SINGAPORE: The outbreak of a novel coronavirus has thrown up new uncertainties for businesses in Singapore, which already have to cope with a sharp slowdown in the domestic economy last year and global risks such as the US-China trade war.
Enterprise Singapore (ESG) said its “immediate priority is to assist companies” in coping with the impact of the new virus, such as lower demand, supply chain disruptions and travel restrictions.
But its representatives, who were speaking at the release of the agency’s year-in-review report on Friday (Feb 7), stressed that companies, especially small- and medium-sized enterprises (SMEs), must continue with transformation efforts to remain competitive in the long run.
BUSINESS CONTINUITY TOP CONCERN AMID VIRUS SPREAD
CEO Png Cheong Boon said business continuity is currently top on the minds of businesses, as they figure out plans to tackle the impact of the unknown flu-like virus that has spread beyond China to other parts of the world.
Singapore has 30 confirmed cases of the coronavirus as of Thursday.
“Cash flow is a key concern and we encourage businesses to make use of the Enterprise Financing Scheme to help with their working capital,” said Mr Png.
Further supply chain disruption is another worry, said chairman Peter Ong. This as factory closures in China have been lengthened on the back of cities being locked down and the week-long Chinese New Year holiday extended as local authorities try to curb the spread of the coronavirus.
Already, it has been “very difficult” to ship goods in and out of China, he added, citing conversations he’s had with some businesses.
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Still, Mr Ong stressed that it remains too early to assess the economic impact, as the situation remains fast-evolving while experts have yet to pinpoint how the virus transmission and containment will play out.
At the moment, businesses seem “calm” and appear to be more prepared as they draw on the experience of 2003’s Severe Acute Respiratory Syndrome outbreak.
“We don’t see any businesses that are extremely anxious about the current situation,” Mr Png told reporters.
He added that many businesses have also drawn up business continuity plans even before the government agency released its advisory.
“They know what to do … and are quite prepared to take the necessary measures,” said Mr Png. “We are heartened by that.”
Nevertheless, ESG is watching the developments closely and is in regular contact with the trade associations and chambers (TACS), as well as businesses “to determine the impact, and how we can help those who are more affected”.
The Government has also said that it stands ready to help enterprises and workers, said Mr Ong.
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Thus far, targeted support has been announced for directly-affected sectors like the transport and tourism sectors.
“Depending on how the situation progresses, (there can be) broader measures to address wider economic slowdown to help viable firms stay afloat and workers stay in their jobs,” he said.
CONTINUE TRANSFORMATION JOURNEY
Despite the added uncertainties, ESG urged businesses to continue on the transformation journey.
Over the past year, the agency, which was formed two years ago from the merger of IE Singapore and Spring Singapore, has been looking at helping Singapore firms raise productivity, strengthen innovation and accelerate internationalisation.
It will continue to do so by providing enterprises, especially SMEs, with support in productivity and capability upgrading, innovation and business transformation.
It will also step up its internationalisation drive, by supporting first-timers to expand overseas at an earlier stage and those that are already overseas to deepen and diversify their footprint abroad.
“Given the size of our market, Singapore enterprises cannot afford to not seek out opportunities globally,” said Mr Ong.
“In fact, situations such as the coronavirus and geopolitical risks make it even more critical for enterprises to diversify their businesses and markets.”
Echoing that, Mr Png said it is important for businesses to do so because this will help them to compete locally and overseas, and be better positioned in time of a recovery.
“For when the recovery comes, while there may be pent-up demand, there will also be pent-up supply competing for new businesses to make up for lost revenue,” he said.
“ENCOURAGED” BY 2019 PERFORMANCE
ESG is taking heart from an encouraging performance in 2019, where 11,450 businesses embarked on 13,560 projects to raise productivity, enhance innovation and accelerate internationalisation.
These projects are expected to create S$17.3 billion in value added and 21,700 PMET jobs, it said in its annual report released on Friday.
Compared with 2018, the number of businesses and projects supported last year increased significantly – up 43 per cent and 52 per cent, respectively, with SMEs undertaking a majority of these projects.
The number of productivity and capability building projects saw an 85 per cent jump compared to the previous year. These were taken on by 8,300 businesses, largely from the services industries such as lifestyle, trade, transport and logistics, to improve business processes and become more manpower lean.
The number of innovation projects remained consistent, with 550 enterprises supported last year, according to ESG.
Turning to internationalisation projects, it helped 2,600 firms to go overseas with 3,000 projects. Nearly two-third of these businesses came from the wholesale trade, professional services, information and communications technology, and retail sectors.
The agency also gave on-the-ground support to 600 projects, largely in China and Southeast Asia. These projects are expected to bring about S$8.8 billion in overseas sales and S$8.9 billion in overseas investments.
It also provided assistance to about 2,000 start-ups through its Startup SG programmes and partners.
Among others, ESG expanded its Global Innovation Alliance network to 13 cities in 10 markets, with the addition of Shanghai, Ho Chi Minh, Bangalore and London last year. This aims to help more start-ups and tech SMEs find collaboration and innovation opportunities overseas.
Mr Png described the 2019 numbers as “encouraging”, noting that there was a “significant increase” in the number of SMEs embarking on capability upgrading, business transformation and overseas ventures despite a challenging economic environment.
There is also the economic benefits, in terms of new value added and additional skilled jobs, he said.
“It shows that our enterprise development strategies are gaining traction,” said Mr Png.