Keep calm and carry on

What measures, if any, are needed as Singapore seeks to tackle the economic slowdown?

Victor Mills Chief Executive Singapore International Chamber of Commerce

All businesses in Singapore need to stay the course whatever headwinds come our way. That means keeping focussed on collaborating to innovate, employing technology whenever possible, developing the skills and capabilities of leaders and employees to better serve and retain customers. More businesses need to take advantage of the terms of the free trade agreements (FTAs) which the government has negotiated on their behalf. Utilising FTAs will help mitigate supply chain disruptions and reduce business costs. If the headwinds are particularly strong you can be sure the government will intervene with appropriate help. For now, keep calm and carry on.

Simon Baptist Global Chief Economist and MD The Economist Intelligence Unit, Asia

I think the Singapore government can be fairly relaxed about the Q2 figures. We haven't yet seen the breakdown of how much of this was due to the volatile trade environment, but presumably it was an important factor. That will move up and down over the rest of the year, and in any case domestic policy has limited influence. The cyclical slowdown in the electronics sector was definitely a big driver. This should turn around soon, plus there will be some benefits as supply chains relocate due to bilateral strains in electronics between not just the US and China, but also between Japan and South Korea. Despite Singapore's reputation as a highly free-market economy, the government has an outsized influence in the economy, and so has some levers to counteract a downturn. There is also fiscal and monetary policy space, both of which I think should be used. In my opinion, a recession will be avoided, even if GDP growth is likely to slow significantly from last year.

John Bittleston Founder and Chair Terrific Mentors International Pte Ltd

Singapore is inevitably a victim of a world economic slowdown. To encourage a stronger economic recovery, Singapore should prepare to use the time of the slowdown:

1) to upgrade infrastructure that needs retrofitting or redeveloping,

2) to build new infrastructure that will be needed for the future,

3) to reskill those whose jobs are going to disappear through digitisation and AI,

4) to fund startups of businesses compatible with our resources,

5) to review its education system radically,

6) to educate seniors in computing and related skills,

7) to build Singapore as even more of a sports centre than it already is.

Jayaprakash Jagateesan Chief Executive Officer RHT Holdings Pte Ltd

The government appears prepared and confident that it has the right fiscal policies in place to ensure that Singapore can beat expectations and prove the recession predictions wrong.

More could be done to engage the business community as well as intensify efforts to train and upskill employees to keep them relevant to the changing business needs.

We are heartened by the efforts of Enterprise Singapore and other agencies to support businesses, including RHT, to pursue various growth initiatives. I encourage other businesses to seriously explore the support schemes available to them as a small boost can go a long way in this challenging environment.

Mark Billington Regional Director, Greater China and South-East Asia ICAEW

As previously forecast in ICAEW's latest Economic Insight report, Singapore's economic slowdown reflects its vulnerability as a small open economy heavily dependent on exports. Although the recent easing in US-China trade tensions provides some momentary relief, we remain cautious on the speed of recovery in Singapore.

Looking ahead, we expect domestic demand to act as the main cushion for the drag on growth and this can be further stimulated with accommodative macro policies. With a sharp policy reversal by the US Federal Reserve and benign inflationary pressures in Singapore, we believe that the Monetary Authority of Singapore will have room to ease its policy, specifically reducing the appreciation bias of its S$NEER (nominal effective exchange rate) and so create favourable conditions for the thriving domestic market.

Dev Dhiman MD, Southeast Asia & Emerging Markets Experian

With a stable political environment, sound economic fundamentals, well-planned infrastructure, agile regulatory frameworks and robust distribution networks, Singapore is rightly recognised as a conducive global and regional business hub. While a weakened global economic outlook and escalating US-China trade tensions have created the perfect storm and dampened the current outlook, there continues to be pockets of resilience, particularly in the Information and Communications sector. The current economic climate is an opportune time for organisations to proactively adopt technologies, invest in the right skillsets, and leverage data insights to create new opportunities and drive sustainable growth in today's digital economy.

