2019 annual business survey 14 october 2019 - sccci annual... · 2020. 1. 16. · voices from...

2019 Annual Business Survey

14 October 2019

Voices from Business Community

Industry

20.9%Manufacturing

8.2%Construction

70.9%Services

47.7%Small

Size of company

23.7%Medium

23.7Micro

4.9%Large972

Respondents

95%SMEs

Survey was carried out between May and July 2019

Business sentiments

Economic slowdown impacted business outlookMost projected increase in costs and decline in profits

Increased33.1%

Increased71.0%

Increased18.2%

No change28.2%

No change24.5%

No change27.7%

Decreased38.7%

Decreased 4.5%

Decreased54.1%

Revenue Business Costs Profit Margin

Business sentiments in 2019

Larger dip in revenue and profit margin

Business sentiments (2017 v 2018 v 2019)

72.3%78.9%

71.0%

23.0%17.7%

24.5%

4.7% 3.4% 4.5%

2017 2018 2019

Business costs

-7.9% points

21.6% 20.9% 18.2%

32.8% 33.6%27.7%

45.6% 45.4%54.1%

2017 2018 2019

Profit margin

+8.7% points

36.8%41.4%

32.8%

30.9%31.8%

28.2%

32.3%26.8%

38.7%

2017 2018 2019

Revenue

+11.9% points

Wholesale & Retail most affected by drop in revenue

20.3%

23.1%

23.6%

28.0%

28.9%

30.8%

37.4%

44.0%

48.8%

50.6%

Information & Communications

Education, Health & Social Services

Professional & Business Services

Finance & Insurance

Tourism, Hotels, Food & Beverages

Real Estate

Manufacturing

Transport, Storage & Logistics

Construction

Wholesale & Retail Trade

Percentage of respondents who reported decrease in revenue by sector

MTI’s Third Quarter 2019 Survey of Business Expectations (Services sector): Wholesale & retail trade least optimistic in their business outlook for 2H/2019

46.2%

61.5%

66.7%

68.0%

68.9%

71.4%

72.2%

73.8%

75.7%

88.0%

Real Estate





Manufacturing


Construction


Finance & Insurance

Percentage of respondents who reported increase in business costs by sector

32.0%

35.9%

38.5%

40.0%

40.5%

42.3%

52.7%

60.0%

61.3%

66.6%

Finance & Insurance


Real Estate




Manufacturing


Construction


Percentage of respondents who reported decrease in profit margin by sector

Wholesale & Retail most affected by drop in profit margin

Growing revenue top priority for businessesInternationalisation low priority despite small local market amid global uncertainties

6.5%

20.9%

22.3%

30.7%

36.4%

38.7%

45.1%

82.1%

Business succession

Venture overseas

Cut cost

Improve productivity

Digitalise business

Attract and retain staff

Innovate products and services

Grow revenue

Business priorities for respondents

77.0%

55.5%

29.4% 27.2%

Stiffcompetition

within thesame sector

Lack ofmanpower

Businessfaces

disruptionfrom new

players

Lack offinancing

Top challenges to grow revenue

Rising business costs remain the top challengeDriven by wages and rentals

16.6%

19.3%

24.8%

50.2%

65.8%

76.7%

Challenges from disruptivetechnologies

Financing and cash flow

Sector facing restructuring

Manpower shortages

Stiff market competition

Rising business costs

Business challenges in 2019

13.5%

10.6%

0.0%

31.5%

27.2%

48.9%

69.4%

12.6%

16.5%

23.1%

31.0%

43.1%

43.7%

75.4%

Transport costs

Financing costs / interestpayment

IT / digitalisation cost

Government compliancecosts / admin fees

Cost of goods, rawmaterials, equipment

Rental costs

Employees' salary

Items contributing to rising business costs

Sino-US trade war impacted businesses the most

63.1%

19.9%17.9%

10.3%

2.5%

Sino-US trade tensions Cyber attacks Singapore-Malaysiarelations

Elections in the region Brexit

Developments that impact businesses

Manpower

More companies maintaining their staff strengthTransport, Storage & Logistics sector reduced manpower the most

Finance & Insurance

Real Estate




Manufacturing

Construction



Transport, Storage & Logistics - 10.0%

- 1.9%

29.1%22.2%

56.6%60.9%

14.3% 16.9%

2018 2019

Staff strength (2018 v 2019)

Decreased

No change

Increased+4.3% points

0.0%

3.8%

3.9%

8.9%

16.2%

30.8%

30.8%

52.0%

Decrease instaff strength

Increase instaff strength

Net increase/decrease in staff strength by sector

Top manpower challenge is attracting and retaining staff

8.5%

59.3%

44.6%

13.1%

38.9%

39.3%

59.0%

Lack of suitable industry-specific training for my staff

Not able to recruit staff with the skills we need

Tightening foreign workforce quota

Attracting and retaining local staff

Manpower challenges (2018 v 2019)

2019 2018

+14.4% points

Businesses transforming to manage manpower needsHiring older workers and mid-career workers still not common

