What’s on the horizon for SMEs in 2024
Singapore's SMEs can expect to see rapid AI adoption, more stringent sustainability requirements, and evolving workplace models.
ASEAN Rising
In the current volatile geopolitical climate marked by conflict and tensions, ASEAN has emerged as an attractive destination for businesses and investors. Here are some reasons why Singapore-based SMEs looking to expand should start by exploring opportunities in their own backyards.
- Robust Growth: ASEAN’s projected GDP growth of 4.6% in 2024 and 4.8% in 2025 are expected to outpace global average growth estimates of 2.9% and 3.2%, respectively, according to forecasts by the IMF. Foreign direct investment (FDI) inflows into ASEAN-6, as proportion of world inflows, have exceeded China in the past two years.
- Neutral stance: ASEAN is known for its neutral stance amid major power rivalries. This neutrality can offer stability for businesses at a time when geopolitical tensions are escalating.
- Regional stability: The region has been relatively stable politically and economically, which provides a predictable and steady environment for business operations, compared to other regions that might be experiencing political unrest or economic volatility.
- Trade diversification: As trade tensions continue globally, businesses are looking for alternative markets and trade routes to diversify their operations. ASEAN, with its strategic location and array of Free Trade Agreements, provides a platform for such diversification.
ESG compliance becomes a priority
There is no getting away from the need to incorporate ESG (environmental, social, and governance) factors into businesses today. Even though most SMEs in Singapore are not yet required to report sustainability metrics, those that start early will have an advantage in attracting investors and customers.
As sustainability regulations become more stringent, SMEs who do not meet the ESG criteria of MNCs and large local corporations may also not be able to supply to these big customers.
Meanwhile, more consumers continue to choose products that have a positive impact on the planet as the climate crisis deepens. By incorporating ESG factors into their business, SMEs can not only enhance their sustainability, but also gain a competitive edge in their respective markets.
Adoption of Gen AI by businesses
Powerful generative AI (Gen AI) technologies such as ChatGPT and Dall-E are set to transform the way businesses operate. Experts say that Gen AI is more than just a passing fad, but rather a catalyst that could redefine an industry's landscape.
Among other uses, Gen AI can quickly generate high-quality content tailored to the needs of the business, saving both time and money. This can include marketing blogs, package designs or even computer code. Reflecting its growing prominence, Gen AI was a key focus of this year’s Singapore Fintech Festival.
However, SMEs still lag their larger counterparts when it comes to adopting new technology. While the technology adoption intensity (which refers to average number of digital technologies adopted per firm) of SMEs improved to 2.1 in 2022, this is significantly lower than the 5.7 for their bigger enterprises, according to the Singapore Digital Economy Report 2023.
SMEs can take advantage of support schemes such as IMDA’s SMEs Go Digital initiative or the DBS Start Digital Programme to accelerate their digital transformation.