Axel Berkling Executive Vice President KONE Asia Pacific

There are still several growth opportunities for Singapore's businesses. The government should continue to facilitate sustainable growth and innovation to cushion the impact of the slowdown. It can be achieved by providing additional grants and tax rebates to companies that are adopting new technologies and creating innovative products. Professionals across industries need to make use of the SkillsFuture Credit programme, and the government can look at enhancing the benefits and creating more awareness. Finally, the government should continue investing in infrastructure projects to spur growth and support the construction and manufacturing industries.

Lee Fook Chiew Chief Executive Officer Institute of Singapore Chartered Accountants

Amid the current uncertain economic climate which has dampened market demand in some sectors, there remains growth markets, such as within Asean, for Singapore companies to venture into. Government agencies can help to inspire business confidence by providing companies that are on the lookout for overseas business opportunities with more targeted information and guidance. For example, information on how to make use of ASEAN Trade in Goods Agreement (ATIGA), ASEAN Framework Agreement on Services (AFAS) and ASEAN Trade in Services Agreement (ATISA), or pertinent details regarding relevant business or tax laws and regulations in specific markets, will be very helpful. This would facilitate Singapore companies' journey as they step abroad in search of new markets.

Dileep Nair Independent Director Thakral Corporation Limited

Accurate prognostication of the economy is difficult. However, the latest indications are worrisome. Besides negative flash GDP estimates and severely slumping exports, key leading indicators such as the Purchasing Managers Index and the Consumer Confidence Index predict a further softening of the economy. Our open economy is highly affected by global trends. For that reason, in the past three economic downturns, the government intervened by taking strong and timely action to manage the economic crises. The primary concern is to save jobs of Singaporeans. No doubt foreign labour will be first to be shed but that will in turn affect consumption and the property market. Lowering business costs through income tax rebates, tax deductions for investment, and cheaper trade financing should be considered. Similarly, demand can be stimulated by accelerating infrastructure buildup and boosting public investment. Property financing rules should also be relaxed to promote the mortgage market. These measures should not be seen as kneejerk reactions but as a well crafted policy package. With such preemptive actions, we can move forward - hoping for the best while preparing for the worst.

Vijay Kumar CEO & Founder ConnectUpz

All businesses have external and internal spheres of influence, but the weightage of how each affects a business depends on the business structure and model. When external factors cause economic slowdown and affect your business, decision makers should look to explore internal opportunities that they may have previously overlooked. This could be things like expanding your network of suppliers and clients locally, by allocating more resources towards achieving that goal or by increasing the customer lifetime value (CLV) through improving your customer relationships with existing clients. By adding these additional streams of income, it would help ride the wave of economic uncertainty.

Gene Fitzgerald CEO and Director Singapore-MIT Alliance for Research and Technology (SMART)

Economic growth in developed countries is heavily dependent on innovation, the movement of useful ideas into the marketplace. Easy money policies have been used for decades externally to hide the global decrease in innovation efficiency and real growth, and the consequence of these damaging policies may be arriving. Sound money and new-world innovation ecosystems are required to create new economic growth in the real economy. SMART, MIT's research and innovation enterprise in Singapore, has been, and will continue to be, a sound and committed partner in establishing innovation impact in Singapore by addressing global market needs.

Mario Singh CEO Fullerton Markets

On average, a global recession happens once every eleven to twelve years. The writing is certainly on the wall for 2020 to record the next global recession after the global financial crisis of 2008. Data from the Ministry of Trade and Industry show that the Singapore economy shrank by 3.4 per cent on a quarter-on-quarter basis in Q2.

On closer look, sectors such as electronics, precision engineering and wholesale trade have slowed but the service sector with components like finance, insurance and information & communications technology (ICT) showed some bright sparks. There are three areas for Singapore to look at to weather the economic slowdown:

Firstly, implement programmes and initiatives for companies, businesses and workers to strengthen core competencies and build new capabilities. Secondly, continuously attract global companies to either invest or set up bases in Singapore. Finally, assistance from the government in the form of an expansionary budget in FY2020 to weather any incoming storms.

