Businesses in Singapore saw their revenues plunge by 31 per cent on average amid the Covid-19 pandemic, although 69 per cent of them are confident of sustaining themselves for the next 12 months.
Almost two-thirds, or 63 per cent, were negatively affected by the pandemic, an annual survey by the Singapore Business Federation (SBF) found.
But about one-third (31 per cent) expect business and the economic climate to improve this year, a significant rise from 8 per cent in last year's survey.
On the flip side, one in three companies is not sure if it can keep operating for the next six to 12 months.
Local businesses have been operating at 70 per cent of their capacity, on average.
Overall, less than 23 per cent are satisfied with the economic climate, and 32 per cent predict worsening conditions.
The survey, conducted online from Oct 9 to Nov 28 last year, drew responses from 1,075 businesses across all key industries.
It found that uncertainty about the future is higher among small and medium-sized enterprises, with seven in 10 of them confident about sustaining their businesses for the next six to 12 months, compared with eight out of 10 large companies.
Among the businesses negatively affected by the pandemic, 70 per cent predict that their full recovery will occur only towards the end of this year or beyond.
SBF chief executive Lam Yi Young said the survey shows that while businesses recognise there are some signs of improvement in conditions, they are also realistic about the challenges.
"This is not going to be an easy year," he said. "This year is definitely going to be better than the last one, but we are not out of the winter yet. Companies recognise that it will take a bit longer to fully recover back to where they were before the pandemic."
Mr Lam said that as the economy recovers, transformation and manpower development efforts will enable companies to build up core capabilities and help them emerge stronger.
The survey shows that business priorities will continue to revolve around increasing revenue, building cash flow and reducing costs.
Fifty-two per cent of the respondents flag manpower costs as a key challenge, and two in five firms say that job applicants lack the soft skills needed.
The same proportion of companies believes that new foreign workforce policies will add to costs.
Aside from costs, businesses are also concerned about restrictions on the supply of foreign workers.
Nearly half of all businesses say that staff training has become more important as a result of the Covid-19 outbreak and future uncertainties.
Businesses invested the most on staff training during the pandemic, a trend that will continue to rise this year. Conversely, cost-cutting measures such as workforce or salary reductions will decrease this year.
Businesses feel that government support is still required to help them manage cost and cash flow, as well as to attract, develop and retain talent.
Overall, companies expect government schemes to be extended till the end of this year, when the economy has stabilised and business outlook is more certain.
The top five schemes that businesses think should be extended are related to cost and cash flow management, manpower and digitalisation support. These include the Jobs Support Scheme, foreign worker levy rebates and waivers, information technology adoption subsidies, cash flow loans and grants, and corporate income tax relief.
Aside from financial support (37 per cent), businesses also seek help in digitalisation (43 per cent), financial management (33 per cent) and brand development (31 per cent).
Companies are aware of the need for continued digitalisation, but many feel they lack the manpower and resources to transform their businesses. Three in five report that digitalisation is necessary to overcome the impact of Covid-19.
Proportion of local businesses that are satisfied with the economic climate.
Proportion of businesses that predict worsening conditions.
Proportion of businesses negatively affected by the pandemic that predict their full recovery will occur only towards the end of this year or beyond.
While overseas business expansion has been hindered by the pandemic, some companies are still looking for opportunities beyond Singapore. The most popular destinations for expansion continue to include Vietnam, Indonesia and China.
Nearly half of the survey respondents indicated that their overseas businesses had contracted, and only 27 per cent see themselves expanding overseas this year.
Mr David Black, founder and chief executive of Blackbox Research, which conducted the SBF survey, said the Singapore economy and its businesses are still in repair mode, and a lot of work is needed for what lies ahead.
"All this discussion about digitalisation and transformation is about achieving resilience, and that is really going to be critical," he said.