8 in 10 SMEs plan overseas expansion in 2026 despite market volatility: DBS survey

[SINGAPORE] Small and medium-sized enterprises (SMEs) in Singapore are increasingly looking beyond domestic shores to drive growth, with 82 per cent planning to expand overseas in 2026, the latest DBS Business Pulse Check survey, released on Tuesday (Feb 10), showed.Nearly half of the respondents cited reaching new customer bases as a key driver, while 43 per cent pointed to building a stronger presence in other countries.DBS said that these findings point to a strategic shift among businesses towards diversifying revenue streams and markets.The survey was conducted from December 2025 to January 2026 and polled 730 companies – with the information and communications and manufacturing sectors forming the largest representation – to assess the needs, concerns and plans of local SMEs.Among those planning to expand overseas, 59 per cent noted partnerships with domestic players as the top support needed, while 47 per cent cited access to market insights.The survey comes amid trade headwinds and broader market volatility.About 36 per cent of the respondents said that tariffs and trade restrictions had affected their operations, with higher operating costs and weaker sales indicated as key challenges.Technology, particularly artificial intelligence (AI), is also playing a growing role in SME operations.In a press release, DBS said that AI is playing an “increasingly prominent role in how companies are strengthening their competitive edge”.Around 67 per cent of firms reported using AI in some form, though only 12 per cent had fully integrated it across all operations, indicating uneven adoption.Firms in the information technology, electronics manufacturing and professional services sectors were the most advanced in their AI use, while those in the wholesale and trade sectors were the least likely to have adopted AI solutions.Companies highlighted the need for financial grants, expert guidance and partnerships with technology providers to translate AI adoption into measurable productivity gains.DBS noted that this reflects further improvements for more businesses to fully incorporate AI in their practices.More firms are sustainability-readyThe survey also found that sustainability remains another area of focus for local firms to “align with evolving customer and market expectations”. About half of the respondents considered themselves sustainability-ready, up from one-third in 2025, while those feeling unprepared fell to 27 per cent from 60 per cent the year before.Chen Ze Ling, group head of corporate and SME banking at DBS, said that businesses are “taking clear, practical steps – expanding their footprint, investing in AI to drive efficiency and strengthening their sustainability credentials to stay competitive”.Despite market uncertainty, sentiment among SMEs remains cautiously optimistic, with 57 per cent of the survey respondents expecting business performance to improve this year, supported by investments in technology and overseas expansion.Chen said that the survey reflects the “pragmatic approach many SMEs are taking to navigate an uncertain environment”. He added that DBS will continue “working alongside them to build resilience and support sustained, long-term growth”.