A strong majority of Singapore’s small and medium-sized enterprises are prioritising overseas expansion in 2026, according to the latest DBS Business Pulse Check Survey. The survey found that 82 percent of 730 companies, polled between December 2025 and January 2026, plan to internationalise this year, signalling a renewed push to diversify markets beyond domestic boundaries.

The annual survey, conducted across a wide range of industries, reflects shifting ambitions within the SME community as firms seek growth despite an increasingly complex global environment. Companies in the information and communications sector, alongside manufacturing firms, emerged as the most eager to pursue international opportunities.

Revenue Diversification and Brand Building Drive Expansion

Among surveyed SMEs, 49 percent cited access to new customer bases as the primary motivation for expanding overseas, while 43 percent pointed to building a stronger international brand presence. The findings suggest a strategic pivot toward revenue diversification and market resilience rather than short-term opportunistic expansion.

SMEs also highlighted that successful entry into new markets depends heavily on access to trusted local partners, reliable market intelligence, and guidance on regulatory and compliance requirements, particularly during the early scaling phase.

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AI Adoption Accelerates but Remains Uneven

The survey indicates that technology adoption, especially artificial intelligence, is becoming an increasingly important lever for competitiveness. Sixty-seven percent of respondents reported that they have already begun applying some form of AI within their work processes.

However, deeper integration remains limited. Only 12 percent of SMEs said AI is fully embedded across their operations, pointing to significant room for expansion. Firms in information and communications, electronics manufacturing, and professional services were the most advanced in AI usage, while adoption lagged among wholesale and trade businesses.

To accelerate progress, respondents identified access to financial support or grants, expert implementation guidance, and partnerships with technology providers as critical enablers for translating AI adoption into tangible productivity gains.

Sustainability Readiness Shows Marked Improvement

SMEs also reported notable progress on sustainability preparedness. The share of firms that consider themselves sustainability-ready rose to 49 percent, up from roughly one-third a year earlier. At the same time, the proportion of businesses that felt unprepared declined sharply to 27 percent, down from 60 percent last year.

To maintain momentum, SMEs emphasised the need for more affordable green technologies, clear step-by-step implementation frameworks, and targeted training programmes to equip staff with relevant sustainability skills as ESG considerations become increasingly tied to competitiveness.

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Global Trade Pressures Persist

These strategic initiatives are unfolding against ongoing external pressures. Thirty-six percent of survey respondents said their operations had been affected by tariffs and trade restrictions, with impacted firms citing higher operating costs, supply chain delays, and material shortages.

Despite these headwinds, business sentiment remains cautiously optimistic. Fifty-seven percent of SMEs expect their business performance to improve in the year ahead, supported by investments in productivity, digitalisation, and overseas expansion.

A Pragmatic Growth Mindset

Commenting on the findings, Chen Ze Ling, Group Head of Corporate and SME Banking at DBS, said the results reflect a pragmatic approach among SMEs navigating uncertainty. Businesses, she noted, are taking concrete steps to expand their footprint, invest in AI-driven efficiency, and strengthen sustainability credentials to remain competitive in a changing global landscape.

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