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Singapore firms plan to invest in supply chain digitisation, lean into intra-regional partners: HSBC
SINGAPORE firms feel the full force of the economic shock more acutely than their global peers, according to survey findings from HSBC released on Tuesday.
It showed that 87 per cent of Singapore respondents said they felt the impact "strongly", compared with 72 per cent of global peers.
The survey took in the responses from more than 2,600 companies from 14 markets globally in May 2020, including 200 firms in Singapore.
HSBC said the survey reflects the Republic's official data which revealed the trade-dependent economy shrinking 41.2 per cent quarter on quarter in the second quarter of 2020.
Amid this, the firms plan to invest in supply chain digitisation and lean into their intra-regional partners to build future resilience.
Singapore firms are placing a heavier emphasis on integrating technology into their supply chain management, with 36 per cent of companies saying they will focus on digitising their supply chains in the next one to two years, versus 28 per cent of firms globally.
They are also more intent on securing their supply chains compared with global counterparts. A top priority in the next one to two years for these firms is to review their supply chain partners to ensure they are able to weather future challenges and uncertainties.
The survey noted that Singapore firms are looking to their regional partners to bolster trade flows, with 28 per cent of local companies intending to increase intra-regional trade in the next one to two years, compared with 20 per cent of global peers.
This sentiment coincides with the development of two major trade agreements - the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) - which Singapore is involved in, HSBC said.
The survey said Singapore firms feel "considerably less prepared" to handle the challenges arising from the Covid-19 pandemic. Only 34 per cent felt prepared, the lowest figure among Asia-Pacific countries, alongside the special administrative region of Hong Kong.
This came despite heavy investment in technology in the two years preceding the pandemic, where technology and innovation were the main focus areas for 75 per cent of the Singapore firms surveyed in building resilience before the novel coronavirus.
For Alan Turner, HSBC Singapore head of commercial banking, it is no surprise that Singapore firms have been more acutely affected as their success is founded on international trade systems.
"What stands out is the need to build more resilient contingency plans; while digital investment may have benefited B2C operations, digging deeper, the survey suggests future planning in supply chains is key," he said in a press statement.
Mr Turner noted that Covid-19 has shown the "absolute necessity" of preparedness for all businesses. Firms must get ahead to develop greater visibility and flexibility of the supply chains in order to withstand future shocks, he added.
"With Singapore already establishing business green lanes with key trade partners and with regional trade agreements like CPTPP and RCEP developing, Singapore businesses are well placed for the recovery," Mr Turner said.