Singapore firms upbeat about trade despite US-China rift

Singapore

DESPITE ongoing trade tensions between the US and China, four in five Singapore businesses have a positive outlook on the international trade environment, according to the latest HSBC Navigator report.

This was just above the global average of 77 per cent, in the October edition of the twice-yearly report.

Said HSBC Singapore chief executive officer Tony Cripps: "This reaction probably reflects a wide spectrum of attitudes ranging from those who see the trade tensions as a passing shower, to those who are underestimating risks, and also those seeing opportunity among disruption."

China also remains the top destination for Singapore firms, with 26 per cent of them naming it as one of their top three markets for expansion in the next three to five years. Malaysia and the US were the next most popular choices, each cited by 16 per cent.

However, China retained its leading position by a slimmer margin compared to the previous report in March, in which it was named by 31 per cent of Singapore respondents.

"While the economic, commercial and cultural corridor between Singapore and China has been historically strong, clearly trade tensions and cyclical shifts cannot be ignored," said Mr Cripps. Yet, current events notwithstanding, China will remain key, he added: "But, at the end of the day, Singapore exporters see China as a priority market and we can't see this central scenario changing."

Singapore firms were divided on the likely impact of US-China trade tensions, with 35 per cent seeing the situation as helpful to their business - "possibly offering a chance to take market share from affected economies", said HSBC - and 31 per cent considering it harmful. The latter may be firms supplying intermediate goods or providing services to support global trade flows, said HSBC.

Closer to home, Asean in general was seen as the most beneficial policy development in the next three years, with 71 per cent of Singapore firms seeing it as helpful to their business.

The Asean-China Free Trade Area was seen as helpful by 68 per cent, with the Asean 2025 initiative and free trade agreements both seen as helpful by 64 per cent - significantly more upbeat compared to the global average of 51 per cent who saw free trade pacts as helpful.

Said Mr Cripps: "With a number of regional trade pacts coming into effect for South-east Asia, the research shows that Singaporean are placing greater focus on ties with their Asean neighbours."

Conducted over six weeks from July to September, the international survey of over 8,650 businesses included 200 Singapore firms.

Besides trade, the survey also covered areas such as business strategy. Almost three-quarters of Singapore firms surveyed use data to optimise their performance, comparable to the global average.

The most common sort of data used was operational data such as internal feedback and operational reports, used by 58 per cent of firms.

In contrast, sensor-collected data from machinery was the rarest sort, tapped by just 25 per cent of firms.

Other commonly-used types of data were market data and transaction data, both used by more than half of respondents, while Web data was used by 42 per cent.

Increasing the use of digital technology or technology in general was the top planned supply chain change in the next three years, for both goods and services. In Singapore, 36 per cent of firms in the goods sector planned to do so, compared to 28 per cent globally. Three in 10 services firms planned to make such a change, above the 27 per cent global figure.