Driving productivity and technological innovation will be the beachhead in Singapore firms’ fight against a more subdued economic environment.
Local businesses retained a broadly optimistic trade outlook, with 51% seeing more opportunities on the horizon in the next one to two years, on the back of productivity and technological enhancements as avenues for competitive delta, a HSBC global survey found.
According to the survey, 78% of Singapore firms expect to grow in the next one to two years, in line with the global average (79%). Additionally, 35% of Singapore’s businesses said they have become more optimistic about growth in the last 12 months, although this falls behind the global average of 53%.
Despite the business optimism, 20% of Singapore firms say they see threats ahead, which is above the global average of 12%. The top threats for Singapore’s businesses include new competitors (33%), uncertain/declining customer demand, cyber security and protectionism.
Meanwhile, the survey found that business leaders in Singapore are echoing the priorities set out by Singapore’s smart nation initiative, with improving productivity (31%) and the adoption of new technologies (29%) as the main opportunities for business growth (compared to the global average of 26% respectively for each). It also revealed the importance of innovation to maintaining business continuity, with 44% stating that innovation is a prerequisite for survival, the second highest level in APAC after China (50%) and above the global average (38%).
According to Alan Turner, head of commercial banking at HSBC Singapore, as an open and trade-sensitive economy, Singapore will feel this global softness more keenly than other markets.
“Driving productivity and technological innovation will be the beachhead in Singapore firms’ fight against a more subdued domestic and global economic outlook. The path to achieving future growth has been laid out in the smart nation initiative, and it is encouraging to see that businesses are showing confidence in the principles to achieve this, placing innovation, technology and productivity at the forefront,” he said.
That said, skills shortage was found to be a particular pain point for Singapore, with local firms calling for an increase in skills to meet the future challenges underpinning digitalisation of the economy. Singapore businesses identified skills shortage as a key barrier to innovation (36%) compared to the global average (28%), reflecting the second highest percentage amongst markets surveyed.
In addition, Singapore businesses placed greater emphasis on people when it comes to future proofing their businesses, with more firms considering investing in the skills of their workforce (26%) compared to the global average (22%), and higher than any other Asia Pacific market.
“The survey reveals Singapore’s current catch 22: increasing productivity, technology and innovation will overcome competitive threats, but skills shortage and gaps need to be filled. Whilst Singapore continues to grapple with how to better equip its workers to compete in a technologically advancing and increasingly competitive environment, it will be up to the decision makers to allocate investment in their people to ensure their businesses are made for the future,” Turner noted.
HSBC’s “Navigator” survey comes as Singapore policymakers put economic growth forecasts under review in light of the global slowdown in manufacturing, trade and investment.
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