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Government moves help mitigate Covid impact on US firms in Singapore

Mindy Tan
Published Fri, Mar 12, 2021 · 05:50 AM


OVER half of Singapore-based American businesses expect the pandemic to continue to weigh on revenue this year. The annual Asean Business Outlook Survey conducted by Blackbox Research also found that the impact of Covid-19 was less severe for US firms in Singapore compared with their peers in the region.

Almost 80 per cent of businesses said the Covid-19 pandemic has negatively affected their regional business (24 per cent impacted to a great extent and 55 per cent impacted to some extent).

The impact on local business operations was even more severe with 27 impacted to a great extent and 60 per cent impacted to some extent.

The exception to this was Singapore where only 13 per cent of businesses said they were severely impacted.

This was primarily because of the proactive measures taken by the government as well as the extensive Budget set aside to help businesses tide over the pandemic, said Monica Chitnis, research director at Blackbox Research who presented the findings at the AmChams of Asia Pacific Business Summit on Thursday.

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In terms of revenue forecasts for the year, 54 per cent of respondents said they expect continued revenue reductions, 19 per cent were neutral, and 27 per cent expect positive impact on business.

Of those that expect continued revenue reductions, the majority (58 per cent) said they expect a one to 10 per cent reduction in revenue.

Separately, PwC's 24th Annual Global CEO Survey, which polled 5,050 CEOs in 100 countries and territories over January and February of this year found that CEOs globally are voicing record levels of optimism.

Globally, the percentage of CEOs expressing confidence in growth, at 76 per cent, is up from 22 per cent in 2020 and 42 per cent in 2019, representing the highest level of optimism since the survey started asking this question in 2012.

Singapore CEOs were significantly more confident at 75 per cent in 2021, a leap from only 6 per cent in 2020.

Meanwhile, Blackbox's Ms Chitnis noted that an increasing number of respondents - 117 of AmCham members were surveyed in December 2020 - foresee a stagnation in revenue generation from Asean markets in the next two years.

In terms of how important the contribution of the Asean market is for company revenue, 42 per cent of those surveyed said it is "more important", while 47 per cent said it "remains the same".

Compared with the previous year (survey conducted in 2019), American businesses were more bullish on Asean then - 54 per cent said the region is more important and 36 per cent said it remains the same. In 2018, 61 per cent of respondents said the region is "more important".

On expansion plans, more businesses are putting local expansion on hold. This is expected as nine in 10 businesses reported a negative impact on local operations due to Covid-19, she noted.

Less than half (42 per cent) of those surveyed have plans to expand locally (notably, Malaysia is the most optimistic in this segment, with 48 per cent set to expand locally), 51 per cent intend to "stay the same" (60 per cent of businesses in Singapore are set to carry on at a similar capacity), and 4 per cent expect to decrease.

For overseas expansion plans for the Asia-Pacific region, 73 per cent of the businesses are planning to expand overseas in the next five years.

The five countries highlighted as leading investment destinations comprise Vietnam (44 per cent), Thailand and Malaysia (31 per cent each), Indonesia (28 per cent) and China (27 per cent).

Interestingly, PwC's survey had the order of countries shuffled. Globally, results showed that the US has extended its lead as the No 1 market that CEOs are looking to for growth over the next 12 months (35 per cent), 7 percentage points ahead of China at 28 per cent.

Regionally, Singapore business leaders see China (43 per cent), Indonesia (27 per cent), the US (23 per cent) and Vietnam (18 per cent) as the top destinations for growth over the next 12 months.

PwC highlighted that political developments and existing tensions have had an impact on the views of US CEOs in their survey.

Specifically, they are reducing their emphasis on China as a growth driver and increasing their focus on Canada and Mexico; compared to 2020, US CEOs' interest in the latter two countries rose by 78 per cent, said PwC.

CEOs in China report growing interest in large economies such as the US, Germany and Japan, which are prime destinations for exports.


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