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Weak economy hurting more than half of businesses: Survey

SINGAPORE — More than half of businesses here have been adversely affected by the current economic slowdown, as they continue to face challenges such as higher business costs, an annual survey by the Singapore Business Federation (SBF) has showed.

Office workers are reflected in a rain-covered window as they stand at the lobby of a building in Singapore's financial district. Reuters file photo

Office workers are reflected in a rain-covered window as they stand at the lobby of a building in Singapore's financial district. Reuters file photo

SINGAPORE — More than half of businesses here have been adversely affected by the current economic slowdown, as they continue to face challenges such as higher business costs, an annual survey by the Singapore Business Federation (SBF) has showed.

The survey, which polled 1,000 SBF members in the fourth quarter last year, found that 54 per cent of respondents have been negatively affected by the worsening economic climate, up sharply from 35 per cent a year ago. The findings were shared today (Jan 12) at a conference held to present SBF’s Position Paper for a vibrant economy.

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“We all know that it has been a challenging few months... The early days of 2016 almost seems to be marking what the future looks like for the rest of the year and there seems to be more uncertainty,” said Mr Lincoln Teo, chief operating officer of DP Information Group, which conducted the annual survey commissioned by the SBF.

High labour costs continued to be the biggest challenge confronting businesses here, the survey showed, with 70 per cent of respondents indicating they have been hit. Some 56 per cent of companies polled also hope that Budget 2016, to be presented in March, will offer help in reducing business costs.

However, in a panel discussion after Mr Teo’s presentation, economists said that while the Government can roll out measures to help businesses cope, cost-cutting is a short-term solution and companies have to take charge of their own growth.

“They way to restructure the economy is not about cost-cutting, not about reducing your headcount. The way to survive is to continue to grow. How do we grow? First, we must create value, which will set us apart from our competitors and second, we have to grow out of Singapore. This is where I think the Government plays an important role as the facilitator, but at the end of the day, it boils down to the businesses,” said DBS economist Irvin Seah.

“Singapore firms really face two challenges, cost – manpower cost is high, rental cost is high – and competitiveness. Can we be the cheapest? If we can’t, can we be the fastest to market? If we can’t, are we the ones that are disrupting technologies in established industries? If we are not, then what’s our value-add?” asked OCBC’s head of treasury research and strategy Selena Ling.

At the conference, attended by about 400 business leaders and professionals, SBF called for views on the 18 recommendations in its position paper and reiterated that the intent of the paper is to “generate good discussions leading to solutions for the greater good and prosperity of Singapore and its citizens”.

SBF chairman Teo Siong Seng said the event marked the start of a series of activities that the federation will organise this year, in collaboration with other partners, to gather further inputs from the business community for the Committee on the Future Economy.

“We also hope that the discussion will prompt more collaborations among businesses and the Government to jointly tackle the challenges ahead,” he said. “A strong government has been the hallmark of Singapore for the last 50 years. Bold leadership is what is required now,” he added.

Mr Samuel Tsien, the Chief Executive of OCBC Bank, said that the idea was to have the business community coming together to help define a new role in collaboration with the government. Exactly what needs to be done is the purpose of the SBF position paper.

“We do not know what new role Singapore will play but it is a recognition that Singapore will have to redefine itself in the future economy… The private sector should be more proactive, creative, original in its thinking in order to define a new role, rather than riding on what we have been able to do best in the past,” he told TODAY.

Key trends that will shape Singapore’s future economic strategies and business include geographic and social change, shift in global economic power, rapid urbanization, technological breakthroughs as well as climate change and resource scarcity, according to consultancy PwC.

“We need to look at revamping and creating the right infrastructure for SMEs to upscale beyond Singapore. We need to look at why SMEs are not able to grow and compete internationally,” said Mr Yeoh Oon Jin, executive chairman of PwC Singapore.

In its 32-page position paper released on Jan 6, the SBF called on the Government to relax foreign manpower curbs and asked policymakers to look into the problem of rising business costs.

Among the many wide-ranging proposals, the paper also urged policymakers to recognise the limits of a “foreign direct investment-centric” economic development strategy, and called on government agencies to do more to help local enterprises venture and succeed overseas.

The paper — backed by 28 trade associations and chambers as well as 70 top-level executives — also suggested that the Government invests Central Provident Fund monies in local shares, similar to how other countries use pension funds to support their own markets.

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