Business Sentiments Amidst COVID-19 (FY20Q2)
Business Sentiment | 15 Sep 2020
Business Sentiments Amidst COVID-19 in FY20Q2
(Jul – Aug 2020)
AN INDSIGHTS RESEARCH REPORT SUMMARY
The Business Sentiments Survey by IndSights Research ascertains how companies in Singapore are adjusting to the current global and domestic economic environment. The survey was done from July to August 2020, with 911 business leaders from the Wholesale trade, Retail, Food services, ICT (Information & Communications Technology), Environmental services, Logistics and Security industries.
You may view the earlier Business Sentiments Survey (April 2020) findings on the ICT sector HERE.
The negative impact of the company closures due to the Circuit Breaker (Phase 1), and the disruption brought about by the pandemic was underscored by an overwhelming decline in revenue relative to other periods. Despite the uncertainty and supply chain disruptions, our study found that some SMEs view this period as an opportunity to pivot by leveraging technology and adapting business models with new partners. We saw that many SMEs, driven by the pandemic, are now embracing digitalisation with more urgency and this is a key priority in budget allocation.
The perception of Singapore’s economic situation remained poor, but many were holding on. This is in line with our previous findings where we expected to see a continued impact of the COVID-19 pandemic on business sentiments in the months ahead (note when comparing findings: previous survey was on ICT companies only).
Sentiments in Singapore are not vastly different from the business sentiments of Asian companies, according to a Thomson Reuters/INSEAD survey. Despite the negative impact, we found that some were still optimistic about the economy in the coming year. About four in 10 companies thought that Singapore’s economy would do better in a year’s time, while 44% had a more positive outlook of their respective industry’s situation in a year’s time.
We note the sentiments here may be buoyed by the various forms of government support. Sentiments may change more drastically after the next quarter, where some of the support schemes start to taper off for certain industries. According to Trading Economics’ forecasts, Business Confidence in Singapore is expected to be negative all through to 2021.
IMPACT OF COVID-19 AND BUSINESSES
We saw that 73% of companies were moderately to extremely impacted by the COVID-19 pandemic.
Nearly half (47%) experienced a sharp revenue decline of at least 20% or more in the period between April to June 2020. About six in 10 companies foresee a consecutive revenue decline in the current quarter (July to September 2020).
Six in 10 companies maintained their headcount, neither creating nor reducing jobs between April and June. Looking forward, a similar proportion of companies plan to keep their headcounts unchanged from July to September.
Encouragingly, many companies preferred alternatives to layoffs, relocation or winding down. In keeping with sustaining a stable workforce, companies indicated that their top plans in Jul-Sep included reorganising their existing workforce and reducing compensation.
As of the time of writing, the Straits Times reported that employment expectations among businesses in Singapore have taken a turn for the worse for the last quarter, becoming the most negative level for 2020. Hopefully, the companies’ plans and government support may mitigate the actual numbers.
BUSINESS STRATEGY IN JUL-SEP
Despite the poor economic and industry situation, more companies are planning to increase budgets for business expansion and digitalisation. As going digital is now imperative for companies across industries, budget increment in digitalisation of business processes is a priority, especially for companies more impacted by COVID-19.
Among the business strategies that the surveyed companies are planning to implement, the top strategy was unsurprisingly, to increase their spending for the digitalisation of their business processes (46%). Slightly more than four in 10 companies regard business expansion as their second priority in their strategy. Other spending priorities were in training (24%) and Investments in Research and Development (18%).
IndSights Research also saw that 70% of companies allocated their budget to the digitalisation of business operations. In fact, The Straits Times reported that 75% of firms are planning to accelerate digitalisation due to COVID-19.
Digitalisation programmes rolled out to support businesses include the Automation Support Package, the E-invoicing grant, the Productivity Solutions Grant, and the SME Go Digital programme. You can read more about the programmes in the infographics.
AUGUST MINISTERIAL STATEMENT
The Government has devoted around $100 billion dollars over 4 Budgets to help people and businesses amidst the unprecedented COVID-19 crisis. With the fluid nature of the pandemic situation worldwide, measures have been introduced and implemented in a manner that allows flexible adjustments.
In addition to the budgets, Deputy Prime Minister and Finance Minister Heng Swee Keat delivered a ministerial statement on 17 August 2020, laying out how the Singapore Government will “evolve and extend” its support for companies and workers during the COVID-19 crisis.
You may read more about the additional support in the infographics.
About the Study
This quarter’s survey collected views from 991 business leaders from various industries consisting of Wholesale trade, Retail, Food services, ICT, Environmental services, Logistics and Security, in the period of July to August 2020.
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