Singapore businesses are more confident about access to finance in 2010
Singapore businesses are more confident about access to finance in 2010
Singapore 20 January 2010 - More indications that the global credit crunch is easing comes from the latest Grant Thornton International Business Report (IBR) which reveals that 36% of privately held businesses (PHBs) in Singapore are increasingly confident that access to finance will be easier in 2010; a 10 percentage point jump compared to 26% in 2009. At the other end of the scale the percentage of businesses expecting finance to become less or much less accessible shows a healthy low of 6% compared to a high of 48% in 2009. Globally 35% of businesses said they thought access to finance would be 'more' or 'much more accessible' in 2010 compared with only 14% who were similarly positive in 2009.
Businesses were also asked how supportive they believed their lenders to be. Globally, 69% feel their lender is currently being 'supportive' or 'very supportive' towards their business - unchanged from 2009. In Singapore, lenders’ support is at an encouraging high of 80%. However, huge global differences appear when lender support is compared to accessibility of finance suggesting that business success in 2010 may be something of a global lottery, depending on where a business is based (Figure 1 where four scenarios emerge).
Kon Yin Tong, director of Grant Thornton Corporate Finance Pte Ltd, commented, "This shift in confidence about access to finance suggests that businesses believe that lenders are becoming more willing to support them with funds rather than kind words. In Singapore, the government’s targeted fiscal stimulus measures have a positive effect in driving the economy albeit to a slow recovery. While businesses in many parts of the world also see light at the end of the tunnel, there are still many countries where businesses are pessimistic about their chances of raising finance and feel their lenders are being unsupportive."
The largest number of economies still sit in the bottom left quadrant with the lowest expectations about access to finance and with a perception that their lenders are the least supportive in the world. Many, like France, Greece, Ireland, Russia and Thailand were in the same position in 2009 and, not surprisingly, are amongst the most generally pessimistic of the 36 economies surveyed this year. Perhaps more surprising is the presence of mainland China where businesses, despite being the 12th most optimistic in the 2010 IBR optimism/pessimism index, still fall below the global average in terms of their expectations for access to finance in 2010.
At the other end of the scale, the top right quadrant shows economies where businesses expect finance to be more accessible than the global average and who believe they enjoy above average support from their lenders. Chile, India and the Philippines are the most confident, but a number of major economies have also moved into this quadrant since 2009 - including the US, New Zealand, Hong Kong and Singapore. The correlation between access to finance and overall business optimism continues with eight of the top 10 most optimistic economies in the world appearing in this quadrant.
In the top left quadrant, Japan, Poland, Malaysia and Spain believe their prospects for raising finance are low despite having supportive lenders and it is no coincidence that the IMF's official GDP growth forecasts for all these countries are below 3%, the global average for 2010.
Businesses from many countries in the bottom right quadrant (such as Argentina, Brazil, Finland and Turkey) have historically taken this position so despite their continuing belief that their lenders are unsupportive, they are without exception more optimistic that access to finance will significantly improve in 2010. The newcomers are businesses in the UK, South Africa and Botswana, where last year's belief that lenders were supportive has been significantly eroded.
When businesses were asked how their sources of finance had changed over the last 12 months there was little change from 2009. Yin Tong commented, “The use of long and short term loans have dropped as we would expect as global investment has slumped. Where use of short term loans has reduced there has been an equal increase in the use of factoring as businesses look for short term survival strategies to increase their cash flow. In place of long term loans, there has been a slight increase in popularity for equity from individuals and institutions and grant and awards. It will be interesting to see if this trend continues as financial markets adjust to the lasting effects of the credit crunch."
