Increased Trade Tensions Possibly Contributing to Slower Debt Payments in Key Sectors

Increased Trade Tensions Possibly Contributing to  Slower Debt Payments in Key Sectors
  • Varying impact, with commerce-wholesale and transport/storage sectors most affected
  • Trade payment trends across all SME sectors are generally stable

SINGAPORE, 08 November 2018 – The impact of trade tensions may be starting to affect Singapore SMEs that are most exposed to global trade, a study of the payment data of more than 120,000 companies in Singapore across a broad range of sectors has indicated.

 

The payment patterns of SMEs across eight major sectors 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.”

 

Mr Gothard 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.”

 

 

In the last quarter ending September 2018, business sentiment among SMEs for the six months to end-March 2019 have also dampened, with lower revenue and profitability expectations across all sectors, as indicated by the SBF-DP SME index. In the backdrop of the US-China trade tensions, SMEs in general have become more cautious, but this has been tempered by regional opportunities in Southeast Asia as well as by the year-end festive season which is likely to be marked by an uptick in spending.

 

Mr Gothard said: “A considerable number of Singapore SMEs still derive their revenue sources from external markets. Coupled with increasing domestic competition, there may well be a reprioritisation of market opportunities, with greater focus on emerging marks such as the Philippines, India and Myanmar.”

Read full article

Experian

By Experian 11/08/2018

Related Articles

Singapore SMEs Remain Cautious for 2021 Amid Early Signs of an Uneven Recovery: SBF-Experian SME Index
Singapore SMEs Remain Cautious for 2021 Amid Early Signs of an Uneven Recovery: SBF-Experian SME Index

The SBF-Experian SME Index for 1Q21 – 2Q21F registered an overall reading of 48.2, an uptick from 46.3 in the 4Q20 – 1Q21F SBF-Experian SME Index.

Learn more
Consumers in APAC continue to struggle with bill payments amid COVID-19
Consumers in APAC continue to struggle with bill payments amid COVID-19

The second wave of Experian’s 2020 Global Insights Report highlights the impact of the global pandemic on consumer spending habits and potential implications for financial institutions

Learn more
Experian partners with Standard Chartered to drive Financial Inclusion with Machine Learning, powering the next generation of Decisioning
Experian partners with Standard Chartered to drive Financial Inclusion with Machine Learning, powering the next generation of Decisioning

Leveraging innovation in technology to provide access to credit during uncertain times to populations underserved by formal financial services.

Learn more