SMEs invest in tech to boost local productivity

Singapore's small and medium sized enterprises (SMEs) are spending more on technology and assets in order to spur on growth.

According to the SBF DP SME Index, a joint initiative of the Singapore Business Federation and DP Information Group, the overall outlook for capital investment by SMEs has increased in each of the last four quarters, from a score of 5.09 a year ago to 5.45 this quarter.

The construction and engineering sector has the highest capital investment index score of 5.61, indicating that it will be the most active in making new investments in the next few months.

Five industry sectors were tracked, including business services, commerce/trading, construction/engineering, manufacturing and transport/storage.

Chen Yew Nah, the managing director of DP Information Group said the jump in capital investment shows SMEs are embracing the drive to increase their productivity, specifically when it comes to technology.

"SMEs know they need to increase their productivity to stay competitive. That's why they are buying machinery, IT hardware and software," she said.

"These investments have the added benefit of driving down costs over time. Investing in better equipment and automation is a sound strategy to combat rising manpower costs," Chen added.

The gradual improvement of the global economy and increased government support has led to increased business confidence amongst SMEs, the report stated.

"Against this more positive backdrop, SMEs have improved their capital investment to drive productivity and beat rising business costs.

"During budget 2013, Government introduced a slew of policies to help our companies restructure and improve productivity."

The current Index tracks SME sentiments for October 2013 to March 2014 and is based on 3,000 interviews with SME owners and managers, and the financial performance of SMEs.