Silver linings in the clouds

THIS WEEK'S TOPIC: What has been the impact, if any, of the economic downturn on your business or industry? Should there be support measures for the Singapore economy at this stage?

Victor Mills Chief Executive Singapore International Chamber of Commerce

Singapore's small, open economy is always vulnerable to negative external events. The current trade war between the world's two largest economies means everyone is a loser but small, open economies lose disproportionately more. Calls for government intervention are premature. We may be facing a technical recession but the more important indicator is that the job market is not yet in crisis. Thanks to good fortune, and sound economic management, Singapore has more than enough funds to help workers and businesses should the need arise. We are also very fortunate to have a government with the will to do so.

Jayaprakash Jagateesan Chief Executive Officer RHT Fintech Holdings

The impact is two-fold. As companies become more cautious in an uncertain and volatile environment, investments may be pared back, further intensifying competition between professional services firms to support these companies. On the other hand, any downturn pushes us to think of creative ways to tap new opportunities. In this age of disruption, we see opportunities in fintech and financial services to meet the future needs of clients who are looking for alternative fundraising channels.

An increase in government spending, targeted tax incentives and greater regulatory support in getting products to market are just some of the possible support measures for Singapore's economy at this stage.

John Bittleston Founder and Chair Terrific Mentors International Pte Ltd

Mentoring, coaching and training work contra to the economy. There is more need for them in downturns and more time to take advantage of them. Demand for updating increases the need for all three. Cost affects the 80 per cent of clients who pay but not the 20 per cent who we handle pro-bono. We think that the government should support the costs but not pay them all. Those receiving the service should pay some 25 per cent themselves even when their organisation and/or the government are helping with the costs. Those who get something for nothing may not appreciate its value. That is why even our pro-bono clients pay a token sum.

Svend Janssen Head of Asia Western Union Business Solutions

Many Singapore companies are currently weathering both external and internal factors, forcing a re-evaluation of how to pivot their business strategy for the long term, rather than the immediate future. For those in Asia, it is especially crucial to tap into the unprecedented growth opportunities within the region. This move is what we call becoming "micro-multinationals" - one which comes with the challenge of managing the growing complexity of international trade and financial operations, both vital to future success. Within current market conditions, the key to protecting and improving the bottomline for such businesses is to focus on finding value. For many who trade across borders, they may lean on a business payment specialist to help streamline the payment process as well as consideration of FX risk management strategies.

Dolly Goh CEO Singapore National Co-operative Federation (SNCF)

As rising trade tensions cast dark clouds over global trade growth, businesses need to brace for a tough economic battle ahead. It has been observed across the world that in times of economic crisis, co-operatives are able to weather the storm due to their unique combination of member ownership, control and benefit. Co-operatives put the needs of their members and communities first before profit.

For example, NTUC FairPrice Co-operative helps workers stretch their dollar by freezing the prices of 100 FairPrice housebrand products until June 2020 and slashing the prices of more than half of these 100 products by up to 30 per cent. While support measures to encourage economic growth like more assistance for self-help groups/businesses/co-operatives are welcomed, it is still important that we help ourselves. The co-operative model provides people with ways to respond to emerging economic realities. For example the Singapore Professionals' and Executives' Co-operative (SPEC) was set up after the 1998 financial crisis to help retrenched local PMETs gain meaningful employment again. Groups looking to form co-operatives can approach the Singapore National Co-operative Federation (SNCF) for support.

Vikas Nahata Executive Chairman & Co-Founder Validus Capital

Validus has been the leading SME financing platform for Singapore for over two years now. We have seen more requests from SMEs for financing requirements. We have also taken measures to be careful in some industries because credit risks have risen. With India lowering corporate tax rates, multiple central banks slashing interest rates, we believe Singapore also should be proactive in measures to protect trade and commerce. Support could be in the form of offering wider credit protection through platforms for credit downturns, which would help SMEs get financing when they need it.

Helen Ng Chief Executive Officer Lock+Store

We have not felt any significant impact from the economic downturn as the self-storage industry is uniquely positioned for economic fluctuations. Demand for temporary storage for two weeks to three months tends to rise during tough times as small businesses prefer not to sign leases with lengthy lock-in periods. This gives them the flexibility of adjusting their inventory according to the economic outlook. However, should the downturn persist, demand from households could wane significantly. That is when we would start looking to the government for incentives and tax rebates.

Hugh Lim Chief Executive Officer Building and Construction Authority

From 2015 to 2017, the built environment sector saw a significant slowdown but construction demand has since picked up. We currently see a positive outlook for the sector, supported by a strong pipeline of public infrastructure projects. The Building and Construction Authority has been working closely with the industry through the Construction Industry Transformation Map which identifies Integrated Digital Delivery, Design for Manufacturing and Assembly and Green Buildings as key transformation areas. We also rolled out the BuildSG Transformation Fund and enhanced the Building Innovation Panel to promote the adoption of innovative solutions in the built environment sector. We encourage our firms to seize these opportunities, seek out innovation-driven growth and consider building up their capabilities in civil engineering and complex projects.

