Given the uncertainties faced by businesses during the on-going Phase Two of the post-Circuit Breaker period, the Singapore Business Federation (SBF) launched a survey in August to garner business sentiments and to better understand the support businesses may require during this phase.
Conducted over a two-week period, 225 companies responded to the survey, of which 83% were small and medium-sized enterprises (SMEs) and the remaining 17% were large enterprises.
Broadly, businesses remain cognizant that the current crisis will likely remain protracted. More than three in five businesses (62%) expect the prevailing uncertain climate to persist with economic activities continuing at its present pace for the next 12 months.
Under current conditions, 87% of large companies and 66% of SMEs indicate that they can sustain their business operations with thinner profit margins or small operating losses.
Nonetheless, a proportion of SMEs (29%) and large companies (11%) expect to either downsize by folding a segment of their business or to shut their operations entirely.
While the Government support schemes are generally welcomed, with three in five businesses (60%) ascertaining such schemes to be at least 40% effective in buffering business costs, businesses remain concerned with their ability to cope when such schemes are eventually withdrawn.
Manpower Costs and Challenges
On the manpower front, two in three businesses (67%) conducted a headcount review as part of their overall strategy in coping with COVID-19, with this review more prevalent in large companies (84%) than SMEs (63%).
Most businesses (62%) also expect to maintain their number of employees over the next 12 months, while one in five businesses (20%) is likely to reduce their headcount. The Jobs Support Scheme has been useful to SMEs (58%) and large companies (43%) alike, in delaying their retrenchment considerations.
In right-sizing their headcount, businesses with plans to hire during the next 12 months are more inclined to employ Professionals, Managers and Executives (32%). If businesses intend to reduce hiring over the next 12 months, they are more inclined in hiring less clerical support, service and sales workers (19%). Two in three businesses (66%) are prepared to hire mid-careerists, but among the businesses that think otherwise, the inability to match wage expectations (36%) and the need to train mid-careerists with the right skillsets which require attention and resources (29%) are the top reasons cited.
Furthermore, the inability to match wage expectations of mid-careerists is more pronounced for SMEs (38%) than large companies (13%).
Productivity and Business Transformation
Productivity levels have also been adversely impacted during Phase Two, with almost three in four businesses (74%) experiencing a drop in their productivity levels. In putting together their transformation plans to boost productivity, large companies (74%) are directing more resources to digitalisation and automation, while SMEs are taking a more myriad approach by looking at building financial resilience (for example, the restructuring of business) (49%), innovation (49%) and digitalisation and automation (44%).
However, in undergoing business transformation, businesses face challenges on multiple fronts. They have to contend with the uncertainty in demand for their products and services (48%), the shortage of employees with the appropriate skillsets (40%), as well as operational issues when adopting new solutions (37%).
Internationalisation and Resumption of Essential Business Travel
Businesses looking to expand into overseas markets and diversify their market-specific risks also encounter difficulties. While over two in three businesses (68%) feel that the safe resumption of essential business travel is critical for their operations, they remain mindful of the challenges involved given that overseas markets continue to be affected by COVID-19 (73%) and internationalisation plans are likely to be hindered by travel restrictions (57%).
One in three large companies (34%) are also concerned with an increasingly protectionist trade environment.
ASEAN remains a key region for business expansion. Most businesses cite Indonesia (41%), Thailand (28%), and Vietnam (27%) as markets they hope to see re-open for essential business travel, in addition to China and Malaysia. Large enterprises also cite Japan (26%), Australia (26%), and India (24%) as among key markets they like to see re-open for essential business travel.
Reflecting on the survey results, Mr Ho Meng Kit, CEO of SBF, said “For a majority of businesses, the uncertain economic conditions remain a key concern as they continue to face challenges in sustaining their businesses, managing their manpower, and coping with cashflow issues. Businesses need to take this window of opportunity to rethink their business models and reinvent themselves to seize new opportunities and remain viable.”