SINGAPORE: A recent survey conducted by the Singapore Business Federation has revealed a significant decline in business confidence in the country’s economic prospects. Only 25 per cent of surveyed businesses expressed confidence in the economic outlook for the upcoming year, marking a substantial drop from the previous year’s 41 per cent.

The survey, conducted from September to November of the previous year, encompassed opinions from over 1,000 large and small to medium-sized enterprises across various industries. It indicated a prevalent belief among small and medium-sized enterprises that the economy would experience a downturn in the coming year.

Notably, businesses in the technology and manufacturing sectors exhibited a particularly pessimistic outlook. Conversely, the construction and civil engineering, banking and insurance, and logistics and transportation industries displayed more optimism regarding the economic landscape.

Rising operating costs emerged as the primary challenge faced by the surveyed companies, with labor costs, supplier cost pass-through, and escalating utility bills cited as major contributing factors. Sectors most affected by these challenges included construction and civil engineering and manufacturing.

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Last year, over 80 per cent of businesses grappled with rising interest rates and increased financing costs. Nearly half of the companies encountered credit problems, leading to a surge in the number of entities operating without sufficient funds. Industries significantly impacted included construction and civil engineering, wholesale trade, retail, real estate, hotel, catering, and accommodation.

The survey results highlight a growing issue of manpower shortages, prompting companies to consider offering better salary packages, professional training, and flexible working models to attract and retain skilled employees.

While 90 per cent of the surveyed companies acknowledged the importance of digital transformation, many cited high costs, the need for employee skill upgrades, and a lack of management experience as primary obstacles. Concerns about cybersecurity and emerging technologies like artificial intelligence were also prevalent.

Fewer companies expressed a willingness to expand into overseas markets, with Malaysia, Vietnam, and Indonesia identified as the primary markets of interest. More than 70% of surveyed businesses indicated a readiness to embrace sustainable development goals, but 41% admitted not knowing where to begin.

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As Singaporean businesses face these challenges, they express hope that the government will provide increased support in the upcoming budget for the new financial year. Businesses are looking for assistance to navigate cost and cash flow challenges and to enhance their ability to recruit, attract, and retain talent in an increasingly competitive market.

The upcoming budget announcement is eagerly awaited by the business community as they seek measures to bolster their resilience and promote sustainable growth amid economic uncertainties.