Sandie Overtveld VP APAC Zendesk

For companies that take the right steps, an economic downturn can lead to an increase in business, and even be an opportunity to transform and grow. Our customers - both large and small - know that for that to happen, they need to double-down on two things.

Firstly, they put in place solutions that enable them to better understand their customers' needs and continue to deliver on their expectations. They're doing this with agile, seamless and scalable technology that allows them to adjust their sails as the economic winds change, for the better or worse.

Secondly, boosting employee productivity is at the centre of operational success. Brands that break down internal silos and get rid of outdated technologies that slow them down from making fast, informed decisions are the ones that get ahead.

Any measures that can be put in place to help companies be more agile and boost productivity is a huge win - both during a downturn and in times of economic growth.

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

Real estate activities have been relatively weak on the back of a challenging geopolitical and economic environment. Weaker manufacturing and electronics sector, retail and trade-related services could further exert pressure on occupancy levels and rents, affecting business sentiment, investments and expansion plans.

Likewise, buying sentiment is also affected. Real estate development and related businesses have played a pivotal role in creating jobs and driving investments. Property is also a major asset class for many - companies, institutional investors, conglomerates and Singaporeans. With the Singapore economy expected to continue its downward trend, we urge the government to watch the pulse of businesses closely and monitor the job market across the various sectors for signs of distress and roll out appropriate and targeted stimulus measures to help boost and sustain the economy in areas where needed.

Ronak Shah Chief Executive Officer QBE Insurance (Singapore) Pte Ltd, Asia

Geopolitical tensions are having some impact on buying behaviour, but insurance remains critical as economic uncertainty threatens businesses with greater risk. It is clear that companies cannot take profitability and prosperity for granted. While economic stimulus is important for injecting renewed enthusiasm into sluggish economies, we have not reached a point yet where support measures are needed in Singapore. However, in navigating any downturn, businesses should consult with insurers and risk managers to identify and plug new vulnerabilities, taking the right measures to protect themselves in the immediate term while insulating against longer-term headwinds.

Haresh Khoobchandani Vice President, Asia Pacific Autodesk

The infrastructure development and built environment industry has been a bright spot in Singapore's economy, and has in fact accelerated over the past year through large-scale projects - including Changi Airport's Terminal 5 and the Cross Island MRT Line. Plenty of credit goes to the government for investing in the sector's future ahead of the curve, with initiatives like the Construction Productivity Roadmap and Industry Transformation Map.

That said, companies should do their part to stay competitive by redefining talent programmes for reskilling their staff. Besides being a moral responsibility, it goes a long way in keeping them competitive on a global scale, while also stimulating the economy.

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

As a small and open economy, Singapore has experienced the sharpest economic slowdown in growth in Asean, particularly hitting manufacturing and externally-dependent service sectors. Likewise, the accounting and finance industry has not been exempted from the lower business confidence and sentiment, as external conditions continue to prove challenging. With the sharp policy reversal by the United States Federal Reserve and benign inflationary pressures at home, ICAEW had previously forecast that the Monetary Authority of Singapore (MAS) would probably ease its policy this month, shifting to a zero-appreciation bias in its key policy tool - the SG$NEER, a trade weighted basket of currencies against the SGD - to support domestic demand. Apart from immediate relief measures, this is also an opportune time for the government to consider other long-term efforts that can spur growth and help businesses become more resilient in the long term..

Maren Schweizer Director Schweizer World Pte Ltd

We have been setting the sails for a stormy future by fat trimming and increasing our cash in hand. At this stage, it's by far too early to touch our reserve cash pool we had built over the last decade for anti-cyclical investments.

Regardless of why or when a next recession hits, policymakers should be ready with tools that provide a powerful fiscal stimulus aimed at boosting the spending by households, businesses or governments to relieve the aggregate demand shortfall that causes recessions. These tools should be constructed not only to be effective economically but also to be valuable politically, to ensure broad and engaged popular support.

I urge for multilateral preparedness and action.

Sudhanshu Tewari CEO & Co-Founder Rewardz

Many economists are forecasting a downturn, if not a full-blown recession, over the next 12-24 months. The economic downturn looks pretty real at this stage. We have seen budget cuts in HR spending by existing and potential clients. Some approved projects have been deferred due to budget cuts. 2020 is currently looking grim for SMEs like Rewardz for new business development. In order to thrive in these tough times, we are working on increasing operating margins through automation and rolling out technology products with the least operating expenses and high potential returns for the business.

The Singapore government needs to closely watch the impact of macroeconomic factors on the economy. Startups and SMEs are the backbone and one of the success stories of the local economy and they are most exposed and vulnerable during tough economic conditions. Any financial support with reduced borrowing costs, grants and tax breaks will be very welcome by the community at this stage.

