Up to 84% of businesses in Singapore have reported being somewhat or highly affected by inflation, according to information from a UOB Business Outlook Study 2024 conducted from the end of December last year to mid-January 2024 for small- to medium-sized enterprises (SMEs) and larger enterprises.
The study was conducted between the end of December 2023 to mid-January this year with 800 businesses with an annual turnover of less than $300 million. Small businesses were defined as having an annual turnover of less than $10 million while mid-sized businesses were defined as having an annual turnover of $10 million to $300 million.
Companies in the industrial or oil and gas (O&G) sector as well as the manufacturing and engineering sector have felt the pinch more than most at 91% and 90% respectively, while 63% of all businesses have seen increased operating costs and 42% have similarly experienced an increase in raw material costs.
Subsequently, in an effort to mitigate the effects of higher inflation, businesses have embarked on a myriad of measures to increase efficiency, such as improving productivity, cost-cutting measures and the raising of prices for goods and services.
Meanwhile, more medium-sized businesses have shifted their focus on digitalising their process, with 33% doing so compared to 23% of smaller businesses, and 26% of medium-sized businesses have also scaled back on new investments, compared to 20% of small businesses.
Applying for additional funding has also been a focus for medium-sized businesses, with 23% doing so compared to 16% of small businesses.
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Conversely, 39% of small businesses are looking forward to the announcement of support measures at Budget 2024 following this year’s goods and services tax (GST) hike to 9%. The sentiment applies similarly to the desire for additional capital support, with 28% of small businesses indicating so to just 16% of medium-sized businesses.
Of the 800 companies surveyed, businesses in the community and personal sector and business services sector in particular have reported a hope for the announcing of support post-rate hike at this year’s budget, at 51% and 49% of businesses respectively to the total survey average of 34%.
Compared to last year, 60% of businesses were reportedly prepared for the GST rate hike in 2024, down from 74% previously.
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Increased direct business costs and indirect costs associated with GST calculations were the biggest worries post-rate hike, with businesses adopting measures such as improved productivity, investment in technology and automation as well as moving up value chains to cope with the hike.
On the end of sustainability, 74% of companies surveyed believe in the importance of environmental, social and governance (ESG) considerations, with the industrial or oil and gas sector and the tech, media and telecom sector believing more so than others at 89% and 83% respectively.
Moving forward, 33% of businesses want more support in the form of tax incentives or rebates and an equal percentage want easier access to funding to implement sustainable practices.
