Singapore is hailed as one of the best places in the world to conduct business. With its extensive talent pool and excellent global recognition, Singapore’s local entrepreneurs have a strong advantage in growing into an international business player.
According to smeportal.sg:
Though the market conditions in Singapore may be challenging, there are still growth opportunities out there for small and medium enterprises (SMEs). However, many of the opportunities may come from abroad and some argue that the main markets are not in Singapore, but in the United States, Europe and China.”
Due to the small domestic market, local entrepreneurs are often forced to move towards internationalising at an early stage, which can be difficult for small enterprises. On the upside, emerging markets in Asia will demand for solutions that many local Singaporean-based entrepreneurs are strong at; markets like real estate, healthcare, and waste management solutions are most likely a few emerging markets that Singapore’s local businesses will perform spectacularly.
Government intervention to help local companies gain better access to capital, talent improvement, and better international network will provide support to local entrepreneurs in Singapore for them to better position on how to internationalise their operations.
Better opportunities for financial support and aid through Supply Chain Financing (SCF)
Financial aid and support are of crucial importance for many businesses in Singapore who are looking to expand their business into the international scene. According to a paper by the ESC Subcommittee on Developing a Vibrant SME Landscape and Globally Competitive Local Enterprises:
As the overseas business opportunities for Singapore companies expand, the need for cross-border financing will increase. Singapore corporates require funding for three major purposes: (a) trade finance and credit insurance for exports and imports; (b) internationalisation finance (funding of overseas plants and operations); and (c) project finance.
Though financing is important for businesses going international, financial constraints have made it hard for banks and other financial institutions to lend. And as trade finance move away from lending letter of credit to open account terms, exporters are at a disadvantage and are in need of more insurance coverages to reduce default risks from clients.
However, this financial deficit can be solved through alternative financial technology solutions like Supply Chain Financing.
Supply Chain financing programs have become a global solution for better cash flow management, with many major international banks reporting 30% to 40% annual growth rates when SCF programs are implemented. SCF Growth rate are expected to continue its upward trend in coming years.
Citibank’s “Benefits Beyond Treasury: How Supply Chain Finance Impacts the Bottom Line” report, they explain how SCF programs help the overall health of a company:
“SCF clearly provides benefits across the organization: from procurement negotiations, to setting measurable goals within treasury, to company- wide profitability… improved working capital ensures companies remain competitive within their industries.”
With improved cash flow, businesses manage to stay afloat despite the financial constraints they face with the lack of government support and wariness of many major financial institutions. Through the help of third-party financers, businesses are able to complete trade transactions with little to no risk on each party: exporters receive early cash from their sale of goods, while importers receive goods without delay.
Improved support for global expansion of small businesses will prove crucial for the future of Singapore’s local businesses. Through SCF programs, the financial support needed by local businesses to expand internationally are met.