Terry Smagh SVP, Asia Pacific & Japan BlackLine

Among other cost-cutting measures, companies and the government need to balance promoting innovation with the safeguarding of economic stability.

Substantial competitive opportunities await organisations and leaders who look at the big picture in the long term. Given the threat of a slowdown in employment growth as well as retrenchments in manufacturing and trade-related services, companies need to start on their digital disruption journey to enhance employee productivity or risk affecting their level of competitiveness in the local and global landscape. Given that Singapore's economic fundamentals have the strength and resilience to address emerging threats to financial stability, developments in automation and artificial intelligence should still be prioritised to enhance sustainable long-term economic growth.

Mark Laudi Managing Partner RIABU LLP

Before looking to the government for more stimulus or support, there's one important thing all businesses must do to shore up their working capital: examine their own habits and processes.

Companies like to blame the economy, or even their customers, for thinning cash flows.

All too often, they are resigned to the old view that they simply have to chase customers harder to shore up collections at a time of weakening sales.

The mindset must change. They must take action for themselves to turn the situation around. There's only so much the government can do. Companies have to help themselves.

Vikas Nahata Executive Chairman & Co-Founder Validus Capital

At the SME level, business owners should focus on keeping the cash flowing in to recession-proof themselves. To weather storms ahead, prepare cashflow projections, review credit policies and flag out customers who have a history of slow payment.

In light of muted market sentiments, traditional lenders are also less likely to inject funds into SMEs affected by the trade wars. With this in mind, diversify your financing sources. Establish new credit facilities to help your business roll out new strategies, such as expansion into new markets, renegotiating contracts, winning new customers and minimising expenses. Skills training and career development opportunities should still be in place to keep your workforce agile.

This is also an opportune time for SMEs to tap into government grants, that help businesses pivot digitally to gain a competitive edge.

Sanjay K Deshmukh VP and MD, South East Asia and Korea VMware

We are optimistic of the overall opportunities in the Singapore market and do believe that companies will be able to tackle these short-term economic headwinds. There are two key approaches companies can take in the current economic environment:

1. External market-facing strategies like innovating to launch new products and services and new market expansions,

2. Internal strategies to drive digital transformation. VMware is working with companies in Singapore to accelerate their digital transformation efforts and achieve higher efficiencies in their digital infrastructure, improve business agility to respond faster to changing market needs and increase employee productivity.

Kevin Fitzgerald Regional Director - Asia Xero

To ensure continued economic growth, cross-border trade will become increasingly critical for Singapore. The Singapore government has done an admirable job of fostering this with initiatives such as the recent Digital Economic Partnership Agreement. At the same time, Singapore's small businesses will need continued support to overcome increasingly turbulent headwinds - economic, regulatory, and political.

Digitalisation is quickly becoming the foundation of cross-border trade, enabling modern business necessities such as e-invoicing and digital payments. To ensure that Singapore businesses have digital-first foundations that are both scalable and cost-effective, business softwares need to permeate tertiary education systems, so that the next generation of business leaders are equipped with the right tools and knowledge for success

Motohiko Uno President Fujitsu Singapore

As our GDP growth slows down, businesses should accelerate the speed of innovation through co-creation by partnership. Businesses and people are realising the importance of ecosystems. As it becomes clear that no one can do it alone, we will have to design new relationships and new ways of working with partners - which requires unprecedented levels of trust. Companies will need to transform, and look into the role that technology plays in building and sustaining trust, from tools like blockchain to digital identities, to develop deeper and more genuine relationships with customers and partners.

Laletha Nithiyanandan Managing Director Behavioural Consulting Group

We cannot blame the slowdown of our economy completely on external factors. Whilst this has an impact, our escalating costs and the failure to curb this early enough is an issue that needs to be dealt with as we are losing our competitive edge as a business hub. We need to review some of our policies as the justification for these has always been to increase our economic growth but if some policies are not working, we need to challenge the assumptions. We have become too bureaucratic and out of touch with reality. Accepting critical feedback no matter where it's from is key in order to make better decisions.

