Monday Wrap: Surplus strain, delivery challenges, and expansion headwinds

Firms are prioritising growth, though talent retention remains a major obstacle.

Last week in Singapore Business Review, higher government spending outpaces tax revenue, delivery firms prioritise efficiency amidst rising costs, and companies face continued risks in overseas expansion.

The country’s FY2026 Budget is expected to post an $8.5b fiscal surplus, though government spending is outpacing tax revenue, with the surplus primarily supported by investment returns.

Meanwhile, analysts warn that companies still face challenges with capital management and geopolitical risks, despite government efforts to ease financial barriers for overseas expansion.

Last-mile delivery firms are focusing on efficiency, as 43% of small and medium-sized enterprises (SMEs) cite rising logistics costs and over half report higher delivery demands, prompting operators to rethink operational strategies.

A separate report revealed that firms are prioritising organisational growth into the year, though 18% of employers cite talent retention as their biggest obstacle.

The government’s 40% corporate tax rebate for the year of assessment 2026 is expected to ease cost pressures for some firms, though companies with weak cash flow and loss-making businesses may see limited benefit.

On the other hand, experts remain positive on Singapore’s full-year non-oil domestic export outlook, supported by continued artificial intelligence (AI)-related demand into the first half of the year.

Lastly, a local startup is expanding its enterprise AI agents across Asia-Pacific to automate customer engagement whilst preserving human-quality service.