Internationalisation and raising productivity key to Singapore enterprises in overcoming domestic challenges for next 12 months
- 240 key decision makers were polled for the inaugural Singapore Business Federation & American Express Singapore Business and Financial Strategy Survey 2014
- Most enterprises are optimistic in overcoming domestic challenges
2 October, 2014 [Singapore] – Singapore enterprises are considering going regional and increasing their productivity to overcome domestic challenges, as revealed in the inaugural Singapore Business Federation & American Express Singapore Business and Financial Strategy Survey 2014. The survey polled key decision makers of some 240 local enterprises, with the aim of gaining insights to the sentiments and strategies of these businesses.
The responses were gathered through a series of survey and polls, and a facilitated focus group discussion; respondents were segmented into micro, small, mid-sized and large enterprises according to their annual revenue.
Domestic challenges arising from escalating business costs and manpower issues persist for local enterprises
The survey findings confirmed that Singapore companies continued to be challenged by external and internal environments. Domestically, escalating business expenditures on manpower, rental and compliance, as well as suitable labour supply and intense industry competition, topped the list of challenges among survey respondents.
Reeling from the recent changes to foreign workers policies, a tightening labour market with demand for high wages by locals, rising manpower costs also remains a prevalent issue for micro (71%), small (96%) and mid-sized (98%) enterprises. Larger enterprises which are financially stronger and more competitive in overcoming cost issues are comparatively more concerned with the lack of suitable manpower (95%).
Enterprises look to emerging markets in ASEAN for expansion
Most enterprises, especially small, mid-sized and large enterprises are forward-looking in overcoming domestic challenges. Majority are looking to increase their operations internationally, particularly into emerging markets within the region (i.e. ASEAN) in the next year, with plans to migrate functions related to production, as well as expand sales and distribution activities.
“Ongoing manpower issues and escalating business costs are driving Singapore enterprises to re-look their strategies moving forward. In view of the opportunities presented at ASEAN Economic Community (AEC) 2015, we strongly encourage enterprises to leverage on the branding of Singapore’s enterprises to regionalise to emerging ASEAN markets. In the face of increased competition, businesses will have to band together in consortium to increase their economy of scale,” Mr Victor Tay, Chief Operating Officer, Singapore Business Federation commented.
In light of increasing cross borders business operations, a majority of enterprises across all segments find currency trading important to their business, with large enterprises ranking at the top (70%). However, companies also highlighted that currency swings in an unstable geo-political environment makes currency trading challenging.
“Businesses that look to expand and grow beyond the domestic border can adopt a hedging strategy against exchange rate risks and in turn protect profit margins. Small and mid-sized enterprises could consider forward exchange contracts to reduce the risk associated with foreign exchange payments and/or receivables.” said Mr Nigel Fox, Vice President and General Manager, Global Corporate Payments for Singapore, American Express.
Productivity-led growth more pivotal as resource crunch looms
In addition, small, mid-sized and large enterprises appear to be responding favourably to the Government’s call for productivity-led growth. In fact, an overwhelming 92% of executives revealed that lifting productivity is a core strategy for them to manage rising costs, whether it is through adopting technology, calibrating capabilities, tapping into government grants, or implementing payment options like corporate cards to streamline expense management and gain better visibility in expenditure. Conversely, only about 70% of micro-enterprises are looking at increasing productivity, possibly due to insufficient resources and expertise.
Enterprises adopt rigorous cost management strategies and favour government support to meet their financing needs
Facing the headwind of high business costs, majority of enterprises are also focusing on cost reduction measures, namely in reducing overheads (63%), procuring cheaper supplies (62%), outsourcing (43%), freezing headcount and moderating wages (41%), as well as leveraging on shared services (34%). In addition, some 22% of polled enterprises (of which 50% are mid to large-sized companies) are looking to relocate facilities to lower cost countries, while 21 percent (of which 20% are large enterprises) are considering downsizing as an option.
“Although enterprises are expecting a slower growth in the next 12 months, we see a healthy level of increase in investments. Enterprises across all segments intend to spend more on IT-related investment as well as branding and marketing activities,” said Mr Fox. ‘Micro-enterprises demonstrate a different investment strategy favouring outsourcing, while the rest of the other three segments of enterprises plan to increase spending on capital expenditure.”
When asked about financing needs, micro-enterprises highlighted new product development as one of the reasons that would warrant additional financing, followed by market expansion and increasing capacity as we head into 2015. Mid to large-sized enterprises, however, are looking towards funding mostly to expand their business and increase capacity. Large enterprises were the only respondents that listed merger and acquisitions as one of the key reasons for financing.
On preferred methods to address the need for additional finances, almost half of the enterprises suggested SME bank as the ideal government policy measure for their needs, while 28% of the enterprises prefer bank loans with higher risk sharing by the Government. In addition, a fair percentage of survey respondents hope that banks will consider allocating a certain percentage of their loans to the SMEs.
Amidst multiple domestic challenges, it is now more important than ever for Singapore enterprises to make concerted efforts to re-look and possibly re-engineer their business strategies and processes, from forging strategic alliances, to adopting appropriate business models, implementing tools to improve efficiencies, managing finances more prudently, investing in training, developing and retaining staff, innovating and optimising products and service qualities, as well as, considering expanding into overseas markets. These strategies could eventually help raise profitability and reduce operational costs.
About the Survey
The Singapore Business Federation (SBF) and American Express (AmEx) Singapore Business and Financial Strategy Survey 2014 polled key decision makers of some 240 Singapore enterprises, with the aim of gaining insights to the sentiments and strategies of Singapore enterprises.
The responses were gathered through a series of survey and polls, and a facilitated focus group discussion in September 2014, in which respondents were segmented into micro, small, mid-sized and large enterprises according to their annual revenue.
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at and connect with us on http://www.americanexpress.com/sg and http://www.facebook.com/americanexpresssingapore.
About American Express Global Corporate Payments
Through its Global Corporate Payments group, American Express provides Corporate Card, Business Travel Account and other expense management services to mid-sized companies and large corporations worldwide. In the U.S., it is a leading issuer of corporate cards, serving more than 70% of the Fortune 500, as well as tens of thousands of mid-sized companies. American Express issues local-currency commercial cards in more than 40 countries, and International Dollar Corporate Cards in an additional 100+ countries. For more information, visit
About American Express Foreign Exchange International Payments Services
American Express Foreign Exchange International Payments Services offers a convenient, secure online payment platform for businesses of various sizes and industries, to make international payments using Telegraphic Transfers, Bank Drafts and Forward Exchange Contracts. For more information, visit