Business Sentiments of Local Companies in FY22 Q2

- All Industries -  |  25 Oct 2022

Business sentiments of Singapore companies
(Second Quarter of FY2022: July to September 2022)

The Singapore economy is moving more cautiously towards post-pandemic recovery with a lower estimated economic forecast for the latter half of 2022. In August 2022, the Ministry of Trade and Industry (MTI) narrowed Singapore’s 2022 Gross Domestic Product (GDP) growth forecast to 3 to 4 percent, from the 3 to 5 percent announced in May. This summary report will look at the business sentiments from Singapore companies from July to September 2022.

Channel News Asia also reported that Singapore’s economy grew at a slower pace of 4.4 percent in the third quarter of 2022. However, the growth exceeded expectations as economists polled by Reuters had expected a 3.4 per cent expansion for the July to September period from a year ago.

According to Forbes, the increase in living costs is the top concern of Singaporeans, as the government warns that higher inflation is likely to persist and interest rates have been on an upward trend. We will also look at businesses’ top concerns in this summary report.

Continual challenges from stiff global headwinds were further intensified by global supply chain bottlenecks and the inflation in food and energy prices. These challenges were also reflected in companies’ sentiments about the future. However, current sentiments about the business situation have held steady and are showing slight improvement despite remaining in negative territory.

READ ALSO: Business Sentiments Survey FY22 Q1 report


Perceptions of Singapore’s Economy and Industry

From IndSights’ BSS findings, we found that positive sentiments towards the Singapore economy increased slightly, with a net balance of 17 percent compared to 16 percent in the previous quarter.

Chart 1 of net balance score of perceptions of Singapore economy July to September 2022
Chart 1 of net balance score of perceptions of Singapore economy July to September 2022

However, companies were much more pessimistic about the future economic outlook; with a 21 percentage point plunge from the previous quarter. This sentiment comports with Forbes’ “cloudy outlook” for Singapore’s economic growth.

Chart 2 of Forbes outlook of Singapore economic growth
Chart 2 of Forbes outlook of Singapore economic growth, courtesy of Forbes

Negative sentiments about the current business situation saw an improvement, with a net balance score of −8 percent, up from the previous quarter of −10 percent. Similar to the future outlook of Singapore’s economy, companies were notably less positive about their future business situation.

Chart 3 of net balance score of perceptions of Singapore industry July to September 2022
Chart 3 of net balance score of perceptions of Singapore industry July to September 2022

Note: A net balance score is calculated by taking the difference between the percentages of respondents with positive responses against the percentages of respondents with negative responses. A plus sign in the net balance indicates a net upward trend (i.e., a higher proportion of companies were optimistic) and a minus sign denotes a net downward trend (i.e., a higher proportion of companies were pessimistic) of the economic/industry situation. 


It was observed in previous reports that the recovery across various industries has been uneven. Our observations are in line with the report from the Singapore Department of Statistics (SingStat), which noted that the outlook for some outward-oriented sectors has weakened. For instance, as China is a key market for petroleum and chemicals products from Singapore, its current weakening economic outlook has negatively affected the growth of Singapore’s chemicals sector, as well as the fuels and chemicals segment of the wholesale trade sector. Growth is also expected to be stifled by projected slowdown in major external economies in the water transport, finance, and insurance sectors.

In contrast, SingStat also reported that several sectors in the Singapore economy saw improved outlooks. For example, the strong recovery in air passengers and international visitor arrivals is expected to benefit sectors such as air transport, the arts, entertainment and recreation, and consumer-facing sectors such as food and beverage services. The easing of Singapore’s travel restrictions has additionally strengthened the recovery of the professional services sector where businesses such as consultancy and legal firms may now better engage their overseas clients.

READ ALSO: Air transport recovery journey


Revenue and Manpower Changes

Year-on-year (YoY) revenue change in April to June 2022 remained stable with a net balance of −2 percent, similar to the last three quarters. Sectors in Food Services and Sea Transport saw a higher proportion of companies with YoY revenue increases, while Precision Engineering, Food Manufacturing and Security topped the sectors which experienced YoY revenue decreases in April to June.

In view of the expected recovery in economic activities, firms are generally expecting positive YoY revenue growth for the period of July to September 2022.

Percentage of Singapore companies that reported being profitable in FY21
Percentage of Singapore companies that reported being profitable in FY21

Indsights Research found that a five percent net balance of firms saw manpower growth in April to June 2022, entering positive territory after several quarters. However, the Logistics and Education sectors were among those that had reported more manpower reductions in April to June 2022. Looking ahead, Singapore companies remain optimistic about manpower growth in July to September 2022.

It is noteworthy that not all sectors have been able to source for the talent needed to fill available positions. This suggests that actual manpower change will continue to lag behind expectations. This trend is keenly felt on the ground, and a common feedback raised during conversations with business leaders from various industries is on the challenges in sourcing and hiring suitable local talents as well as the difficulty in hiring foreign talents due to foreign worker quota restrictions.


