SINGAPORE (Jan 14): Local businesses are feeling the pinch of the sluggish economic climate laced with uncertainty.
According to the latest annual National Business Survey released by the Singapore Business Federation (SBF), some 49% of local businesses expect Singapore’s business climate to become more challenging this year, while 44% expect the climate to remain the same.
Conducted between August and October 2019, the survey also found that 51% of all businesses felt the Singapore business environment had worsened over the past year.
According to the CEO of SBF Ho Meng Kit, the weaker overall business sentiment across 1,018 companies did not come as a surprise on the back of the ongoing US-China trade dispute.
“Although the survey was done prior to talks of the Phase One trade agreement, the results are unlikely to vary that much now if the survey is conducted now,” says Ho.
SBF also highlighted key concerns of businesses which include increasing business costs, uncertainties due to US-China trade tensions as well as China’s economic slowdown.
Despite the fairly dismal economic climate, Singapore businesses are continuing to venture out and expand overseas.
84% of businesses now have an overseas presence, up from 75% last year. In particular, small and medium enterprises (SMEs) have been expanding internationally, with 78% now having an overseas presence from 68% in the previous year.
SBF notes that Southeast Asia remains the favoured region for expansion, with Malaysia, Indonesia and Thailand emerging the three most popular countries.
“It is encouraging that our SMEs are extending their global footprints more aggressively despite the economic uncertainty that shrouded 2019,” says SBF. “The growing e-commerce and digital economy provide our businesses with new opportunities as they can expand into new markets with little to no physical presence.”
The survey also revealed that 94% of companies have become more cognisant about maintaining competitiveness and competency through “business transformations”. Some 66% of companies also cite technology to be fundamental in their transformations.
The survey has identified perceived cost remains the biggest roadblock to companies adopting new technology, with 69% of companies attesting to this.
“The shift in mindset is a big step in the right direction and we hope to see this increased awareness translate into actions. The perceived high cost of technology adoption is a common misconception,” says Ho.
“Companies can start small, such as setting up a website, or getting on social media,” he adds.
However, Ho notes that businesses have been fairly slow in warming up to the idea of business transformations, with the shift coming nearly a decade after the government began its push for companies to innovate.
Looking ahead, SBF highlights how companies have “returned to basics” in their wishlists for the upcoming Budget.
Both large companies and SMEs had ranked tax reductions and rebates as the joint top priorities. Easier access to information and resources from government agencies, incentives for industry-related training and corporate venturing were also noted to be key priorities for companies.
Meanwhile, SBF is slated to release its own wishlist for the Budget next week.