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Companies hope for more coordinated government responses as costs rise: SCCCI survey

Majority of the businesses surveyed by SCCCI have projected profits for 2022 and expect a gradual post-pandemic recovery

Benjamin Cher
Published Mon, Oct 24, 2022 · 06:27 PM

THE annual survey by the Singapore Chinese Chamber of Commerce & Industry (SCCCI) for 2022 has revealed concerns around rising business costs, as well as hopes for coordinated responses from government agencies.

Rising business costs is the top concern among the over 1,000 companies polled by the SCCCI, with small and medium enterprises (SMEs) making up 91 per cent of the respondents. This was followed by the availability of suitable manpower, and inflationary pressures.

Singapore businesses are predicting a gradual post-pandemic recovery. Some 36.4 per cent project revenues to remain the same, while 37.7 per cent expect revenues to rise. This was an increase from 2021, as 47.2 per cent of respondents then projected revenues to decline.

On the manpower front, 57 per cent are maintaining their headcount, while 26 per cent are looking to increase it. Of those projecting a manpower increase, 79.3 per cent are looking to raise headcount by 25 per cent.

Business costs are also projected to rise, with 74.9 per cent of respondents predicting an increase. Some 73.6 per cent of those projecting an increase expect business costs to climb by 25 per cent.

However, a majority of the respondents, or 71.6 per cent, are expecting profits in 2022. Across all sectors, the number of respondents who expect profits exceeds those who are predicting losses. (*see amendment note)

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Of those expecting profits, half or 50.3 per cent project higher profits than in 2021. For those expecting losses, around 38 per cent expect a lower loss than in 2021.

Rising manpower costs dominated the list of manpower challenges, followed by the inability to recruit local staff with suitable skills, and greater difficulties in hiring foreign workers. When it comes to addressing manpower issues, 53.9 per cent of respondents are looking into transformation, automation and digitalisation to reduce manpower needs.

There are challenges with business transformation as well, with respondents citing a lack of internal expertise and resources to undertake or implement transformation as the top challenge. This was followed by uncertainties about the outcomes.

However, respondents see the benefits of digitalisation, with the top three benefits being improved operational efficiency, higher productivity, and the ability to reach more customers with wider market access.

About 80 per cent of respondents have experienced a small to moderate rise in the effectiveness of their digitalisation efforts. However, costs and a lack of internal expertise are the key challenges to digitalise. Furthermore, most businesses are yet to derive the majority of their revenue from online sources, with those that do only reporting at 10 per cent or less.

Changing employee mindsets about the need to learn new skills is the top difficulty faced by respondents in reskilling or upskilling employees. This was followed by being unable to release employees for training due to a tight labour market.

As for regulatory challenges, the top challenge cited was the cost incurred for complying with regulations.

Meanwhile, two-thirds of respondents (66.7 per cent) are planning to venture overseas in 2022 compared to 2021 (59.7 per cent). The top four markets respondents are interested in are Malaysia, Vietnam, Indonesia and China.

Business travel is regarded as important for internationalisation efforts, with respondents seeing virtual trade fairs and missions as not that effective. The top challenges for internationalisation are uncertainties in the overseas economic environment, travel restrictions, and a lack of suitable markets.

The majority of respondents, or 67.5 per cent, have applied for government grants, with 60.3 per cent indicating the most useful schemes being those that help with digitalisation and technology adoption. This was followed by schemes that help businesses hire, train and retain employees.

When Covid-related government measures tapered off, 65 per cent of respondents reported a small to moderate impact, while 13.5 per cent reported a large impact. (*see amendment note)

The top challenges faced by respondents in applying for government grants are the lack of knowledge on the most appropriate schemes for their business needs, a complex application process, and the application process not being fast enough for their business needs.

Apart from government schemes, the top thing respondents are looking for is government agencies being more coordinated in cross-agency issues to help businesses. This was followed by trade associations to come out with more relevant initiatives to help member companies, and for government-linked companies and larger businesses to provide more opportunities for SMEs to participate in.

Sustainability is also regarded by respondents as being important for their businesses, with 70.8 per cent marking it as “moderately to largely important”. Some 38 per cent of respondents have incorporated sustainability in their business to a moderate extent.

The top challenges hindering sustainability efforts are the high costs associated with sustainability practices, priority on business survival, and a lack of capabilities and resources to understand and implement relevant sustainability practices.

SCCCI has four recommendations in tandem with the survey findings:

  1. Have a balanced approach towards local and foreign manpower, recognising that foreign workers complement local workers
  2. Refine and strengthen government support for the digitalisation efforts of SMEs
  3. Enhance government support for trade associations and chambers to drive internationalisation of SMEs
  4. Quicken the pace of SMEs’ pursuit of sustainability with a view to building new capabilities and reaping opportunities

“As the business environment remains difficult and uncertain, we urge the government to continue to provide more proactive support for businesses and trade associations, including enhanced funding support, as well as anticipating some of the upcoming key challenges that SMEs will face. This dual approach will not only help our SMEs to address their near-term challenges, but also fulfil the vision to develop globally competitive Singapore enterprises,” said Kho Choon Keng, president, SCCCI.

*Amendment note: A previous version of this story incorrectly stated some responde A previous version of this story incorrectly stated some respondents percentages.

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