Singapore middle-market firms see growth above 6%: survey

Singapore

MIDDLE-MARKET firms in Singapore are brimming with optimism this year, with nine in 10 expecting growth in excess of the global average growth rate of 6 per cent, according to the annual EY Growth Barometer released on Wednesday.

Singapore ranked fourth for growth expectations in Ernst & Young's survey of 2,766 middle-market executives across 21 countries, including 103 from Singapore.

Just under two-fifths of the Singapore respondents are aiming for growth of over 10 per cent for the year, compared to about a quarter of respondents globally. Another 51 per cent of Singapore respondents are targeting growth of 6 to 10 per cent.

Said EY Global Growth Markets Leader Annette Kimmitt: "We are seeing a rare synchronisation of growth across all major global economies that is boosting executive confidence, particularly led by the Asia-Pacific region. For the first time, middle-market company leaders are getting ahead of change and shaping their businesses through investment, expansion and prioritisation to ride the wave of opportunity."

Further reflecting business confidence, almost two-thirds of Singapore respondents said they were considering an initial public offering, compared with 44 per cent globally.

For local firms, the most-cited growth strategies were overseas expansion (30 per cent) and mergers and acquisitions (19 per cent).

However, a quarter also plan to divest part of their business. EY Asean Growth Markets Leader Choo Eng Chuan noted that divestment could also be a route to overseas expansion: "For example, by selling part of their business to an external partner, they can access new markets and explore greater opportunities."

For three in 10 Singapore firms, attracting talent with the right skills is the top growth accelerator. Four in 10 local firms are planning to hire more full-timers, with a similar proportion also looking for more part-timers, contractors or freelancers.

The most-cited external risk was slow or flat global growth, with which more than four in 10 Singapore firms were concerned, compared with a quarter of respondents globally.

Geopolitical uncertainty, in contrast, was cited as the main risk by just 3 per cent of Singapore firms. Slow or flat local growth was also less of a worry, cited by about one in 10 respondents.

As for operational challenges to growth, the biggest issue was insufficient cash flow, cited by 38 per cent of respondents. Another fifth considered technological disruption to be the greatest growth challenge.

The EY survey found that Singapore has the third highest adoption rate of artificial intelligence (AI) at 9 per cent, behind China and the Netherlands, with a further 72 per cent of Singapore firms saying they plan to introduce AI in the next two years.

Yet Singapore fails to lead in applying technology more broadly. EY observed that many businesses still tap technology to serve "traditional roles" such as improving process efficiencies (29 per cent) and financial data (25 per cent), rather than the "more innovative roles" of improving customer experience and creating new business models.