The Singapore Business Federation (SBF) has announced a strengthened economic outlook for Singapore, as detailed in its National Business Survey (NBS) for 2024, which focuses on Annual Business Sentiments. The survey, conducted between 11 October and 11 November 2024, garnered responses from 519 businesses, with a majority (83%) being small and medium-sized enterprises (SMEs) alongside 17% of larger companies.
The findings reveal that 40% of businesses are currently satisfied with the business climate, representing a significant increase of 10 percentage points since mid-2024. Furthermore, there is a growing optimism among businesses concerning the economy's trajectory, with 26% anticipating improvement in the next year compared to 22% expecting decline.
Despite the positive forecast, challenges persist. Rising business costs remain a primary concern, with 66% of respondents identifying manpower costs as their top challenge. Customer demand uncertainty has emerged as a critical issue too, escalating sharply from 30% in 2023 to 45% in 2024, making it the second most significant hurdle faced by companies. Additionally, rental costs have also surged, climbing from 36% in 2023 to 43% in 2024. The hospitality sector, particularly hotels, restaurants, and accommodations, is notably affected, with 80% reporting issues with customer demand instability, followed closely by the retail (75%) and wholesale (59%) sectors.
Amidst these difficulties, a positive note can be found in profitability; 57% of respondents indicated they had maintained or increased their profits over the past year, while 43% reported a decrease, averaging a drop of 27.5%. To address ongoing cost pressures, many businesses have adopted various strategies, including cost-saving measures (51%), raising product prices (41%), and improving inventory management (30%).
Liquidity remains a concern, with 54% of businesses indicating they have no liquidity issues. However, 25% reported experiencing various degrees of credit strain, with 40% of this group stating they lack sufficient funds to operate for the next three to six months. In reaction to these challenges, businesses have begun cutting non-essential expenses, evaluating customer credit risks, and enhancing collection efforts. In addition, 70% of firms are seeking government support programmes to help manage their financial challenges.
Looking ahead, there is a clear shift toward investment in future capabilities. 36% of businesses plan to focus on employee training, 37% are prioritising new technologies and digitalisation, and 26% intend to increase investments over the next year.
However, the survey also highlights a pressing need for a complementary foreign workforce, given the constraints of local manpower and the low unemployment rate in Singapore. A majority (59%) of businesses believe that local employees view foreign workers positively, while only 7% see them as competitive threats. Interestingly, the perception of Singapore’s attractiveness as a global talent hub has declined slightly, dropping from 43% to 41%, particularly among larger corporations, where the figures fell from 55% to 47%.
To foster stronger integration between local and foreign workforces, 42% of businesses are utilising cross-functional teams. Yet, only one in five companies has implemented Diversity, Equity, and Inclusion (DEI) policies or engaged in community and cultural integration activities.
The survey results indicate that businesses have responded favourably to the measures announced in the Budget 2024, which aim to alleviate rising costs, enhance strategic capabilities, and promote sustainability. The most appreciated initiatives included the Corporate Income Tax rebate (88%), the SkillsFuture Level Up programme (78%), an extension of the SkillsFuture Enterprise Credit (73%), enhancements to the Progressive Wage Credit Scheme (70%), and an increase in the salary support cap for Career Conversion Programmes (CCPs) (67%).
As companies navigate these economic challenges, they are calling for government assistance in three pivotal areas: managing financing needs (35%), developing human capital (34%), and advancing digital transformation (33%). Their top priorities for the forthcoming Budget 2025 focus on tackling cost pressures (64%), attracting and retaining local talent (43%), and addressing foreign manpower issues (41%).
Kok Ping Soon, CEO of SBF, remarked on the findings, stating that it is "encouraging to see a growth in optimism on business outlook," attributing this to the resilience and adaptability of businesses in Singapore. He noted the importance of investment in workforce capability, stating, “Given our manpower constraints, we need to increase Singapore’s absorptive capacity for a complementary foreign workforce to maintain our attractiveness as a global talent hub.”
With these insights, the SBF plans to release its SBF-PwC Budget Recommendations on 9 January 2025, derived from this survey and ongoing engagement with the business community.
Source: Noah Wire Services