Virginie Maisonneuve Chief Investment Officer Eastspring Investments

Given the openness of its economy and the current global trade tensions, it is surprising that the latest Singapore GDP growth data has sparked concern. Looking ahead, Singapore can tap into its innovation ecosystem, via judicious and effective policies, to enable new growth engines that leverage tomorrow's global and regional dynamics in a number of ways. Firstly, via the digital economy, and specifically with applied Artificial Intelligence. Secondly, by leading the green economy, including green financing, green farming, architecture and by becoming a global model for sustainability. And, finally, by promoting and further enhancing Singapore's role as a world class education and health centre.

Chia Ngiang Hong President Real Estate Developers' Association of Singapore (REDAS)

Economic challenges and risks faced today are increasingly structural in nature due to technological disruption, supply-chain disruption, new business models, changes in geopolitical conditions and international relations. Economic slowdown could offer precious opportunities for businesses to adapt and transform themselves to address their shortcomings and gear up for recovery in the long haul. To help businesses ride out the slowdown, the government can consider, as an interim measure, suitable monetary and fiscal policy support and relief measures, such as review of taxes and lowering of fees, etc. Such interim reliefs could provide a lifeline to ward off potential collapse (in some cases) which could cause a domino effect on the market, leading to further loss of confidence.

Businesses affected should take a cold hard look at their current operations and take decisive actions to restructure and reinvent if necessary. They could take advantage of the available assistance schemes and exercise strict financial prudence, enhance competitiveness for longer-term growth prospects through innovation and digitalisation, building collaborative networks and partnerships as well as positioning in potential growth sectors and countries.

Maren Schweizer Director Schweizer World Pte Ltd

A recession is usually synonymous with retrenchment and ''reduced'' employment. Regardless of why or when a recession hits, policymakers should use every tool at their disposal to end it as quickly as possible. To be effective, these tools need to boost the spending by households, businesses or governments to relieve the aggregate demand shortfall that is the fundamental cause of recessions. A key lesson from the Great Recession is that discretionary fiscal policy should take a leading role.

Several downturns since we started our family business back in 1849 have taught us the value of immediate fat trimming followed by anti-cyclic investments (capital expenditure). Do not leave your employees in the dark about this.

Hari Ramanathan Chief Strategy Officer, Asia and Chief Transformation Officer, Asia VMLY&R

Singapore has two challenges in spurring growth on the ground. One is transformation of businesses - the pace of SMEs, in using data or AI or even just proper marketing, is extremely poor. Despite government push, the 'trader' mentality has prevented professionalising of businesses and real changes on the ground. There need to be real measures and indicators assigned and, not merely awareness of campaigns and takeup of free money in the form of grants.

The second is that Singapore SMEs also need rebalancing from being too trading-focused to actual service and product creation. There is a need for serious intervention to address this. There's simply not enough creation happening. That's the secret to building long-term economic value.

Bindu Bhatia Managing Director, Asia Pacific CWT

Despite the weakness in the latest economic data, we're encouraged to see that our clients in Singapore have in fact increased their business travel transactions year-over-year in the first six months of 2019. This suggests that even with the prevailing global economic uncertainty, businesses here feel that face-to-face meetings - both external and internal - will yield a positive return-on-investment. If there is a downturn in the economy, companies should maintain confidence in their business offerings, and continue to connect not only with their customers but also with their employees, to ensure they can find new avenues for growth.

Bara Pasupathi CEO Jetstar Asia

The aviation and tourism sectors account for 10 per cent of Singapore's GDP. In the last 15 years most of the traffic growth has come from low-cost carriers (LCCs) like Jetstar who have made airfares affordable for everyone.

The recent doubling of air taxes and charges has led to airlines increasing airfares or absorbing fees adding significant cost pressure, particularly on the high-growth LCC market.