Leaders may understandably be reluctant to take major actions until they see clear evidence that they are affected by economic headwinds. The next downturn will challenge many companies, but a few will emerge stronger, competitively and financially.

Henry Tan Group CEO Nexia TS Group

We are seeing signs of economic downturn with slower collections and with demand for our services starting to slow down. In addition we see signs of slowing in the performance of our clients. This economic slowdown is long overdue and we should brace for a significant impact because both US and China are facing slowdown. Impact for SMEs will be significant as the oil and gas, shipping, construction and retail industries are all doing badly. Some stimulus should be provided now before the impact to SMEs become unmanageable. I hope the wage credit scheme is reintroduced to help SMEs.

Leonard Cheong Managing Director AdNovum Singapore Pte. Ltd.

In the IT security business of providing peace of mind and trust, we have observed a huge increase in demand in recent economic downturns that may have spurred cybercrimes. The correlation between economy and crime has been a topic of study by social researchers. With the drive towards digital transformation and the need for alignment with data regulations, cybersecurity is rethought as a strategic business priority to protect consumer identity and data privacy.

Support measures must be continuously implemented, reviewed and revised - which the Singapore government does well - particularly for the industries that are badly affected. In times like this, it is essential for the country to continue to have good foresight into the future and prepare for the necessary actions to be in place for the problems of today as well as tomorrow.

Toby Koh Group MD Ademco Security Group

The world economy is undeniably headed south. In the Smart City sector and security technology industry, things are still fairly stable and trending positively in part because governments are funding the push for intelligent cities.

The Singapore government is mindful of the slowing business scene and has ramped up investment in building capabilities of local businesses rather than dole out monetary aid. Building capabilities is definitely a more strategic and long-term sustainable move than dishing out handouts at this time.

Having said that, keeping close tabs on the economy and acting fast when the time comes are vital to help Singapore tide over the challenges on the horizon.

Lim Soon Hock Managing Director PLAN-B ICAG Pte Ltd

In this economic downturn, many businesses big and small are slashing their budgets in response to declining revenues.

Companies that offer services that use hi-tech to extend the life of machines or equipment are benefiting from this downturn. Instead of buying new machines, many companies are resorting to refurbishing their equipment to near new to save on capital expenditures.

These companies - like one that I consult in the marine, oil and gas industries - which are able to profit from the downturn, have invested strategically in relevant technologies, as well as in up-skilling and retraining employees during good times in the past. In fact, some have done better during the downturn.

As costs will be a significant problem for many companies during this downturn, the government should introduce measures to help companies, especially SMEs, to alleviate this. It is heartening to note that the government has assured us that it stands ready to do so when needed.

Annie Yap CEO AYP Group

In an economic downturn, companies might attempt to downsize their headcount. Others will look into solutions that help automate their HR or payroll processes and at the same time improve productivity and profit. Hence we smell in this economic downturn an opportunity for us to pitch our HRMS solution, JuzTalent, which can assist companies with time and labour management. Several industries will be impacted negatively by the economic downturn, but others will see it as a golden opportunity. Singapore is not new to difficult economic situations. That said, if the downturn worsens, I believe support measures will be implemented. But not at this stage.

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd

The continuing weakness in the economy is unlikely to improve until daylight is seen from the long nightmare of the US-China trade conflict. The vacillating dramas between the two economies create stress and tensions across global supply chains and manufacturing sectors.

Our business cannot escape the uncertainties - employers are withholding hiring, with a great number of them retrenching.

Support measures must be targeted to retain workers through this period of stress and uncertainty, and should not just be broadbased grants to SMEs for innovation, technology adoption or productivity growth. This kind of help will not save the day but retaining Singaporean workers and PRs will save jobs and families. The fabric of our workforce must be resilient and be able to bounce back to form when the economy improves. The government's support must therefore be at the grassroots workforce level during periods of stress to provide employment support through wage subsidies, incentives for retention of older workers, and re-skilling and job training grants. A cut in the employer's CPF contribution rate will be the last card to throw.

Dora Hoan CEO Best World International Ltd

Despite the economic downturn, Singapore's economy probably has not slipped into recession yet. Overseas business accounts for the vast majority of Best World's overall performance, thus the impact of the sluggish domestic economy on the group's growth is not so significant.

Nevertheless, the economy has slowed, and priority should be given to support measures for business cost control - for instance, by not raising all kinds of taxes and fees, and to relax some restrictions on employment of foreign workers in order to achieve a balance amid relatively higher local business costs. Besides, we may continue to transform our economy by ensuring our workers are equipped with knowledge and skills that are resilient to changes in the digital future. In the long run, maintaining a vibrant and innovative economy is the key for Singapore to stay at the forefront of the global economy.