NATIONAL BUSINESS SURVEY 2020/2021 Finding a Pathway to the Future These findings summarise the National Business Survey 2020/2021 conducted by the Singapore Business Federation (SBF). The 13 th edition of this annual survey was carried out from 9 October to 28 November 2020, and drew responses from 1,075 companies across key industries. 85% of the responses were from SMEs and 15% of the responses were from large companies. i. COVID-19 has taken a major toll on local businesses. Two thirds of businesses have been negatively affected by COVID-19, though the impact was uneven across industries. Sectors hit the hardest were Construction & Civil Engineering (79%) and Retail, Real Estate, Hotels, Restaurants & Accommodations (73%), while top sectors reporting positive or no impact from the pandemic were Logistics & Transportation (62%) and IT & Professional Services (46%). ii. Two in three companies are confident that they can sustain their businesses in the next 12 months. However, a proportion (31%) are unsure about the future of their businesses. This uncertainty is higher amongst SMEs than in large companies. iv. ... but most feel that full recovery will only happen in 2022 or beyond. Majority (70%) of businesses that have been negatively impacted by COVID-19 predict that they are likely to fully recover after 12 months or more. This sentiment is consistent across both SMEs and large companies. NEGATIVE IMPACT 63% Average revenue decrease by 31% POSITIVE IMPACT 6% Average revenue increase by 40% NO IMPACT 31% COVID-19 IMPACT ON BUSINESS (Very + Somewhat Confident) CONFIDENT CONFIDENT (Very + Somewhat Not Confident) NOT CONFIDENT MY BUSINESS WILL FULLY RECOVER IN... 6 months 6-12 months 1-2 years 2 years+ 3% 4% 1% 23% 21% 54% 55% 18% 18% 22% 54% 16% 31% 69% NEXT 12 months 1. BUSINESS SENTIMENT & IMPACT OF COVID-19 1 CONFIDENCE IN SUSTAINING BUSINESS SMEs 67% 77% 23% 33% LARGE COMPANIES CONFIDENT NOT CONFIDENT NOT CONFIDENT Base: n=1075 Base: n=1075 | SMEs n=916 | Large Companies n=159 iii. Businesses optimistic that the economy will improve in 2021... Overall, about one-third of companies (31%) expect business and economic climate to improve in the next 12 months, with an almost equal proportion (32%) expecting it to worsen. SINGAPORE ECONOMY NEXT 12 MONTHS WORSEN 70% WORSEN 32% 5% THE SAME IMPROVE 31% IMPROVE 25% THE SAME 37% SINGAPORE ECONOMY LAST 12 MONTHS Base: 2019 n=1018 | 2020 n=1075 Decimal points have been rounded up. The total may not add up to 100%. SMES LARGE COMPANIES Base: Companies that have been negatively impacted, n=676 79% 73% 11% 51% 8% 38%
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NATIONAL BUSINESS SURVEY 2020/2021Finding a Pathway to the Future
These findings summarise the National Business Survey 2020/2021 conducted by the Singapore Business Federation (SBF).The 13th edition of this annual survey was carried out from 9 October to 28 November 2020, and drew responses from 1,075companies across key industries. 85% of the responses were from SMEs and 15% of the responses were from large companies.
i. COVID-19 has taken a major toll on local businesses.
Two thirds of businesses have been negatively affected by COVID-19, though the impact was uneven across industries. Sectors hit the hardest were Construction & Civil Engineering (79%) and Retail, Real Estate, Hotels, Restaurants & Accommodations (73%), while top sectors reporting positive or no impact from the pandemic were Logistics & Transportation (62%) and IT & Professional Services (46%).
ii. Two in three companies are confident that they can sustain their businesses in the next 12 months.
However, a proportion (31%) are unsure about the future of their businesses. This uncertainty is higher amongst SMEs than in large companies.
iv. ... but most feel that full recovery will only happen in 2022 or beyond.
Majority (70%) of businesses that have been negatively impacted by COVID-19 predict that they are likely to fully recover after 12 months or more. This sentiment is consistent across both SMEs and large companies.
NEGATIVE IMPACT
63%Average revenuedecrease by 31%
POSITIVE IMPACT
6%Average revenueincrease by 40%
NO IMPACT
31%
COVID-19IMPACT ONBUSINESS
(Very + Somewhat Confident)CONFIDENT
CONFIDENT
(Very + Somewhat Not Confident)NOT CONFIDENT
MY BUSINESS WILL FULLY RECOVER IN...
6 months 6-12 months 1-2 years 2 years+
3% 4%1%
23%21%
54%55%
18%18%
22%
54%
16%
31% 69%NEXT12 months
1. BUSINESS SENTIMENT & IMPACT OF COVID-19
1
CONFIDENCE IN SUSTAINING BUSINESS
OPEN
SMEs
67% 77%
23%33%
LARGECOMPANIES
CONFIDENT
NOTCONFIDENT
NOTCONFIDENT
Base: n=1075
Base: n=1075 | SMEs n=916 | Large Companies n=159
iii. Businesses optimistic that the economy will improve in 2021...
