Business Sentiments of ICT Companies on the Singapore Economy and ICT Industry in FY21 Q2

Information & Communications Technology and Media  |  09 Sep 2021

Business Sentiments of ICT Companies on the Singapore Economy and ICT Industry 

(FY21 Q2: July – August 2021)

AN INDSIGHTS RESEARCH REPORT SUMMARY

 

When the Multi-Ministry Taskforce (MTF) announced Singapore’s return to Phase 2 (Heightened Alert) measures from 22 July to 18 August 2021, many companies were impacted. The measures announced were meant to mitigate the risk of further community spread from COVID-19 clusters linked to the Jurong Fishery Port. Even though many agreed that the measures were necessary, ICT companies’ sentiment on the economy and industry still took a hit this quarter.

The Business Sentiments Survey ascertains how Information and Communication Technology (ICT) companies in Singapore are adjusting to the current global and domestic economic environment. This survey was conducted in July to August 2021, with over 400 ICT business leaders.

 

Perceptions of Singapore’s economy and industry situation

Perceptions of the economy worsened in this reported quarter. ‘Good’ ratings were 26%, falling from 31% in the last quarter. More ICT companies perceived their current industry situation as poor (25%), an uptick from last quarter, see Chart 1.

Chart 1: Perceptions of Singapore’s economy and industry situation
Chart showing the perceptions of Singapore’s economy and industry situation

58% thought that the future economic outlook would be better, but this was also less positive compared to the previous quarter. While the current industry sentiment was less positive compared with last quarter, ICT companies’ views on the future industry outlook remained stable at 57%.

 

Year on year revenue and manpower changes

Businesses have become more financially fragile, with some companies experiencing a decrease in revenue between Apr-Jun ’21. About half of these companies had not expected to experience a revenue decrease in this period, prior to P2HA.

Anecdotally, some businesses shared that they were caught off-guard and did not have enough preparation time. This may be seen in the figures, where 39% reported a decrease in revenue, up from 29% in the previous quarter. 31% reported an increase in revenue, down from 39% in the previous report.

READ ALSO: Business Sentiments of ICT Companies on the Singapore economy and ICT industry in FY21 Q1

On manpower changes, five times as many companies saw a reduction in manpower in Apr-Jun ’21, compared to Jan-Mar ’21. This reduction is higher than what companies had expected. Increase in manpower was also lower than expected for the same period.

 

Return to Phase 2 Heightened Alert (P2HA) measures

A majority of ICT companies agreed that Singapore’s return to P2HA was necessary, although the views on the duration of the measures were split between hoping that the government could review and relax P2HA measures after 2 weeks, and thinking that P2HA should be put in place for 1 month.

In addition, compared to when P2HA was first implemented in May-June 2021, more companies now thought that the economy should gradually re-open and tolerate the daily number of COVID-19 cases as long as our medical system could cope.

ICT companies impacted by P2HA measures
ICT companies impacted by P2HA measures

 

Other support measures

Overall, the latest P2HA is not expected to disrupt Singapore’s economic recovery of 4% to 6% GDP growth in 2021 – as long as “external demand remains healthy”, said Finance Minister Lawrence Wong said in Parliament in July. He shared that the support measures for the P2HA will be financed through budget reallocations, through underutilised expenditures and funds that had been set aside as a buffer.

In summary, there will be about S$2 billion of support to workers and businesses over the two periods of Heightened Alert in 2021. The measures include:

READ ALSO: Additional business resources

 

About the study

This quarter’s survey was conducted in July-August 2021 with 454 ICT business leaders.

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