Nearly half of all businesses also stated that staff training has become more important.
SINGAPORE – Businesses in Singapore saw their revenues plunge by 31 per cent on average amid the Covid-19 pandemic, although 69 per cent of them are confident of sustaining their business in the next 12 months.
Almost two-thirds or 63 per cent of businesses were negatively impacted by the Covid-19 pandemic, an annual survey by the Singapore Business Federation (SBF) found.
About one-third of firms (31 per cent) expect business and the economic climate to improve this year, a significant improvement from the 8 per cent in last year’s survey.
On the flip side, one in three companies are not sure whether they can keep operating in the next six to 12 months.
Local businesses have also been operating at 70 per cent of their capacity on average.
And overall, less than 23 per cent of respondents are satisfied with the economic climate and 32 per cent predict worsening conditions.
The survey, conducted online from Oct 9 to Nov 28 last year, drew responses from 1,075 businesses across all key industries.
It found that uncertainty about the future is higher among small and medium-sized enterprises (SMEs) – with seven in 10 SMEs confident about sustaining their businesses in the next 6 to 12 months, compared with eight out of 10 large companies.
Among the businesses negatively impacted by the Covid-19 situation, 70 per cent predict that their full recovery will only occur towards the end of 2021 or beyond.
Mr Lam Yi Young, SBF’s chief executive officer, said the survey shows that while businesses recognise that there are some signs of improvement in conditions, they are also realistic about the challenges.
“This is not going to be an easy year,” he said.
“This year is definitely going to be better than the last one, but we are not out of the winter yet. Companies recognise that it will take a bit longer to fully recover back to where they were before the pandemic.”
Mr Lam said that as the economy recovers, transformation and manpower development efforts will enable companies to build up core capabilities and help them emerge stronger.
“Amid the negative impact of Covid-19 is the silver lining of a stronger push for digital transformation and manpower development by companies. 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,” he said.
According to the survey, business priorities will continue to revolve around increasing revenue, building cash flow and reducing costs.
One in five companies also recognises and prioritises the need to streamline its business and operational processes. Historical key challenges such as manpower costs and business competition remain critical.
Fifty-two per cent of the respondents flagged manpower costs as a key challenge, and two in five firms also said that job applicants lack the soft skills needed. The same proportion of companies said that new foreign workforce policies will add to their costs.
Aside from costs, businesses are also concerned about the restrictions placed on the supply of foreign workers.
Nearly half of all businesses stated that staff training has become more important as a result of Covid-19 and due to future uncertainties.
While businesses are keen to undertake staff training, many are hindered by limited staffing resources.
Thirty-six per cent feel that training programmes do not offer practical outcomes. Hence, matching companies with the right programmes will be key in aiding them in their goals of upskilling employees.
Businesses invested the most on staff training during the pandemic, a trend that will continue to rise in 2021. Conversely, cost-cutting measures such as workforce or salary reduction will decrease in the coming year.
Businesses feel that Government support is still required to help them manage cost and cash flow, as well as attracting, developing and retaining talents.
Overall, companies expect Government schemes to be extended till end of 2021, when the economy has stabilised and business outlook is more certain.
The top five schemes that businesses think should be extended are related to cost and cash flow management, manpower and digitalisation support. The schemes include the Jobs Support Scheme (JSS), rebate and waiver on foreign worker levy, IT adoption subsidy, cash flow loans and grants, relief on corporate income tax.
Aside from financial support (37 per cent), businesses also seek help in digitalisation (43 per cent), financial management (33 per cent) and brand development (31 per cent).
Companies are also aware of the need for continued digitalisation, but many feel they lack manpower and resources to transform their businesses. Three in five report that digitalisation is necessary to overcome the impact of Covid-19.
While 45 per cent of companies leverage collaborative technology and tools to increase productivity, and 44 per cent adopt technology to optimise operations and automate business processes, the perceived high investment cost of technology adoption and keeping staff abreast of new technologies are primary barriers to tech adoption.
While overseas business expansion was hindered by the pandemic, some firms are still looking for opportunities beyond Singapore. The most popular destinations for expansion continue to include Vietnam, Indonesia and China.
Nearly half of the survey respondents indicated that their overseas businesses have contracted and only 27 per cent see themselves expanding overseas this year.
Not surprisingly, over half of Singapore companies state that travel continues to be a key aspect to do business.
This means there is an urgent need for safe travel bubbles between countries in order to ensure a pick up in overseas expansion.
Mr David Black, founder and CEO of Black Box Research that conducted the SBF survey, said the Singapore economy and its businesses are still in repair mode and a lot of work is needed for what lies ahead.
“All this discussion about digitalisation and transformation is about achieving resilience and that is really going to be critical,” he noted.
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