Two in three Singapore firms ‘moderately to severely’ hit by Iran war: SBF

[SINGAPORE] Two-thirds of Singapore businesses polled by the Singapore Business Federation (SBF) said that they have been “moderately to severely” affected by the ongoing Iran war.

Rising energy and logistics costs have affected operations and demand, even as companies attempt to actively manage costs and shift strategies in response, the poll results indicated.

About 66 per cent of the 254 businesses surveyed felt the effects of rising energy prices, said SBF on Wednesday (Apr 22). This was followed by 54 per cent of respondents indicating a hit on shipping and freight costs and 48 per cent feeling the effect in customer demand.

“While half of large companies reported a moderate impact, small and medium-sized enterprises (SMEs) are experiencing more acute challenges, with one in three reporting significant to severe disruptions,” said SBF.

Amid large firms, more than two in five also reported higher exposure to insurance and security-related costs, compared to less than one in five for SMEs, highlighting “differences in risk exposure across firm sizes”.

As a result, just over a third of SMEs polled expressed confidence in managing ongoing volatility, compared with 78 per cent of large firms.

More than half of all respondents also said they were “very or extremely concerned about their long-term viability” if macroeconomic conditions do not improve in the next six months. 

Necessary adaptations

Singapore businesses have already been taking active steps to adapt, SBF said.

Half of all firms polled said they have already raised prices or renegotiated contracts, while 40 per cent of SMEs are prioritising cash conservation.

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Large firms with more resources and capabilities are undertaking sophisticated risk management, with a third implementing fuel and foreign exchange hedging and 17 per cent increasing energy efficiency investments. 

Still, businesses are “making a strong call for more targeted assistance” to cope with what seem to be longer-term cost pressures and geopolitical uncertainty.

More than two in five are seeking working capital support, while over a third are looking for logistics cost management assistance.

On Apr 7, Singapore increased the corporate income tax rebate from 40 to 50 per cent. This was cited by three in five businesses as “delivering the strongest immediate value”.

The extension of the Energy Efficiency Grant during the Budget announcement in February was highlighted by 43 per cent of respondents, while nearly a third pointed to support to defray cost increases in government projects as having the biggest supportive impact.