Amid improving business sentiments, companies that adapt faster to the evolving business landscape stand to benefit from the anticipated growth momentum
- One in three companies (33%) have accelerated transformation to yield stronger business results, but one in four companies (25%) have yet to implement any notable transformation and are falling behind
- About three in four Singapore businesses (72%) identified hiring people with the right skills / attitude as a key challenge
- Businesses want Budget 2018 to prioritise digitalisation
- Singapore companies are focused on first doing business within ASEAN. Those that have ventured into ASEAN aim to expand further in the region
11 January 2018 [Singapore] -Business sentiments have improved significantly in 2017. Nearly two in five businesses (36%) are satisfied with the current business climate here, whilst 68% of companies responded that business conditions have either improved or remained the same over the past 12 months, with the outlook for the next 12 months looking better. This is according to SBF’s latest National Business Survey 2017/2018. This annual survey, which marks its milestone 10th edition in 2017, drew more than 1,000 responses from companies across all major industries.
In terms of business priorities for 2018, revenue growth ranked first at 68% and cost cutting next at 44%. As for the key challenges that businesses are facing, hiring people with the right skills and attitude emerged as the top challenge at 72% and cost of operations (excluding labour costs) was ranked next at 58%.
The Changing Face of Singapore Businesses
Amid the changing external environment now and going into the future, the Government announced the Industry Transformation Programme in 2016. Under the programme, Industry Transformation Maps (ITMs) are being developed for 23 industries, covering over 80% of our GDP. The programme will integrate the different restructuring efforts going on in Singapore, and take a targeted and industry-focused approach to address issues and deepen partnerships.
Half (52%) of the businesses surveyed feel that ITMs are a good idea, but do not know enough about the ITMs to assess their impact.
Early signs of business transformation, however, are reassuring. Today, nearly three in 10 companies (28%) believe that digital innovation is absolutely critical to the survival of their businesses. Six in 10 companies (63%) are reported to be currently using or offering digital services or solutions. Looking ahead in 2018, digitalisation will continue to feature as a key priority for businesses, with six in 10 (60%) saying that support for digital transformation should be the focus of the next Singapore Budget – ahead of relaxation of foreign employee quotas (53%) and facilitation of overseas markets access (51%).
The survey results also point to three distinct profiles of businesses based on their ability and willingness to adapt and transform: Transformers, Progressives and Slow Starters.
With the launch of ITMs, some firms are already responding in action with 33% stating that their businesses have put in place significant measures and changes to be at the forefront of change and innovation. These Transformers businesses have made the effort to keep up with the changing business landscape. Examples of such companies include Aalst Chocolate Pte Ltd and Onn Wah Tech Pte Ltd (see Annex).
Slow Starters are Lagging Behind
However, one in four companies (25%) have yet to implement any notable course of action when it comes to transformation. These Slow Starters companies have not prioritised digitalisation with only one in five increasing their implementation of new technology in the past 12 months.
In 2018, the Slow Starters may have to play catch up and adopt technology at a faster pace to improve business performance. Six in 10 slow starters (63%) have reported lower profitability in the past year, as compared to the average of 44% for all businesses surveyed. Transformers and Progressives are also more likely to have implemented new technology, experienced greater growth in local and overseas as well as increased their profits as compared to Slow Starters.
Singapore Businesses are going International
More Singapore companies have expanded their international footprint in 2017, with 83% of businesses currently engaged in overseas business activities, up from 56% in 2016. ASEAN is the key focus region, with 71% of local businesses operating in at least one ASEAN country. Half (50%) of the companies surveyed are also keen to expand further into ASEAN, especially those that are already doing business in the region.
Companies, while keen to internationalise, continue to face barriers overseas:
- 93% of businesses require more help understanding compliance, regulations and standards in overseas markets;
- 90% need more information on taxation rules in other countries;
- 89% struggle with sourcing relevant local contacts in overseas market(s); and
- 84% wish they had better partnerships with overseas local firms.
Mr S S Teo, Chairman of SBF, said “It is heartening that one in three companies (33%) have transformed their businesses to be at the forefront of change and innovation. However, a sizeable proportion of companies (25%) that have yet to put into place any notable measures to keep up with the changing business landscape is a concern. As SBF members are the larger companies, I think the proportion of Slow Starters in the national population is probably larger. SBF has set up a Digitalisation Committee to drive digital adoption and transformation across the Singapore business community. This is a beneficial platform for businesses that are slower on the uptake of digital opportunities, and enables SBF and various Trade Associations and Chambers to engage them to kick-start their transformation. As digitalisation is an important horizontal element of the various ITMs, this will be SBF’s initiative to cascade the relevance of the ITMs to more companies.”
Drawing on the survey findings of the challenge faced by businesses in hiring talent with the right skills to transform, Mr Ho Meng Kit, CEO of SBF said “There is scope for Government to look at skills shortages and how to help companies address this gap. Government can also give thought to be more flexible in manpower policies for the areas where there is a shortage of the relevant skills especially when it comes to helping companies understand and adopt disruptive technologies and overseas expansion.
SBF is encouraged that more companies are expanding overseas. SBF will intensify efforts to equip businesses with the knowledge and expertise to overcome current challenges when internationalising their businesses. This includes the sharing of more market insights, especially during Singapore’s chairmanship of ASEAN, and raising the awareness of our businesses on our Free Trade Agreements (FTAs) and their benefits to help businesses better utilise our FTAs to gain competitive advantage”, he added.
Further details of the findings of the SBF National Business Survey 2017/2018 will be shared at SBF’s Seminar on 2018 Business Outlook and the briefing for the early respondents of the survey that will be held on 26 January 2018.
This year’s survey was done in collaboration with Blackbox Research Pte Ltd.Annex 1 - Profiles of Companies Transformed
Annex 2 - SBF CEO's Statement on the 10 Jan 2018 ST and BT Reports on the ISCA pre-Budget Roundtable