Sustainability and Green Practices for Singapore Businesses

Two in five companies agreed that growth in demand for sustainability and green solutions would open new opportunities for their business. 47 percent of companies reported having put in place budget/plans to adopt such practices in the next two to three years.

Half of the companies reported that they knew how to adopt sustainable practices into their business models. From the chats with business leaders, IndSights has heard from a few companies who shared about adopting ESG (environmental, social and governance) practices. These Singapore companies expect to have a competitive advantage over competitors in their industry because of changing client behaviour where there is growing support for companies with sustainable practices and because their competitors have not started on their sustainability journey.

Singapore companies that know of how to adopt sustainable practices in their business
Singapore companies that know of how to adopt sustainable practices in their business


Top Concerns of Singapore Companies

In the International Monetary Fund (IMF) Country Focus analysis of Singapore’s economic outlook, Singapore’s recovery is expected to remain resilient, but considerable uncertainties and evolving risks cloud the outlook. Crucial to the evolving risks are developments in China, Singapore’s largest trading partner, and the global economic fragmentation resulting from the conflict in Ukraine.

At the time of writing, a new COVID subvariant named XBB has become the predominant subvariant in Singapore. While large scale responses are unnecessary for now, Singapore’ Minister for Health Mr. Ong Ye Kung said that the Ministry of Health does not rule out reimposing safe management measures such as mask-wearing. We can be cautiously hopeful that there will be minimal impact to businesses if Singapore can ride out the new wave.

The worries of COVID subvariants aside, IndSights also surveyed companies regarding their business concerns. Singapore companies reported that their main concerns in the next six months are largely related to macroeconomic factors such as inflation and demand/supply issues. The top-most concern was on the cost of doing business in Singapore.

Chart 4 showing top concerns of Singapore companies
Chart 4 showing top concerns of Singapore companies


Support for Rising Business Costs

The IMF country focus analysis also looked at Singapore’s responses and found that the ongoing policies were appropriate had positive results. Notwithstanding the risks of emerging vaccine-resistant COVID variants, Singapore has appropriately shifted to accelerating transformation towards a digital, more inclusive, and greener economy.

In June 2022, Deputy Prime Minister and Minister for Finance Lawrence Wong announced a $1.5 billion support package to help households and businesses counter rising costs.  The support package will also extend more help to local companies in their enterprise and workforce transformation, and builds on the support measures announced in Budget 2022 and April 2022.

Regarding the $1.5 billion support package, IndSights found that four in five companies polled were aware of the announcements. Additionally, at least 80 percent of Singapore companies responded that they read or heard at least a little about the recent announcements, among which 13 percent followed the news closely.

Top three areas of rising business costs
Top three areas of rising business costs

For more information on the support schemes announced in June 2022:

  • Progressive Wage Credit Scheme (PWCS): The government’s co-funding share for PWCS will increase from 50 percent to 75 percent for wages up to $2,500 and from 30 percent to 45 percent for wages above $2,500 up to $3,000.
  • Jobs Growth Incentive (JGI): Businesses can continue to benefit from JGI until September 2022, when they hire mature jobseekers who have not been working for at least six months, as well as persons with disabilities or ex-offenders. Support for employers of vulnerable workers will see the JGI extended to March 2023.
  • Enterprise Financing Scheme – SME Working Capital Loan (EFS-WCL): the maximum loan quantum increased to $500,000 from 1 October 2022 to 31 March 2023, after the Temporary Bridging Loan Programme expires on 30 September 2022.
  • Enterprise Financing Scheme – Trade Loan (EFS-TL): the maximum loan quantum increased to $10m from 1 July 2022 to 31 March 2023; extended 70% risk-share during this period.
  • Energy Efficiency Grant: For local SMEs (Small and Medium Enterprises) in the Food Services, Food Manufacturing, and Retail sectors to adopt energy-efficient equipment in pre-approved categories with up to 70 percent support.

For more information on other support programmes, see: Resource Page

As Singapore recovers from the pandemic, the nation is transitioning into a social compact of increased collective action while safeguarding individual responsibility through incentives or support programmes to keep people in the workforce. In addition, as Singapore continues with its plans to accelerate digital adoption and innovation, this strategy will help retain Singapore’s status as a key regional innovation hub. Local companies will do well to take the opportunity to ride on the support schemes to digitalise, innovate and futureproof their businesses.

READ MORE: Navigating the Next Normal and digitalisation


About the Study

Our recent survey was conducted in July to September 2022 with 1,520 business leaders from: Environmental Services, Food Services, Logistics, Retail, Information & Communications, Security, Wholesale Trade, Real Estate, Air Transport, Land Transport, Sea Transport, Hotels, Construction, Financial Services, Professional Services, Food Manufacturing, Healthcare, Education, Electronics, Energy & Chemicals, Marine & Offshore, Precision Engineering, and Aerospace.

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