Businesses negatively impacted by Covid-19 drop to 32% as sentiments rebound: SBF poll

BUSINESS sentiments in Singapore rebounded in 2021, with the proportion of companies that reported being negatively impacted by Covid-19 halving to 32 per cent, from 63 per cent a year ago.

Nevertheless, of those that have been negatively impacted by the pandemic, nearly 7 in 10 said they expect to take more than a year to fully recover.

Only a quarter of the companies in this group were confident that they could bounce back in the next 6 to 12 months.

These were among the findings from the Singapore Business Federation's (SBF) latest annual National Business Survey, which was released on Wednesday (Dec 8).

During a media briefing on the survey findings, Lam Yi Young, SBF's chief executive officer, said many of the companies have shifted their focus from survival to recovery in 2021. And though they express optimism for recovery and growth in the coming year, there still remains uncertainties and unevenness across the industries.

The survey was conducted between Jul 26 and Oct 1 this year with 1,096 respondents across all key industries.

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It found a jump in the number of businesses which believed they could sustain their operations in the coming year, with nearly 8 in 10 firms saying they were confident of tiding over the next 6 and 12 months respectively.

Only a minority of those surveyed - 13 per cent - believed the Singapore economy will take a turn for the worse in the next 12 months, while nearly half were confident that the situation will improve.

However, this optimism was not reflected in the companies' sentiments towards the international markets.

Most businesses were either neutral or dissatisfied about the current global and South-east Asian business climate.

Manpower cost was the most cited business challenge, named by 48 per cent of respondents.

Demand uncertainty and travel restrictions came in second and third place respectively, with 48 per cent and 47 per cent of companies citing them as top business challenges.

Businesses identified rising manpower costs, the need to attract and retain younger workers, as well as stricter policies limiting the supply of foreign workers as among their key manpower challenges.

To address these, businesses said they would enhance recruitment efforts to hire locals, increase wages of jobs to attract locals and invest in technology or redesign job roles to reduce manpower needs.

Lam said businesses may feel like they have "no choice" but to pay more to get the people they need, even as they worry about rising manpower costs.

"This would lead to even higher manpower costs, so that's why it's a great concern to them. If it keeps spiralling this way it can become unsustainable for businesses," he said.

When it comes to digitalisation, the survey found that while businesses were keen to adopt new technologies to stay competitive, many reported being held back by the high cost of adoption as well as the need to keep staff constantly updated.

Among those polled, 52 per cent cited the high cost of tech adoption as a challenge, 30 per cent cited upskilling while another 30 per cent cited cyber security risks.

As for how the government could assist businesses, the respondents said they would like to see support in their digitalisation efforts (43 per cent), and be given financial support (38 per cent) as well as human capital development support (37 per cent).

Amid a pandemic which has seen virtual meetings become the norm, businesses still cited travel as a key driver for doing business overseas.

Almost 7 in 10 companies said travel out of Singapore was important for doing business abroad, while nearly three-fifths said travel to Singapore was important.

Asked how sentiment has shifted since the survey was conducted and more Vaccinated Travel Lanes (VTLs) have been launched, Lam said the resumption of quarantine-free travel, along with the holding of big-scale events such as the Bloomberg New Economy Forum, have further boosted business confidence.

However, he noted that the emergence of the Omicron variant has dampened some of the optimism, especially since further reopening of borders has now been put on hold to mitigate infection risks.

"I think we are keeping our fingers crossed as more data emerges about Omicron - what type of impact will it have and will we be able to continue with our transition towards living with endemic Covid, and continue reopening domestically as well as overseas," he said.