Our government and tourism bodies have made great investments and worked hard to promote Singapore as one of the world's best destinations.

It's important that we continue to work together with infrastructure and policy makers to stimulate growth by keeping airport costs and taxes low and ensuring we have a good supply of affordable accommodation, especially in the current economic climate.

Andrew Seow Regional Director for Southeast Asia and Greater China Rimini Street

In order to remain competitive in a challenging environment, organisations in Singapore should focus on their digital transformation strategy and efforts that will help to improve competitive advantage and growth as well as productivity while reducing costs. Digital transformation does not need to be a costly investment and resourceful organisations will find efficiencies that free up budget funds for innovation. For example, up to 90 per cent of IT budgets are spent ''keeping the lights on'' with just 10 per cent left over for innovation and driving growth. Strategies that reduce legacy maintenance spend and inefficient IT churn can drive savings that can then be invested back into the business to drive further innovation, ensuring that organisations in Singapore remain competitive despite tough economic conditions.

Ian Lee CEO, Asia Pacific The Adecco Group

The Singapore government can consider expanding its world's best in-class reskilling and upskilling through IMDA's Tech & Immersion programme to help more Singaporeans enter the digital economy. This ensures the workforce fully capitalises on the expected growth in digital economy of today and tomorrow.

The government may also need to consider adjusting the current Wage Credit Scheme to a higher co-funding percentage in 2020 and potentially extending it to 2021 and beyond. Designed to help companies with their transformation efforts as well as share productivity gains, this scheme could help companies in a downturn.

Lim Soon Hock Managing Director I PLAN-B ICAG

If there is going to be a recession, we can expect the government to introduce relief measures or a stimulus package like in the past, to help businesses contain costs. However, businesses should not always depend on this to ride out any economic downturn.

If a business has not invested in resilience to stay viable in not-so-good times, it is often too late when a recession sets in. In my opinion, a company can achieve this by investing in IP that caters to a global market, expand regionally or go internationally and continue to seek new businesses.

To mitigate risks and to enhance resilience, it is imperative and strategic for a company to devote enough time and resources to generate new businesses. Such new businesses can come from leveraging the core business to grow organically through economies of scale and business efficiency, or by creating entirely new businesses. In this 2x2 Growth Matrix for products (current and new) and markets (current and new), the government - through relief measures or a stimulus package - can play an enabling or supporting role.

Vishal Doshi CEO AUM Biosciences

Economic slowdown typically raises questions on where the financial burden of healthcare should sit. In this less certain economic climate, beyond cost containment across all industries, the bioscience sector must create business models that work to generate more affordable therapeutic and care options. As a Singapore-based biotech company, we take our responsibility to the economy and all health stakeholders seriously. We develop medicines with the primary aim of ensuring treatment options for Asian prevalent cancers with high unmet needs, that are affordable for governments to reimburse for their citizens - even and especially in increasingly challenging economic times.

Toby Koh Group MD Ademco Security Group

Undoubtedly, the economy is headed into a slow period. Singapore will weather through this trying period in a good state as evidenced by the past few economic slowdowns. Our financial strength, stable political scene and human talent will help tide us over.

Singapore needs to continue doing the following three things in these times.

Firstly, support and help promising local SMEs go regional, if not global. The recent Scale Up programme is a great example of nurturing locals to compete on the international stage.

Secondly, GLCs must use their knowhow and financial clout to expand out of Singapore. Get out of this small market, conquer the world and bring the spoils home. Even in challenging times opportunities abound. Encourage and allow local businesses to fill the gaps.

Lastly, we must continue to invest in our education system and maximise the potential of our younger Singaporeans. Ensuring that our talent continues to be sought after will keep Singapore relevant.