Overall, about one-third of companies (31%) expect business and economic climate to improve in the next 12 months, with an almost equal proportion (32%) expecting it to worsen.
SINGAPORE ECONOMYNEXT 12 MONTHS
WORSEN70%
WORSEN32%5%
THE SAME IMPROVE31%IMPROVE
25%THE SAME37%
SINGAPORE ECONOMYLAST 12 MONTHS
Base: 2019 n=1018 | 2020 n=1075Decimal points have been rounded up. The total may not add up to 100%.
SMESLARGE COMPANIES
Base: Companies that have been negatively impacted, n=676
79% 73% 11% 51% 8% 38%
80% 81%
2. BUSINESS OUTLOOK: PRIORITIES & CHALLENGES
2
i. COVID-19 has given rise to new challenges for companies.Businesses have to contend with new uncertainties in consumer demand and travel constraints, while handling historical challenges such as manpower costs and business competition.
Restrictive foreign workforce policies and the need to reduce manpower cost are the top manpower challenges faced by businesses.
ii. To emerge stronger from the COVID-19 crisis, companies are reskilling and re-looking their workforce capabilities.
Businesses invested the most on staff training during COVID-19, a trend that will continue into 2021. Conversely, cost-cutting measures such as workforce or salary reduction will decrease in the coming year.
TOP 5 MANPOWER CHALLENGES FOR BUSINESSESKEY CHALLENGES IN THE INDUSTRY
New foreign workforce policies will raise costs
52%
Reducing manpower cost
47%
Stricter policies that limit the supply of foreign workforce
44%
Applicants lack required soft skills (e.g. creativity, problem solving)
Attracting and/or retaining younger workers
42%
40%
Demand uncertainty due to COVID-19
Manpower cost
Travel restrictions due to COVID-19
52%
44%
59%
Foreign workforce policies
38%
41%
Rental cost
36%
Employee attidude & productivity
35%
37%Compliance cost for COVID-19 regulations and safety measures
Uncertainty on duration of existing government support and grants
Business competition
Keeping abreast with changing COVID-19 regulations41%
37%
INVESTMENT INSTAFF TRAINING
REDEPLOYMENTOF STAFF
NUMBER OFEMPLOYEES
EMPLOYEES’SALARY/PAY
EMPLOYEEBENEFITS
EMPLOYEES’WORKING HOURS
INCREASED/WILL INCREASE
DECREASED/WILL DECREASE
HAVE STAYEDOR WILL STAYTHE SAME
14%
20%
67% 64%
8% 10%6%
6%9%
14%
4% 22%
3%
2020 2021 2020 2021
Percentage ofbusinesses that...
AVG.+7%
AVG.-13%
65% 65%
2020 2021
AVG.+6%
AVG.-15%
80% 76%
2020 2021
8%
28%
5%7%
14%12%24%
10% 24%
11%
16%7%
14%
82% 84%
2020 2021
75% 85%
2020 2021
Base: n=1075
Base: n=956
Base: n=1075Decimal points have been rounded up. The total may not add up to 100%.
ii. Technology, finance and people will be the core pillars to long-term resilience.Other than financial support and management, businesses require assistance in their digital transformation efforts. Developing brand and marketing strategies, and strengthening human resource capabilities are also key for businesses to emerge stronger.
3. GOVERNMENT BUDGET & SUPPORT
3
i. Government support has been and continues to be vital towards recovery.Cost support and cashflow management were the most helpful and relevant support measures. Businesses also value schemes that helped with talent hiring and management practices, as well as transform their corporate capabilities.
SUPPORT NEEDED TO EMERGE STRONGER
SCHEMES THAT ARE THE MOST RELEVANT/USEFUL
Assistance in digitalisation/digital transformation
Financial support
Financial management to optimise performance & support strategy
Developing brand and marketing to sell products/services more efficiently
Human capital development (i.e. strengthening HR capabilities)
37%
33%
31%
29%
43%
OTHERSCOST-RELATED
88%Business cost supportmeasurese.g. Jobs Support Scheme,Rental Relief, etc.
52%Measures supportingcashflowmanagemente.g. Income Tax Deferment/Rebate etc.
24%Better access to credite.g. Enhancements to EnterpriseFinancing Scheme, etc.
18%Are sector specificfor COVID-19e.g. support package for Tourismsector, etc.
47%Help with attracting,developing, retainingtalente.g. Jobs Growth Incentive,Enhanced Adapt & Grow, etc.
31%Help to transform &deepen capabilitiese.g. Digital Resilience Bonus,PSG, etc.
16%Help businesses tointernationalisee.g. Market Readiness AssistanceGrant, etc.
12%Help companies growthrough businesssupport networke.g. SG Together EnhancingEnterprise Resilience Programme
Base: n=1075
Base: n=1075
4. DIGITALISATION & TRANSFORMATION
4
i. COVID-19 has accelerated business digitalisation efforts across industries.Four in ten businesses will increase investments in new technologies in 2021. 39% of companies report that IT / digitalisation budgets have increased as a result of the COVID19 situation.
iii. Key barrier to digitalisation is the perceived high investment cost.
