Singapore Companies Transforming to Thrive in an Uncertain Business Climate
• Almost two-thirds (63%) of businesses reported being negatively impacted by the COVID-19 pandemic, with an average decline in revenue of 31%. Despite the challenges faced in an uncertain economic climate, 69% of companies were confident in sustaining their business over the next 12 months.
• About one-third of companies (31%) expect business and economic climate to improve in the next 12 months, a significant improvement from the 8% in last year’s survey.
• The impact and sentiments about recovery were uneven across industries, with the “Construction & Civil Engineering”, “Retail, Real Estate, Hotels, Restaurants & Accommodations”, and “Manufacturing” sectors being more negatively impacted.
• Over 8 in 10 (84%) businesses reported having accelerated their digital transformation due to the COVID-19 pandemic, by an average of 2 years. 39% of companies reported having increased their IT budgets, by an average of 29%.
• Staff training and upskilling, technology adoption, regional expansion, and targeted government support are some key factors that can help Singapore businesses to stay resilient and emerge stronger.
Tuesday, 26 January 2021 [Singapore] – According to SBF’s National Business Survey (NBS) 2020/2021, businesses in Singapore remained hopeful despite the many major setbacks that most have faced in 2020. The survey, conducted in October and November 2020 and involving 1,075 companies, covered a wide range of topics including the impact of COVID-19 on businesses, sentiments regarding economic recovery, priorities and challenges for companies, Government Budget and support, digitalisation and transformation, and internationalisation.
Across sectors, there are opportunities for businesses to regain their confidence, reinforce their resilience and strengthen their recovery from the COVID-19 pandemic. However, with the recovery uncertain and uneven, there remain challenges for businesses to overcome to thrive in 2021 and beyond.
THE PATH TO POST-PANDEMIC RECOVERY: KEY NBS FINDINGS
Challenges Expected to Remain in the Recovery Phase
2020 has been a very challenging year for businesses in Singapore. Close to two thirds (63%) of businesses reported that they have been negatively impacted by the COVID-19 pandemic, with an average decline in revenue of 31%. Both SMEs and large companies were affected by the pandemic, although some sectors were more affected than others. Sectors such as Construction and Engineering (79%), Retail, Real Estate, Hotels, Restaurants and Accommodations (73%), and Manufacturing (64%) have the highest proportion of companies reporting being negatively impacted. Conversely, sectors such as the Logistics and Transportation (62%) and IT and Professional Services (46%) have a higher proportion of companies reporting positive or no impact from the pandemic.
Overseas business expansion was hindered by the pandemic, with nearly half (47%) of businesses reporting contractions to their overseas business activities, and only 27% being likely to expand overseas in the next 12 months. For half (50%) of businesses, it will take at least one to two years for their overseas business to resume normal operations.
Despite these challenges, most business owners remained optimistic. Many businesses believe the economy will improve in 2021, and more than two in three (69%) remained confident in sustaining their business over the next 12 months. Overall, about one-third of companies (31%) expect business and economic climate to improve in the next 12 months, significantly higher than the 8% in last year’s survey. An almost equal proportion (32%) expect business climate to worsen (compared to last year’s 49%).
One in four businesses negatively impacted by COVID-19 expect their business to fully recover within the next six to 12 months. However, most (70%) expect full business recovery to occur only in 2022 or beyond. Like with the impact of the pandemic, sentiments on recovery were also uneven across industries.
Timely and Targeted Transformation to Accelerate Growth
The COVID-19 situation has reshaped the challenges businesses faced. The top four challenges from this year’s survey are demand uncertainty due to COVID-19 (59%), manpower costs (52%), travel restrictions due to COVID-19 (44%) and business competition (41%). Demand uncertainty and travel restrictions are new among the top challenges, while manpower costs and business competition were the top challenges in last year’s survey.
To remain viable and to sustain their businesses, companies of all sizes are prioritising revenue growth, maintaining a positive cashflow and reducing costs. Almost one in five (19%) companies recognised the need to streamline their businesses or operational processes, as well as attract and retain talent, developments that augur well for business sustainability and growth.
Having the required manpower and continuous staff upskilling will be critical to businesses, with nearly one in four (24%) companies planning to increase the number of employees in the next year. Conversely, approximately one in ten (11%) indicated that they are planning to downsize.
There was also greater emphasis on manpower training and development to ensure that the workforce remains relevant and competitive. Vast majority (97%) of companies opined that training and staff development had become more or equally important in developing relevant skills and job-related capabilities to help them remain resilient and competitive in this changing digital landscape. In addition to important hard skills, businesses are also looking for ways to help employees become more adaptable to the rapidly evolving business environment.
The COVID-19 pandemic has given a strong push for digital transformation. Over 8 in 10 (84%) businesses reported having accelerated their digital transformation due to COVID-19, by an average of 2 years. 39% of companies reported having increased their IT budgets, by an average of 29%.
The pace of transformation plays an important role in the ability of businesses to overcome the crisis. While 72% of businesses with a high level of transformation are confident in sustaining their business over the next 12 months, 41% of those with low levels of transformation were not.
2021 Budget Support to Build on Previous Measures
The latest NBS findings revealed that support from the Government in 2020 was instrumental in helping businesses weather the challenges of COVID-19 and that continued targeted support measures are needed to help our businesses in recovery.
Businesses reported that the most useful and relevant support measures to date have been those aimed at managing costs (88%) and those relating to cashflow management (52%). In the immediate term, digitalisation remained a key transformation plank for companies to reshape their businesses, and 43% identified assistance on digital transformation as a priority for Budget 2021.
Reflecting on the survey results, Mr Lam Yi Young, CEO of SBF, said, “Amid the negative impact of the COVID-19 is the silver lining of a stronger push for digital transformation and manpower development by companies. Even as the economy recovers, the transformation and manpower development efforts will enable companies to build up core capabilities and help them to emerge stronger. SBF will continue to work with companies to support them in their recovery and growth journey, and with the Government on relevant support schemes to help companies. ”