Singapore SMEs weather the COVID-19 storm through self-directed coping strategies and government support measures

 

 

Despite differing opinions about their industry outlook, SMEs from ICT and non-ICT sectors share similar business concerns. On average, the fear of business disruptions due to COVID-19 was their key concern (61%), followed by low demand for products and services (54%) and the cost of doing business in Singapore (51%).

However, manpower concerns were observed to affect ICT companies more than their non-ICT peers, particularly the lack of skilled tech talent in Singapore. Already in short supply for several years before the pandemic, the shortage of tech talent is now exacerbated by tightened cross-border controls and stricter foreign manpower hiring policies.

SMEs kept afloat with self-driven strategies and government support

Despite being dogged by business continuity concerns, about half of the SMEs polled managed to register a profit in FY2020. What steps had SMEs taken to not only address their business concerns but also keep their heads above water? More than a year into the global health crisis, the resurgence of new virus strains continues to make the domestic and global marketplace unpredictable.

Most SMEs polled planned to seek financial assistance to stay afloat in 1H 2021. Industry players that IndSights Research spoke to in a series of focus group discussions said support schemes such as the Jobs Growth Incentive (JGI) helped to defray manpower hiring costs, which forms a substantial portion of business operations. According to the OECD, government intervention in times of crisis reduces the incidence of SMEs running out of liquidity (OECD, 2020). Therefore, it is reasonable to believe that the recent announcement of the extension of COVID-19 support measures until March 2022 (Monetary Authority of Singapore, 2021) would be well-received, especially for many small businesses that continue to face economic challenges due to the pandemic.

In terms of coping with manpower issues, it is heartening to see that companies are least likely to consider drastic measures such as staff layoffs. In fact, recent FY21Q1 BSS data found that several industries, particularly Construction, Environmental Services, ICT and Security are looking to increase manpower in the coming months. This is in line with a recent report by the Ministry of Manpower (The Straits Times, 2021) that said Singapore’s labour market grew for the first time in FY21Q1 after four consecutive quarters of decline, driven by more placement of retrenched workers and job vacancies.

SMEs explore growth strategies despite economic uncertainties

Singapore’s small businesses are also determined to not just safeguard their survival, but also ensure long-term competitiveness when the economy recovers. Activities related to business expansion and innovation were key areas that SMEs intended to invest in for 1H 2021. Productivity improvements through IT solutions was their next area of priority, with almost 7 in 10 looking to increase or maintain budgets in this area.

More companies in the non-ICT sector (particularly those in the Food Services industry), were looking to engage in digitalisation plans, compared to their peers in the ICT sector. The need for technological transformation is no longer unique to the ICT companies. The pandemic has shifted customer interactions to remote or online channels, forcing industries that are traditionally labour-dependent or that rely on physical operations to adopt technological solutions to stay relevant in the marketplace. To better support SMEs in deepening their digital capabilities, the Singapore government has rolled out various initiatives (e.g. SMEs Go Digital programme) to facilitate the transformation process.

While training appeared to be of relatively lower priority for, it is important for companies to place greater emphasis on upskilling their workforce for successful technological adoption and meet new market demands.

READ ALSO: ICT companies with trained workforce performed better than their peers

As the global health crisis enters its second year, SMEs, particularly smaller companies in some industries, remain in a tenuous position. The gradual reopening of Singapore’s economy and relaxation of business restrictions, coupled with the recent announcement of the extension of Budget support measures undoubtedly provide a much-needed boost of confidence for local small businesses.  However, economic recovery may still be potentially derailed by another wave of COVID-19 cases or delays in vaccination programmes. Therefore, it is important for SMEs to continue to invest in manpower upskilling and explore digitalisation initiatives to ensure sustainable competitiveness and business continuity.

For more information about the assistance grants and schemes available to help small businesses thrive amidst the pandemic, visit our one-stop resource page to browse assistance schemes grouped according to business stage/ function. You can also use the e-adviser on GovAssist to find schemes relevant to your needs.

IndSights Research’s Business Sentiment Survey (BSS) tracks local businesses’ opinions on various issues affecting Information and Communications Technology (ICT) companies, as well as businesses in all major industries in Singapore. Findings drew on data collected between July 2020 to May 2021 from more than 1,500 business leaders across industries in Singapore.

For more information about IndSights Research’s Business Sentiment Survey, or findings on specific sectors, please contact us here.

References