The Singapore Business Federation’s (SBF) 2024 National Business Survey (NBS) has revealed a more optimistic outlook for the local economy.
Conducted between Oct 11 and Nov 11, 2024, the survey gathered responses from 519 businesses across key industries, of which 83% were small- and medium-sized enterprises (SMEs) while the remaining 17% were large companies. SBF notes that these sentiment insights are expected to shape the Singapore Budget 2025 recommendations, aimed at fostering globally competitive and sustainable businesses.
According to the survey, 40% of businesses are satisfied with the current business climate, marking a 10 percentage point (ppts) increase from mid-2024. Notably, 26% of businesses expecting economic improvement outnumber those anticipating a downturn at 22% over the next 12 months. This shift indicates a growing confidence among businesses despite ongoing challenges.
Balancing profitability amid rising costs
In 2024, manpower costs remain the top challenge for businesses, while uncertainty in customer demand has risen sharply to 45% from 30% last year.
Rental costs also increased as a concern, from 36% in 2023 to 43% in 2024. Fluctuating customer demand has also continued to pressure industries such as 80% of hotels, restaurants and accommodations, 75% of retail trade and 59% of wholesale trade businesses.
Despite these pressures, 57% of businesses have managed to maintain or improve profitability in 2024. However, 43% reported a decline, with an average decrease of 27.5%. To counter cost pressures, businesses have adopted strategies such as cost-saving measures, price adjustments and improved inventory management.
Liquidity remains a critical issue for some, with 25% of businesses experiencing severe to moderate credit crunches. Of these, 40% reported insufficient funds to sustain operations for the next three to six months. About 70% of businesses are also seeking government support to manage financing needs, while also prioritising non-essential cost reductions and enhanced credit risk assessments.
While challenges clearly remain, encouragingly, more businesses are committing to future growth. Plans to focus on staff training have risen up to 36%, while digitalisation efforts and new investments have likewise seen an increase to 37% and 26% respectively.
Perspectives on foreign talent and workforce integration
With Singapore's low unemployment rate and limited local manpower, a complementary foreign workforce is crucial for sustaining economic competitiveness. Around 59% of businesses believe their local employees view foreign workers positively, while only 7% see them as competitors. However, the perception of Singapore as a global talent hub has declined, from 43% in the past year to 41% in the next 12 months, with the drop more pronounced among large companies.
To bridge local and foreign workforce integration, 42% of businesses rely on cross-functional teams. Despite this, only 20% have so-called diversity, equity, and inclusion (DEI) policies or participate in cultural integration activities, suggesting room for improvement in fostering workplace inclusivity.
Support for businesses amid challenges
The survey also highlighted widespread appreciation for Budget 2024 initiatives, such as the corporate income tax rebate at 88% of surveyees, the SkillsFuture Level Up programme at 78%, and the extension of SkillsFuture Enterprise Credit at 73%.
Looking ahead to Budget 2025, which will be read by Prime Minister Lawrence Wong on Feb 18, businesses are calling for schemes to address cost pressures, attract and retain local workforce as well as resolve foreign manpower issues. Key priorities include managing financing needs, advancing human capital development and driving digital transformation.
SBF’s chief executive officer, Kok Ping Soon, emphasised the resilience and forward-thinking mindset of Singapore businesses. “It is encouraging to see growing optimism, reflecting businesses’ adaptability and preparedness by investing in capability building. However, rising costs and geopolitical uncertainties remain significant concerns.”
“Given our manpower constraints, we need to enhance Singapore’s absorptive capacity for a complementary foreign workforce. Businesses must also play a more active role in integrating locals and foreigners through DEI initiatives and cultural activities,” adds Kok.
SBF plans to release the SBF-PwC Budget Recommendations on Jan 9 to address these challenges and support businesses in their pursuit of sustainable growth and global competitiveness.