18.0%

24.6%

29.5%

34.3%

44.2%

Hire older workers

Hire foreign workers

Hire and train local mid-career workers

Hire local part-time / contract / temporary workers

Transform business to cut down on manpower needs

Strategies to manage manpower needs

Internationalisation

Uncertain geopolitical climate affects sentiments to internationaliseRising interest in Indonesia, Thailand, Vietnam & Cambodia

42.0%China

53.1%Malaysia

49.0%Indonesia

2019 2018 +/-Malaysia 53.1% 59.5% -6.4%Indonesia 49.0% 39.2% +9.8%China 42.0% 39.7% +2.3%Vietnam 40.9% 33.4% +7.5%Thailand 37.3% 28.3% +9.0%Myanmar 31.8% 26.0% +5.8%Cambodia 24.8% 17.5% +7.3%Australia/New Zealand 13.0% 11.2% +1.8%Europe 12.2% 9.8% +2.4%India 11.5% 10.2% +1.3%

65.1%

60.1%

2018 2019

Respondents who indicated that they plan

to venture overseas

More of the larger companies are internationalising

56.1%

58.8%

65.2%

66.7%

Micro Small Medium Large

Respondents who want to internationalise (by company size)

40.0%

52.0%

57.8%

59.1%

61.5%

62.6%

65.0%

67.6%

68.0%

69.2%

Construction




Real Estate


Manufacturing


Finance & Insurance


Respondents who want to internationalise(by industry)

Businesses most interested to leverage FTAs and digital channelsto develop overseas markets

7.7%

21.4%

23.1%

29.6%

29.6%

32.2%

35.4%

42.8%

Using franchising to internationalise

Using overseas distributors

Setting up direct overseas operations

Developing manpower capabilities to help myinternationalisation

Access to financing to help in my internationalisation

Identifying overseas joint venture partners

Using digital channels to help in my internationalisation

How to make use of and benefit from FTAs

Interests in topics on Internationalisation

Digitalisation

Top challenge in digitalisation: High cost

6.3%

15.4%

18.4%

20.6%

21.8%

24.3%

27.9%

34.5%

Lack of management support

Uncertain about the outcome of digitalisation

Uncertain about which areas to digitalise

Difficulties in finding the right vendors

Competing interest with the current business

Lack of resources to embark on digitalisation

Current business processes too complicated to digitalise

Cost is too high

Challenges during the digitalisation process/when deciding to go digital

77% of companies have limited success deriving online revenue Construction, Wholesale & Retail and Manufacturing lag behind the most

76.7%

9.9%6.2%

2.1% 1.2%3.9%

<10% 10% - 20% >20% -30%

>30% -40%

>40% -50%

>50%

Estimated percentage of revenue from online sources

46.2%

46.2%

56.8%

60.0%

72.0%

73.3%

75.6%

81.8%

82.2%

92.5%


Real Estate


Finance & Insurance




Manufacturing


Construction

Respondents who derive <10% of their revenue from online sources by sector

2019 SCCCI Digitalisation SurveyProfile of survey respondents

Survey conducted overthe month of

August 2019

Micro37.0%

Small36.7%

Medium19.3%

Large7.0%

Company size

Manufacturing13.8%

Services80.0%

Construction6.2%

Industry

278respondents

4 in 5 respondents have digitalised their businessMainly to improve internal and business processes

24.0%

25.5%

27.0%

42.0%

44.0%

45.0%

51.0%

Data analysis to benefit business

Usage of e-commerce to find newmarkets

Engagement with partners and suppliers

Digital marketing of products/services

Engagement with customers

Adoption of ICT/software solutions toimprove business processes

Improvement of internal processes (e.g.HR, Admin, Finance)

Which area(s) of your business have you digitalised?

63.9%79.4%

2018 2019

Percentage of respondents who have digitalised their business

2019 SCCCI Digitalisation Survey

7.1% 49.2% 35.3% 8.3%

To what extent has your digitalisation efforts shown results?

Not at all A small extent A moderate extent A great extent

43.6% of respondents achieved moderate to great resultsfrom digitalisation

43.6%


Top reason for not using e-commerce: Lack of manpower and knowhow

9.5%

29.0%

38.7%

49.1%

My business is doing well enough without e-commerce

Lack of financial resources

Not a proven revenue channel/not applicable to my business

Lack of manpower or knowhow for e-commerce

If your business is not on e-commerce, why?


