SINGAPORE - After a turbulent two years of absorbing blows from the Covid-19 pandemic, Singapore businesses are in better shape to bounce back, according to findings of a survey released on Wednesday (Dec 8).
But, overall, firms expect to take another one to two years to fully recover from the impact of the pandemic.
They cite headwinds, such as manpower cost which has emerged as the top hurdle, even as they tap digitalisation to give them a transformative cutting edge, according to the survey by the Singapore Business Federation (SBF).
The survey, conducted from July 26 to Oct 1 this year, polled 1,096 companies across key sectors. About 80 per cent are small and medium-sized enterprises, while the rest are large companies.
Business sentiments improved this year, SBF said, as nearly half of all businesses are confident that the economy will do better in the next 12 months.
They are also on the road to recovery, with 56 per cent of firms this year reporting no impact from the pandemic, a jump from the 31 per cent in last year's survey.
The proportion of companies that reported being negatively impacted by the pandemic dipped to 32 per cent this year, from 63 per cent last year.
And 12 per cent of firms even registered a positive impact from the pandemic, up from 6 per cent last year. These companies saw an average revenue increase of 25 per cent.
But recovery remains uneven, with construction and civil engineering as well as retail, real estate, hotels, restaurants and accommodation having the highest proportion of companies being negatively impacted.
Nearly 70 per cent of firms project that they will take over a year to recover fully from the pandemic.
But nearly 80 per cent are confident of sustaining their business over the next 12 months at least.
However, manpower cost has emerged as a big challenge going forward, followed by demand uncertainty, travel restrictions and availability of workers.
SBF chief executive Lam Yi Young said at a media briefing: "Key manpower challenges reported are... new foreign manpower policies raising cost, attracting or retaining younger workers, and stricter policies that restrict the supply of foreign workers."
He noted that companies are enhancing efforts to hire locals, increasing wages to attract locals, and investing in technology or redesigning processes to reduce manpower and lift productivity.
There is good news for job hunters, with the SBF noting that 35 per cent of firms intend to increase hiring next year. A similar proportion also plan to raise salaries.
Meanwhile, business transformation continues to be vital, with more firms saying they will bank on new technologies and digitalisation.
"The benefits of digital transformation are also clear to businesses - increased productivity, more scope to optimise their operations, and reduced operation costs," SBF said.
"However, businesses remain wary about the potential cost of change, particularly the high cost of new technology adoption and upskilling of staff to keep pace with the new technologies."
They hope their digitalisation efforts will get a booster shot in Budget 2022.
"The top areas of government support required by them include digitalisation, financial support, human capital development, and financial management to optimise performance," Mr Lam said.
Meanwhile, with travel gradually reopening, 32 per cent of businesses say they are upbeat about pursuing overseas expansion in the next six to 12 months.
Ultimately, the strong economic growth in 2021 has boosted confidence and the focus of more businesses has shifted from survival to recovery, Mr Lam said.
The Ministry of Trade and Industry expects Singapore's gross domestic product to grow by around 7 per cent this year.
In the third quarter of 2021, the economy expanded by 7.1 per cent on a year-on-year basis.
"Looking to 2022, businesses remain optimistic about recovery and growth, given the expected economic growth and the gradual reopening of borders with the vaccinated travel lanes," Mr Lam said.
"However, there remains many uncertainties and unevenness across industries, especially with the emergence of the Omicron variant."
The Government announced digitalisation initiatives in this year's Budget, such as enhancing the Enterprise Development Grant and Productivity Solutions Grant, while pushing on with sector-specific Industry Digital Plans that provide a step-by-step guide on the relevant solutions at each stage of growth.