Three in 10 firms lack confidence in sustaining business this year: SBF poll

THE recovery may have begun but uncertainty remains, with three in 10 companies lacking confidence that they can sustain their business over the next 12 months, according to the Singapore Business Federation's (SBF) annual National Business Survey 2020/21 released on Tuesday.

Still, with the remaining seven in 10 being somewhat or very confident of making it through the year, the overall sentiment is of hope in recovery even if "2021 is not going to be an easy year", said SBF chief executive officer Lam Yi Young.

Sentiment about the coming year is split, with about three in 10 respondents each respectively expecting the business and economic climate to improve or worsen in the next 12 months. The remaining 37 per cent expect it to stay the same.

The survey was conducted in October and November with 1,075 respondents. Of these, 63 per cent said they were hit by the Covid-19 pandemic, with average revenue declines of 31 per cent.

A quarter of respondents expect to make a full recovery in the next six to 12 months. Just over half expect full recovery to take one to two years, while 16 per cent expect it to take longer.

Covid-19 also hindered overseas operations. Nearly half of respondents said overseas business activities had fallen, with nearly all attributing this to Covid-19. Two-thirds felt that outbound business travel is important for effective operations.

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Travel restrictions due to Covid-19 were the third most-cited business challenge, named by 44 per cent of respondents.

The top challenge was demand uncertainty due to Covid-19, cited by three-fifths of respondents, and manpower costs, cited by over half.

But Mr Lam noted: "Amid the negative impact of the Covid-19 pandemic is the silver lining of a stronger push for digital transformation and manpower development by companies."

More than four-fifths of respondents said the pandemic accelerated their digital transformation, by an average of two years.

Firms that reported that their industry was undergoing high levels of transformation were more confident about sustaining their business, compared to those who reported low levels of industry transformation.

Nearly half of respondents said staff training had become more important during the pandemic, with a similar proportion saying its importance remained the same. The biggest barrier to training, however, was having limited manpower resources to cover for staff who were undergoing training.

"SBF will continue to work with companies to support them in their recovery and growth journey, and with the government on relevant support schemes to help companies," said Mr Lam.

With Budget 2021 around the corner, the survey's findings will be shared with the government for its consideration.

Amid the pandemic, business cost support measures were found to be the most helpful by far, cited by nearly nine in 10 respondents.

Second were cash-flow management schemes such as income tax rebates, cited by just over half. Just under half also said schemes for attracting, development and retaining talent were helpful.

Asked which schemes introduced during the pandemic should be extended and till when, some respondents hoped that measures such as the Jobs Support Scheme or working capital loans could be extended till the end of 2021.

As for what support would help them emerge stronger, firms' top picks were help with digital transformation, financial support and financial management.