Government schemes

Usage of Govt Schemes by businesses have fallen

Overall -16.0%Micro -16.8%Small -19.4%Medium -19.4%Large +2.9%

67.1%

51.1%

73.7%

79.4%

55.4%51.1%

34.3%

54.3%

60.0% 58.3%

Overall Micro Small Medium Large

Respondents that have applied for Govt schemes (by size of company)

2018 2019

Stringent eligibility criteria and lack of awareness commonly cited by SMEs for not applying for Govt schemes

Decrease in Govt Schemes uptake across all sectors

Overall -16.0%Construction -7.5%Manufacturing -16.7%Services -17.5%

67.1%

73.8%

79.3%

63.5%

51.1%

66.3%62.6%

46.0%

Overall Construction Manufacturing Services

Respondents that have applied for Govt schemes (by sector)

2018 2019

Most popular scheme: Productivity Solutions Grant

Productivity Solutions Grant (PSG) 48.9%Enterprise Development Grant (EDG) 23.3%Wage Credit Scheme 16.7%Enhanced Training Support for SMEs, WorkPro, Training subsidies 15.9%Market Readiness Assistance (MRA) Grant 8.9%Double Tax Deduction for Internationalisation (DTDi) 7.4%SkillsFuture Earn and Learn 5.8%SMEs Go Digital Programme 5.4%SME Working Capital Loan 5.0%Professional Conversion Programme (PCP) 4.6%Micro-Loan Programme 3.0%A*STAR schemes (Operation and Technology Road-mapping / T-Up) 2.6%Internationalisation Finance Scheme (IFS) 1.8%Capability Transfer Programme (CTP) 1.2%Lean Enterprise Development (LED) Scheme 1.0%

51.1%Yes

of respondents have applied for Govt schemes

Half of respondents felt that Govt should facilitate SMEs to participate in govt procurement projects

Government can develop schemes to facilitate SMEs’ participation in government procurement projects

50.1%

Government agencies can be more coordinated on cross-agency issues 37.9%

Government-linked companies and large businesses provide more opportunities for us to participate to build our track record

33.0%

Explore how the trade association in my sector can help me to transform and upgrade

30.5%

Forms of help apart from Govt schemes

Spur more collaboration between big and small companies;More collaboration to meet common needs

Large companies can more actively make available opportunities for smaller companies to participate in

45.5%

Companies can collaborate with one another to meet common needs (e.g. to access equipment and technology)

42.7%

Government can strengthen the incentive for large companies to collaborate with smaller ones

38.5%

Trade associations and chambers can step up to promote collaboration among member companies

38.6%

Approaches to enhance business collaboration

Recommendations

Recommendations1. Help businesses to ease business costs

o Support wage costs by raising the 10% funding support quantum of the Wage Credit Scheme in 2020, and extend the scheme beyond 2020

o Maintain the existing foreign worker levy rateso Reduce or freeze on rentals of government properties, including industrial and commercial spaceo Flexibility for lessees of JTC industrial properties to sublet beyond 50% of GFA in the current downturno Not to further increase government compliance costs that will unnecessarily aggravate the cost

burden of businesseso Extend Corporate Income Tax rebate to tax-paying companies in 2020

2. Help SMEs to speed up transformation through digitalisation by tackling the high cost

o In an increasingly digital economy, SMEs are generally convinced of the merits of using digitalisation to transform their businesses—but are deterred by the costs

o Provide salary support for the crucial IT/technology talents responsible for executing digitalisationo Higher support quantum that is outcome-based for SMEs to speed up leveraging digital platforms to

increase their revenue streams and uncover new growth opportunities

3. TACs take the lead to harness the sharing economy to help transform the way businesses are conducted

o Benefits of a sharing economy can be harnessed to transform the way that businesses have traditionally been conducted

o TACs can organise member companies together to use shared operating premises, access advanced technologies, equipment and shared services while keeping the operating costs lower for individual companies

o Government agencies can provide the relevant regulatory and funding support

4. Do more to encourage and support businesses to hire mid-career and older workers

o Shortage of manpower is a key challenge. Businesses can tap more fully on mid-career and older workers to address manpower constraints

o Strengthen incentives for companies to hire mid-career and/or older workers where applicable, especially in targeted sectors with acute manpower shortage

o Promote more awareness of relevant manpower schemes:

▪ SkillsFuture Earn & Learn, Professional Conversion Programme, Capability Transfer Programmeand Lean Enterprise Development Scheme

Recommendations

5. Continue to make it easier and lower the cost for SMEs to participate in government procurement projects

o SMEs view government procurement projects as a valuable track record from which they can scale up overseas. According to MOF, about 50% of government contract value goes to SMEs. There is room for more government projects to be awarded to SMEs

o Government can continue to review the qualifying criteria and improve the administrative processes to make it easier and lower the costs for SMEs as they bid for government contracts

6. Business-needs approach to tap on government schemes

o Government agencies should move away from focusing on schemes uptake and adoption to first seek to understand the fundamental business needs and plans of companies

o Correspondingly, government agencies should not indulge in silo, agency-based scheme promotion but instead offer scheme assistance from a “whole-of-government” perspective

Recommendations

7. Do more to help SMEs understand and make use of free trade agreements to derive benefits for their businesses

o FTAs can be a competitive advantage that SMEs can leverage to internationalise. Unlike large companies, SMEs do not have the capabilities and competencies to understand and effectively leverage on FTAs

Recommendations

Thank you

Connect with us

Economic Research [email protected]

Leong Teng ChauAssistant [email protected]

Visit our website at https://www.sccci.org.sg/

2019 annual business survey 14 october 2019 - sccci annual... · 2020. 1. 16. · voices from...

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