The Singapore Business Federation (SBF) has released its National Business Survey 2024 – Annual Business Sentiments Edition, highlighting a more positive outlook for Singapore’s economy despite ongoing challenges with rising costs and uncertain customer demand.
According to the survey, 40% of businesses expressed satisfaction with the current economic climate—a 10% increase from mid-2024. Additionally, more businesses expect the economy to improve (26%) than worsen (22%) over the next 12 months.
The survey, conducted between 11 October and 11 November 2024, gathered responses from 519 businesses across key industries, including 83% small and medium-sized enterprises (SMEs) and 17% large companies. The findings aim to inform the Singapore Budget 2025 recommendations, focusing on building sustainable and globally competitive businesses.
Rising costs and demand uncertainty challenge profitability
Manpower costs remain the top concern for 66% of businesses. However, uncertainty in customer demand has surged, rising from 30% in 2023 to 45% in 2024. Rental costs have also increased as a key concern, growing from 36% to 43% over the same period. Sectors most affected by these challenges include Hotels, Restaurants, and Accommodation (80%), Retail Trade (75%), and Wholesale Trade (59%).
Despite these pressures, 57% of businesses have maintained or increased profitability, while 43% reported an average decline of 27.5%. To counter rising costs, 51% of companies have implemented cost-saving measures, 41% have raised prices, and 30% have improved inventory management.
Liquidity remains stable for most businesses, with 54% reporting no significant issues. However, 25% face moderate to severe credit crunches, with 40% lacking sufficient funds to sustain operations for the next three to six months. In response, businesses are focusing on reducing non-essential expenses, improving credit collection, and assessing customer credit risks. Additionally, 70% are seeking government support for financing needs.
Encouragingly, more businesses are investing in their future, with 36% prioritising staff training (up 7%), 37% focusing on digitalisation and new technologies (up 5%), and 26% planning new investments (up 5%) over the next year.
Foreign talent remains essential, but Singapore’s appeal declines
With a limited local workforce and low unemployment rates, businesses continue to rely on foreign talent. The survey found that 59% of businesses believe their local employees view foreign workers positively, with only 7% seeing them as competitors.
However, Singapore’s reputation as an attractive global talent hub has slightly weakened, falling from 43% to 41% in the past year. The decline is more noticeable among large companies, where the rating dropped from 55% to 47%.
To foster better integration between local and foreign teams, 42% of businesses rely on cross-functional teams. However, only one in five companies have Diversity, Equity, and Inclusion (DEI) policies or participate in community integration activities.
Businesses seek continued government support
Businesses have shown strong appreciation for the measures introduced in Budget 2024, which addressed rising costs, built strategic capabilities, and enhanced sustainability. The most welcomed initiatives include:
- Corporate Income Tax rebate (88%)
- SkillsFuture Level Up programme (78%)
- Extension of SkillsFuture Enterprise Credit (73%)
- Progressive Wage Credit Scheme enhancement (70%)
- Increased salary support cap for Career Conversion Programmes (67%)
Looking ahead to Budget 2025, businesses have outlined their top priorities. These include schemes to address cost pressures (64%), initiatives to attract and retain local talent (43%), and measures to address foreign manpower challenges (41%).
SBF will release its SBF-PwC Budget Recommendations on 9 January 2025, drawing from the survey findings and insights gathered from the business community.
Mr Kok Ping Soon, Chief Executive Officer of SBF, said, “As we move into 2025, it is encouraging to see a growth in optimism on business outlook, reflecting our businesses’ resilience, adaptability and preparedness for the future by investing in capability building. This survey, conducted before the US Presidential election results, shows that many companies are already concerned with the uncertainty in demand arising from geopolitical forces. External factors such as increased trade tensions, potential tariff wars, and spillovers from regional conflicts are likely to dominate business concerns in the coming year.”
He added, “While rising business cost is a perennial concern which needs to be addressed, we are heartened that more companies are prepared to invest in people, technology and new businesses. Given our manpower constraints, we need to increase Singapore’s absorptive capacity of a complementary foreign workforce to maintain our attractiveness as a global talent hub. With only 1 in 5 businesses having DEI policies and providing community or cultural integration activities, businesses can do more to integrate locals and foreigners at the workplaces.”
