2019 Annual Business Survey 14 October 2019 - SCCCI Annual... · 2020. 1. 16. · Voices from...
Transcript of 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
Education, Health & Social Services
Professional & Business Services
Transport, Storage & Logistics
Tourism, Hotels, Food & Beverages
Manufacturing
Wholesale & Retail Trade
Construction
Information & Communications
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
Education, Health & Social Services
Real Estate
Tourism, Hotels, Food & Beverages
Information & Communications
Professional & Business Services
Manufacturing
Transport, Storage & Logistics
Construction
Wholesale & Retail Trade
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
Education, Health & Social Services
Information & Communications
Professional & Business Services
Manufacturing
Construction
Tourism, Hotels, Food & Beverages
Wholesale & Retail Trade
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
Transport, Storage & Logistics
Tourism, Hotels, Food & Beverages
Wholesale & Retail Trade
Real Estate
Professional & Business Services
Manufacturing
Information & Communications
Finance & Insurance
Education, Health & Social Services
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%
Education, Health & Social Services
Real Estate
Information & Communications
Finance & Insurance
Transport, Storage & Logistics
Tourism, Hotels, Food & Beverages
Professional & Business Services
Manufacturing
Wholesale & Retail Trade
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%
2019 SCCCI Digitalisation Survey
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?
2019 SCCCI Digitalisation Survey
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/