Beyond investments, workforce challenges, such as upskilling staff and management support, are obstacles towards the adoption of technology.
ii. Increasing productivity and streamlining processes are the top reasons to digitalise.
Close to half (45%) of Singapore companies tap on technology to improve collaboration and increase productivity, while 44% do so to optimise operations and automate business processes.
DIGITALISATION STEPS TAKEN DURING COVID
Collaborative technology and tools to increase productivity
45%
Technology to streamline operations & automate processes
44%
Enhance data & analytics capabilities to help with businessdecision-making
38%
Monitor shifts in customer demands through enhanced data &analytics capabilities
Adopting cybersecurity solutions to minimise digital risks
35%
33%
TOP 5 TECHNOLOGY ADOPTION CHALLENGESFOR BUSINESSES
INVESTMENT IN NEW TECHNOLOGY
High cost oftechnology adoption58%Upskilling of staff to keep upwith the new technologies35%Expensive licensing (e.g. Payments forcommercial use of intellectual property)33%Cyber security risks (e.g. to preventdata breaches)32%Lack of management expertiseto drive the technological change30%
INCREASED/WILL INCREASE
DECREASED/WILL DECREASE
HAVE STAYED ORWILL STAY THE SAME
33%
10%
56%
40%
7%
53%2020 2021
Base: n=1075Decimal points have been rounded up. The total may not add up to 100%.
HAS COVID-19 INCREASED IT/DIGITALISATION BUDGETS?
HAS COVID-19 ACCELERATED DIGITAL TRANSFORMATION?
39%of companiessay IT budgethas increased.
IT budget increasedby average of 29%
IN THE INDUSTRY IN THE COMPANY
A GREAT DEAL SOMEWHAT
26% 24%
58% 60%
16% 16%
NOT AT ALL
Base: n=1075
Base: n=1075 Base: n=1075
Base: n=1075
Global economic disruption has hindered overseas business expansion and operations. Two-thirds of companies (66%) state that travel is a key aspect for successful overseas business presence.
ii. Recovery of overseas business activities will take at least 1-2 years.
iii. 1 in 2 companies experienced contraction in their overseas business.
66% of businesses estimate that it willl take more than a year for their overseas businesses to fully recover.
TIME ESTIMATED FOR OVERSEAS BUSINESSES TO RECOVER FROM CONTRACTION
5. INTERNATIONALISATION
5
i. Singapore businesses still focused on expanding within ASEAN and beyond.7 in 10 Singapore businesses report a presence in at least one overseas market, down from 8 in 10 in 2019. Despite the travel constraints and various issues brought about by COVID-19, Singapore businesses are staying committed to overseas expansions in the region and beyond.
6 months 6-12 months 1-2 years 2 years+
4%
27%
50%
16%
OVERSEAS BUSINESS RECOVERY
OVERSEASBUSINESSGROWTH
EXPANDED
6%
REMAINED THE SAME
47%
93% Overseas market(s) affected by COVID-19
63% Decreased demand for products/services
47% Physical presence required in overseas market hindered by travel restrictions
Increased demand for products/services overseas
Lack of demand for products/services in Singapore
Reputation of Singapore brands,especially in light of COVID-19
95%
40%
40%
TOP REASONS FOR CONTRACTINGTOP REASONS FOR EXPANDING
CONTRACTED
47%
MALAYSIA
65%
JAPAN32%
VIETNAM39%CAMBODIA15%
PHILIPPINES32%
BRUNEI13%
LAOS5%
SOUTH KOREA25%
UNITED KINGDOM21%
GERMANY18%
UNITED STATESOF AMERICA26%
INDONESIA
52%
CHINA
53%
MYANMAR21%
AUSTRALIA27%
INDIA33%
THAILAND44%
TAIWAN31%
ENGAGED IN ASEAN
84%NOT ACTIVEIN ASEAN
16%
2019
1. Malaysia (61%)2. Indonesia (48%)3. China (46%)
TOP 3 COUNTRIES FORFUTURE EXPANSION
35% VIETNAM
31% CHINA
31% INDONESIA
BUSINESSESTHAT ARE
ENGAGED INOVERSEASBUSINESS
ACTIVITIESBase: 780
66% say ability to travel overseas iskey to effective business operations.
Base: Those who have overseas presence, n=780
Base: Companies whose internationalbusinesses have contracted, n=369
Decimal points have been rounded up.The total may not add up to 100%.
6. ABOUT THE NATIONAL BUSINESS SURVEY 2020/2021
6
Survey conducted byStrategy & Development Division, Research & Publishing,Singapore Business Federation
In collaboration with Blackbox Research
If you require any clarifications, kindly contact [email protected].
COMPANY SIZE
ANNUAL SALES
CURRENT STAGE OF DEVELOPMENT MAIN MODE OF BUSINESS
MINIMUM LOCAL SHAREHOLDING OF 30%
SMEs
(Group Annual Sales ≤ S$100millionor Group Employment Size ≤ 200)
