UNCERTAINTY was the most commonly used word on the first day of the two-day seminar entitled Outlook 2017, and in many ways, it mirrored the sentiment of many small and medium businesses as they approach a new year with trepidation and reservation about the challenges ahead. Recent developments in politics and economic initiatives around the world have had a seismic effect on nations and their companies, as the forecast shifted from a dull, mediocre and unspectacular one to an anticipatory outlook for change with undertones of peril.
Organised by The Business Times and supported by Canon, the event is the fourth and last instalment of the Canon Think Big Leadership Programme for this year. Outlook 2017 aims to address some of the potential issues that can affect economies and firms, while suggesting guidelines on how to make the best of opportunities and move forward with optimism.
Through valuable insights gleaned from industry specialists, participants can gain a greater understanding of the economic outlook for 2017 and how the wide-ranging implications of the Trump administration could influence the way businesses are run.
Held at the Marina Mandarin Hotel on Nov 15, day one of the seminar focused on how the economic outlook for 2017 could shape businesses, with esteemed strategists Mr Vasu Menon and Dr Chua Hak Bin taking the stage, before joining fellow panellists Mr Victor Mills, CEO of the Singapore International Chamber of Commerce (SICC), Mr Vincent Low, Director & General Manager of Business Imaging Solutions, Canon Singapore, Mr Kurt Wee, President of the Association of Small and Medium Enterprises (ASME), and moderator Mr R Sivanithy of The Business Times for an enlightening panel discussion.
Mr Low got the ball rolling with his welcome address, which looked back at a cautious 2016 in the wake of a global slowdown caused largely by the sluggish oil and shipping industries, and the unexpected ripple effects from Brexit and the US election results. “As an export-dependent economy, we were anxious but prepared for changes,” he said. “The year 2016 will be remembered as a year of dramatic developments, and it is up to us to make a difference by adapting and innovating.”
He emphasised the need for a sound understanding of essential elements such as the big picture, risks and prospects to help adapt to long-term transformation and adopt innovation strategies. “Knowledge is a powerful tool and through the Think Big Series, Canon reaffirms the belief that the sharing of knowledge enables collective growth”.
Withstanding The Winds Of Change
Growth is an area that has been sorely lacking, as Senior Investment Strategist for OCBC Mr Menon revealed. World economies have been struggling since the financial crisis of 2009, with a slew of economic crises nullifying any attempts at recovery, while inflation has fallen off the cliff due to increased competition from globalisation, technology, and slower wage growth throughout the world.
Mr Menon proceeded to highlight three headwinds for the coming year, with the ascendency of Donald Trump the most prominent. “Trump could be the beginning of a new world order,” he warned. “One that is probably going to change the way the world is run.” He elaborated that Mr Trump’s anti-trade and extremely expansionary rhetoric poses a threat to Asia’s economies.
His widely-publicised fiscal policy of splurging on infrastructure and drastically cutting corporate tax rate may also harm Asian currencies as they weaken against the inflated US dollar. Along with Brexit, Mr Trump’s election rhetoric has already sparked the second headwind of political uncertainty, which may spill into upcoming elections across Europe.
Based on statistics from Pew Research, Mr Menon showed that more than 70 per cent of Americans are dissatisfied with the state of the economy, citing the income gap between the rich and poor as the main reason. He said: “Economic growth has only benefited the top 10 per cent and hasn’t trickled down into the economy in any big or meaningful way.”
The third headwind that’s expected next year is the intensification of pre-existing structural issues such as demographics, falling productivity, and debt. “In a rapidly ageing global population, companies haven’t been spending, while most of the major world economies have skyrocketing debt levels that pose as hurdles to the world economy’s recovery,” Mr Menon observed.
Strategising On The Local Front
With increasing uncertainty and risk factors for investment and growth in the short and medium term, how can local businesses strategise to ride through the rough times? That was the question Dr Chua, Consultant of Economics & Investment Strategy, GIC, addressed.
The background looks bleak: Business closures have overtaken new business formation in the first seven months of 2016, while there is a slowdown in manufacturing and service sectors. “The restructure that major economies are seeking to gain a foothold in the global competitive landscape is not reaping the desired outcome as only low-productivity, low-wage jobs are growing,” explained Dr Chua.
He proposed searching for opportunities that still abound in an unsynchronised global recovery where divergent policies are being pursued. As the world is divided into “old economy” involving manufacturing and energy, and “new economy” that is service-centric, tourism remains a bright spot in Asean, especially with the onset of budget travel.
The rising affluence of China has also created outward investments and a growing savings pool which companies can tap. “Silver linings are few. Singapore must rely more on the immediate neighbourhood and Asia for growth.”
Turning Constraint Into Strength
Although it was dealing with an unfavourable outlook, the seminar ended on a hopeful note with the panel discussion focusing on untapped opportunities in the face of adversity. There is a consensus among the panellists that outward and positive thinking is the best way forward, with Asia offering plenty of opportunities to be explored.
“Amid business cycles is the propensity for businesses to find ways to grow and sustain,” said Mr Mills. “We shouldn’t be ignoring this hugely diverse and rich region that’s on our doorstep.” Mr Wee concurred with the benefits of regionalisation, saying: “Take our constraints and think how to squeeze blood from stone. Export our state of efficiency, go rough it out and operate like a domestic competitor in overseas markets.”
The economic outlook for the new year may look anything but rosy, with shrinking markets, rising interest rates and political gridlock painting a dismal picture for businesses. In order to stay relevant in these volatile times, companies’ need to innovate becomes more imperative, with overseas markets providing opportunities for businesses to expand.
Perhaps the best way to navigate the waters of uncertainty is simply to take and manage risks. After all, fortune favours the brave – the time to think big is now.
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