SINGAPORE: Nearly two-thirds of local businesses felt that Singapore's economic climate has declined in 2016 and nearly half of the companies polled expect the situation to worsen in 2017, according to latest findings from the National Business Survey released on Wednesday (Dec 28).
The 2016/207 edition of the survey, which was conducted by the Singapore Business Federation (SBF), received responses from more than 1100 companies across different industries.
Some key challenges cited by businesses included operating costs and manpower issues, which included factors like labour costs, manpower laws as well as attracting and retaining younger workers.
Companies in real estate, retail and construction ranked as the most pessimistic sectors for the year ahead.
SBF CEO Ho Meng Kit said: ““Singapore is impacted by the current subdued external demand and global trade due to its open and outward-oriented economy.
"Domestically, high operating costs and the constraints imposed by our foreign worker policies continue to affect businesses. Businesses find operating under this persistently tepid global and domestic economy challenging.”
But while businesses - especially those in the service sector - continue to be plagued by manpower issues, SBF chairman SS Teo called on consumers to taper their expectations. “The reality is that our country is high-cost, and we have many limitations, including our land and an ageing population. So I urge consumers to change their expectations. It’s not just about businesses complaining about the problems they have – we cannot forever open the floodgates.”
The weak economy has hurt Addon Systems, which saw sales plunge by 20 per cent this year. The IT retailer, which operates from Bugis Junction, cited high rentals and hiring as key challenges.
Ms Constantia Ang, sales and marketing director at Addon Systems said: "2016 has been a very challenging and roller-coaster year for us. Looking forward to 2017, we will foresee this challenge will continue. We have great difficulties in getting Singaporeans to work long hours, as well as their high expectations in terms of wages. "
The survey also found that only three in 10 businesses are satisfied with current government policies, with small and medium enterprises being less satisfied than larger ones.
In a press statement, the SBF said this indicates that the steps taken in this year’s budget were not “far-reaching enough, and do not have significant near-term impact”.
SBF added that the focus in next year’s Budget should look at measures to assist businesses with manpower issues, as well as lower government compliance costs, fees and taxes.
Meanwhile, businesses are not embracing the Government's message to transform and restructure, according the SBF. Just over 60 per cent of businesses surveyed agree that there is a need for companies to transform.
Among the SMEs, the survey revealed that majority had not yet made any significant adjustments to adapt to a slowing economy, as well as technological change and disruption.
Mr Ho said more has to be done to reach such smaller companies, as current efforts could be “talking to the converted”.
"If you talk about transformation, it's about technology too," he said. “I think the Government has to mention more than just the medium- to long-term issues, or companies might find it very difficult to transform."
“But overall, we cannot change certain things and we cannot go back to business as usual."
And while the push to internationalise and expand overseas have been cited as a way for businesses to thrive, the survey showed that businesses are lacking in understanding of the opportunities available and requirements needed.
The data also showed that companies feel they do not think they will benefit from trade pacts, like the ASEAN Economic Community and Free Trade Agreements.
This year’s survey was done in collaboration with Blackbox Research Pte Ltd.