Singapore Budget 2016: Over half of local firms hit by tough climate

Singapore

THE weaker economic growth in Singapore and around the world is causing much grief for many Singapore companies these days.

Just over half of businesses here say they have been "adversely affected" by the current global economic climate, the latest National Business Survey has found. The 54 per cent of firms which feel this way is a marked increase from the 35 per cent from last year's survey.

The results of the annual poll of 1,002 members of SBF were released by the Singapore Business Federation (SBF) on Tuesday, at the start of a half-day conference to discuss its new economic position paper.

In the survey, conducted by DP Information Group in the fourth quarter of 2015, four in five respondents were small and medium-sized enterprises, and the rest, large companies; 60 per cent of the firms had fewer than 50 employees on the payroll.

They were asked questions, such as their sentiments on the economy, concerns on the ground, the impact of economic restructuring and their outlook for the new year.

Only 48 per cent of them indicated that they were likely to be profitable this year; this was down from 56 per cent who said so in SBF's survey last year.

About one in six companies, or 17 per cent, said they did not expect to make money this year, up from 10 per cent last year.

The SBF poll found that slightly over a quarter (26 per cent) of companies in the logistics and transportation sector believed that they would be in the red; the ratio was similar for those in the oil & gas (22 per cent) and education (20 per cent) fields.

Overall, just 4 per cent of Singapore companies said they felt "very optimistic" about the country's economic growth prospects for the year.

Companies in the banking & insurance sector and the services industry were in this small group with a more positive outlook about their business prospects in this new year. On the other end of the spectrum, the firms in education and oil & gas were the least optimistic.

Unsurprisingly, the rise in labour costs continued to be the top concern for Singapore companies over the next six to 12 months. This was followed by concerns over an uncertain economic environment and a slowing growth in sales.

More firms (41 per cent) felt the impact of fluctuations in foreign-currency exchange, higher than the 34 per cent and 30 per cent who said so in the last two such surveys.

With Finance Minister Heng Swee Keat set to deliver his first Budget statement in Parliament on March 24, the companies disclosed the items on their wishlists:

They hope that Budget 2016 will chiefly address the rising costs of doing business here, including wages, rentals and foreign worker levies.

They also want to see greater investment in the training and development of the PMET (professionals, managers, executives and technicians) group, and more incentives to help companies to build capacity.

Companies are also hoping for the government to introduce more schemes that cater to foreign worker policies, R&D and innovation, and overseas expansion.

But it is not all doom and gloom in the business world. The SBF survey found that Singapore companies were continuing to maintain a presence overseas; two in three had operations abroad, with the vast majority setting up shop in Asian markets.

The vast Mekong region - in particular Cambodia, Laos, Myanmar and Vietnam - is attracting greater interest among Singapore firms, in addition to other South-east Asian countries such as the Philippines and Thailand.

Those that have had a bumpy ride when venturing beyond Singapore cited a number of obstacles, with the top three being competition from companies already established there, unclear rules and regulations and compliance issues.