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

- All Industries -  |  16 Sep 2021

Business Sentiments of Local Companies on the Singapore Economy and Industries in 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) (P2HA) from 22 July to 18 August 2021, businesses were inevitably impacted. Even though the measures were meant to mitigate the risk of further community spread from COVID-19 clusters linked to the Jurong Fishery Port, and many companies agreed that the measures were necessary, the sentiments on the economy and industry still took a hit this quarter.

The Business Sentiments Survey (BSS) ascertains how companies in Singapore are adjusting to the current global and domestic economic environment. This survey was conducted in July to August 2021, with over 1,500 business leaders.

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

 

Perceptions of Singapore’s economy and industry situation

While the perceptions of the economy worsened in this reported quarter, the majority were optimistic of the future economic outlook. ‘Good’ ratings fell to 18%, a drop from 24% in the last quarter. Correspondingly, the ‘Good’ ratings for the industry situation was at 19%, a fall from 26% in the last quarter (see Chart 1).

Chart 1: SG companies’ perceptions of Singapore’s economy and industry
Chart showing SG companies’ perceptions of Singapore’s economy and industry

In addition to the current sentiments, we also asked companies for their outlook on Singapore’s economy and industry in a year’s time. 54% thought that the future economic outlook would be better, and 45% remained optimistic about their future industry outlook.

 

Year-on-year revenue and manpower changes

From our survey, businesses have become more fragile financially. While two in five companies experienced a drop in revenue between Apr-Jun ’21, about half of them had not expected the revenue decrease.

In particular, the Food Services industries saw a higher proportion of companies with a decrease in Y-o-Y revenue for the first time since Apr-Jun ’20, and the sector remained pessimistic about earnings in Jul-Sep ’21. In line with our findings, 35% of micro and small enterprises in Singapore’s F&B and retail sectors indicated that their earnings had dropped by more than half since the start of the Heightened Alert period, according to the DBS SME Pulse Check Survey.

Having said that, the Business Times reported in June 2021 that micro and small enterprises in Singapore’s food and beverage (F&B) and retail sector were coping better during the Phase 2 Heightened Alert compared to last year’s “circuit-breaker”. This is also supported by our findings where the revenue decrease in Apr-Jun ’21 was less than the decrease in the same period the previous year. Specifically, 43% reported a decrease in revenue in Apr-Jun ’21, up from 41% in the previous quarter. However, 31% reported an increase in revenue, up from 30% in the previous report. In all, 57% of Singapore companies were profitable in the financial year 2020.

READ ALSO: Business Sentiments of Singapore Companies in FY21 Q1

IndSights Research also asked companies about their manpower changes. Fewer companies saw an increase in manpower in Apr-Jun ’21 compared to the previous quarter. The decrease in workforce was also higher than what companies had expected.

For the Construction and Environmental Services sectors, around half had planned to increase their workforce in Apr-Jun, but only 14% were able to do so. The various manpower plans may have been disrupted by the further tightening of border restrictions during the country’s return to P2HA.

 

Return to Phase 2 Heightened Alert (P2HA) measures

A majority of Singapore companies agreed that the return to P2HA was necessary. Most hoped that the P2HA measures could be relaxed after 2 weeks. 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.

Compared to the first implementation of P2HA in May-Jun’21, twice as many companies now thought that the economy should gradually reopen until the COVID-19 situation in Singapore has been resolved.

Proportion of Singapore companies impacted by P2HA measures
Proportion of Singapore companies impacted by P2HA measures

 

Progressive Wage Accreditation Mark

The Ministry of Manpower has accepted the recommendations by Tripartite Workgroup to uplift wages and well-being of lower-wage workers. Among the recommendations is the use of the Progressive Wage Mark as follows:

“Establish a new Progressive Wage Mark (“PW Mark”) to recognise firms that pay Progressive Wages. This will enable corporate buyers and individual consumers to purchase from these firms to support lower-wage workers’ wage increases. In addition, confer “PW Mark Plus” to firms that go the extra mile to uplift lower-wage workers holistically by advancing their well-being. Public and private sector buyers should require their suppliers to obtain the PW Mark.”

The Government is looking to accredit companies that are committed to improving the wages and working conditions of lower-wage workers with a PW Mark. This gives businesses the opportunity to distinguish themselves as a responsible and progressive employer that pays fair wages. It will also allow consumers to identify and consciously support such companies.

Top sectors in Singapore who are interested in the progressive wage mark
Top sectors in Singapore who are interested in the progressive wage mark

We found that the three key motivators for companies to be accredited are as follows:

  1. Will not lead to significant additional cost to business
  2. The administrative process to get accredited is minimal and fuss-free
  3. Demonstrates the company’s commitment as a responsible and progressive employer that pays fair wages

 

Other support measures

Overall, the latest P2HA is not expected to disrupt Singapore’s economic recovery of 4 to 6 percent GDP (Gross Domestic Product) 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 1,576 ICT business leaders. Respondents are from the following industries: Environmental Services, Food Services, Logistics, Retail, ICT, Security, Wholesale Trade, Real Estate, Air Transport, Land Transport, Sea Transport, Hotels, Construction, Financial Services, Professional Services, and Food Manufacturing. 

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