Jagdish Mahapatra Managing Director, Asia CrowdStrike

We foresee organisations leveraging a mix of measures ranging from the adoption of digital technologies that increase efficiencies to general cost-cutting, given the looming recession. Amid a slowing economy, customer expectations around data privacy will remain the same, regardless of changes to operational budgets. As such, business leaders need to be mindful of cyber vulnerabilities, and further risks that may arise from threat actors looking to capitalise on fully taxed security teams. Information security policies and protocols will still remain paramount, especially in Singapore, where any security incident could irreversibly damage the city-state's dominant position as Asia's financial hub.

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd

The economic slowdown is a global, macro-level development and Singapore, as a small country, cannot change the course of the tide. Singapore can only ride into the trough of the wave and seek to maintain balance by not sinking. The government has to empathise with businesses to ensure that they, particularly the SMEs, do not capsize and sink, raising unemployment. Reliefs must be considered to help businesses - from interim reduction of land rent, manpower levies, on the cost-side of businesses to employment grants to employers, to encourage hiring of retrenched workers. Active intervention is needed to keep afloat businesses and workers so that they do not sink.

Such economic slowdowns are always cyclical and Singapore will ride this out, with resilience, to the crest of the next wave.

Helen Ng Chief Executive Officer Lock+Store

When the economy slows down, small businesses are the hardest hit. They would need flexible storage and office space options to allow them to scale their operations according to consumer demand. The government could offer SMEs startup packages that include subsidies for storage and office space. The self-storage industry is poised to support a blueprint that would give small businesses a leg-up in tough economic times to ensure they remain nimble enough to seize new opportunities without being bogged down by high operating costs.

Leonard Cheong Managing Director AdNovum Singapore Pte Ltd

The impact of the already weak global trade coupled with the US-China trade tensions is increasingly being felt across many nations. Heavily dependent on exports, the Singapore economy would likely dip and monetary easing and/or fiscal stimulus may no longer be as effective.

Behind every difficulty, there will be opportunities. Singapore is still in a good position and we should focus on the following to prepare for the economic upturn after the slowdown, via a combination of short-, medium- to long-term measures:

1. Ramp up ongoing public infrastructure projects;

2. Develop new capabilities via upgrading and training of the workforce;

3. Restructure the economy (future-proof the digital economy);

4. Strengthen Asian ties and collaboration and avoid any fallout or getting caught in the US-China conflict.

Zaheer K Merchant Regional Director (Singapore & Europe) QI Group of Companies

The (q-o-q) slide in GDP growth by 3.4 per cent in Q2 and being export-dependent strongly suggests that Singapore seems set to fare the worst of South-east Asian economies. It is only slightly comforting that the Future Economy Council has called for industry transformation plans and enterprise-building capabilities to ''tackle'' the slowdown. I believe much more is needed in terms of identifying the core businesses which will drive an external uptick first, such as financial services or professional services and technology, or some key manufacturing sectors. Then assisting business transformation, upskilling or transitioning workers (which also helps employment), reducing operating and capability costs (including technology costs), providing easier and freer supply chains, helping in new market development with real purpose-driven country trade negotiations, and easing monetary policy will all become key. For fiscal stimulus, banks ought to free up more aggressive lending with better rates. The pain is a shared pain, and some tax incentives or rebates in the short term have to be implemented with businesses top of mind. Our prospects in reality otherwise will be the ''R'' word, no matter how we want to avoid it.

Henry Tan Group CEO Nexia TS

A recession or downturn is imminent for the world economy. I see this more as a cyclical adjustment then a full-blown recession. While the main factor affecting the economy is the trade spat between US and China, the current climate of rising interest rates warns of a need to watch out for debt and money supply. China is still continuing to adjust its domestic economy and Donald Trump in America is gearing for a second term - and Singapore at the centre between these two major economies stands to benefit as they adjust. We need to stay close to these two superpowers and continue to develop entrepreneurship that will spell our future. For the short term, we can still rely on infrastructure developments like MRT, roads and housing to help to cushion the slowdown. In the longer run, we need to develop fintech further and make Singapore an attractive place for industries like fintech to develop and grow. Staying consistent in our economic policies will also encourage investments into our country.

READ MORE: Business leaders call on govt to help firms help themselves in slowdown