Nearly two-thirds of Singapore firms hurt by Covid-19, but rising number expect economy to improve, survey shows

Of the firms surveyed by the Singapore Business Federation, 59 per cent said that uncertainty over demand is a key challenge for business during the pandemic, while 44 per cent said it was travel restrictions. — TODAY pic
Of the firms surveyed by the Singapore Business Federation, 59 per cent said that uncertainty over demand is a key challenge for business during the pandemic, while 44 per cent said it was travel restrictions. — TODAY pic

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SINGAPORE, Jan 27 — Nearly two-thirds of businesses here have been hurt by the Covid-19 pandemic but nearly seven in 10 said that they can sustain their business over the next 12 months, though most do not expect a full recovery until at least 2022.

These were the fingings of the National Business Survey by the Singapore Business Federation (SBF) that were released yesterday.

It also found a marked upturn in optimism, with 31 per cent of 1,075 businesses surveyed expecting the economy to improve in the next 12 months, up from 8 per cent in 2019.

The annual survey was conducted in October and November last year in collaboration with data analysis and research agency Blackbox Research.

It aims to provide insights on business sentiment on the economy and business environment.

In all, 85 per cent of the firms surveyed were small — and medium-sized enterprises (SMEs), while the rest were larger companies, covering key industries such as construction and civil engineering, wholesale trade and manufacturing.

Here is a closer look at the findings:

Impact of Covid-19

  • 63 per cent of businesses reported a negative impact of Covid-19, 31 per cent reported no impact and 6 per cent reported a positive impact
  • The impact has been uneven, with the hardest-hit industries being construction and civil engineering, manufacturing and retail, real estate, hotels, restaurants and accommodation
  • Logistics and transportation, banking, insurance, information technology (IT) and professional services were the most positively impacted by the pandemic
  • When asked at a media briefing about the impact of vaccinations, SBF’s chief executive officer Lam Yi Young referred to the uncertainty of vaccinations and said: “For now, I think companies will still be taking a ‘wait and see’ attitude to what is happening.”

1. Digitalisation and internationalisation

  • 84 per cent of the respondents reported that the pandemic has accelerated their digital transformation by an average of two years, with four in 10 of these companies increasing their IT budgets
  • The number of businesses with an overseas presence shrank by 7 per cent compared with 2019, which Blackbox founder David Black described as “a little less than (expected)”.
  • 27 per cent plan to expand overseas next year, with Vietnam (35 per cent), China (31 per cent) and Indonesia (31 per cent) being the top choices

2. Key business challenges

  • Uncertainty over demand was mentioned by 59 per cent of the respondents as a key challenge of Covid-19, while 44 per cent said it was travel restrictions 
  • Manpower cost (52 per cent) and business competition (41 per cent) are still among the top challenges, similar to 2019
  • 52 per cent reported more restrictive foreign workforce policies raising costs as a key manpower challenge, along with reducing manpower cost (47 per cent), stricter policies limiting the supply of foreign workers (44 per cent) and applicants lacking soft skills (42 per cent)
  • Businesses pointed to staffing resources as another challenge, with 46 per cent reporting that they have limited manpower to cover for employees undergoing training

3. Government support schemes

  • An overwhelming majority, 88 per cent, found that cost support schemes, such as the Jobs Support Scheme, which provides employers with wage support, were most useful and relevant during Covid-19
  • Schemes that helped cash flow management were brought up by 52 per cent of the respondents
  • Other than financial support (37 per cent), companies want help with digitalisation (43 per cent), financial management (33 per cent) and brand development (31 per cent)
  • SBF said that businesses were looking for support in these areas in Budget 2021, to be delivered on February 16

Looking ahead

  • 70 per cent of businesses that have been hurt by the Covid-19 crisis expect full recovery only after more than 12 months
  • 31 per cent of businesses expect the economy to improve in the next 12 months, compared with 8 per cent in 2019
  • However, 37 per cent expect no change and 32 per cent expect the climate to worsen
  • Two in three firms are confident about sustaining their business in the next six to 12 months
  • Uncertainty is higher among SMEs, with seven in 10 reporting that they are confident about sustaining their business in the next six to 12 months, compared with eight in 10 for large companies
  • In 2021, businesses intend to prioritise growing revenue (49 per cent), ensuring positive cashflow (38 per cent) and reducing costs (35 per cent)

Lam of SBF said: “Overall, what this shows is that there are some signs of optimism in the economy, but at the same time, businesses are realistic that it is going to take some more time.

“There will continue to be a lot of uncertainty and challenges.”

He added that the federation has shared its survey findings and Budget recommendations with the Singapore government. — TODAY

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