focus on reducing costs, sourcing for new customer bases as well as making greater use of digital solutions to improve productivity.

Overseas expansion

The survey showed that 83 per cent of businesses are interested in expanding overseas.

About three in five respondents listed South-east Asia as the preferred region in which they wanted to operate within the next three years, with the top four markets being Malaysia, Singapore, Thailand and Indonesia. About a third of respondents said they wanted to enter mainland China.

A NEWSLETTER FOR YOU

Friday, 8.30 am

SGSME

Get updates on Singapore’s SME community, along with profiles, news and tips.

The survey findings also mentioned the challenges that companies faced when venturing abroad, including difficulty in finding the right partners, a lack of in-house talent to drive overseas expansion, and a lack of customers in the desired market. 

Asked about the kinds of support measures that could help them, companies wanted to have access to funding or grants for new markets, as well as connections to large corporate businesses that could serve as prospective anchor clients.

Incorporating sustainability

While the survey found that nearly 90 per cent of businesses believed that sustainability was important, only 44 per cent actually implemented sustainability practices.

In Singapore, about 38 per cent of SMEs have such practices in place, compared with around half in both Thailand and China.

The report noted that key barriers to sustainability included companies’ concerns about the negative impact of sustainability measures on their costs and profits.

UOB head of group commercial banking Eric Lian said that even as SMEs recognised that sustainability was a “business imperative”, many face challenges in getting started.

“Incorporating environmental, social and governance considerations into business strategies will better position SMEs to unlock growth opportunities and build resilience for the long term,” he said.

Over four in 10 businesses also said that adopting sustainability attracted investors and made it easier to work with multinational corporations.

Tax incentives or rebates as well as options for sustainable financing were cited as the top areas where businesses wanted support.

Digitalisation efforts

The survey showed that 62 per cent of businesses saw success on the digitalisation front in 2023, a slight dip from 68 per cent the year before.

Indonesia and Thailand emerged as the markets which saw the most success with digitalisation, while Thailand and China were the most digitalised markets at 92 per cent and 90 per cent, respectively. 

The top challenges for digitalisation included concerns over cybersecurity, implementation costs and the lack of digital skill sets among employees.