Firms in Singapore are doubling down on expanding their business networks in Asia and building resilience in their supply chains despite having a more pessimistic economic outlook than businesses elsewhere, according to a survey.
HSBC Bank's annual Navigator survey, released yesterday, also found that local firms expect a longer recovery from the coronavirus pandemic than those in the Asia-Pacific and beyond, due to Singapore's open and trade-dependent economy.
Despite this, businesses here are continuing to increase their growth investment. Some 87 per cent of respondents plan to expand in the region over the next three to five years, compared with 76 per cent of businesses elsewhere.
About half or 51 per cent of local firms are immediately investing in overseas expansion, compared with 44 per cent in the Asia-Pacific. This is despite over two-thirds of respondents in Singapore expecting cross-border trade to become more difficult than it was pre-pandemic, said HSBC.
"Intra-regional trade dominates, with more than eight in 10 businesses trading within the Asia-Pacific," the report said. "Trade with leading partner, mainland China has grown, as it has with Malaysia."
The survey conducted in September involved 2,500 businesses worldwide, including 200 in Singapore.
Mr Iain Morrison, head of global trade and receivables finance at HSBC Singapore, said: "There's no doubt Singapore's businesses have been hard hit; it comes with the territory of being one of the world's most internationally connected trading hubs... Yet it's encouraging to see they are still investing for growth; digging deep to strengthen Asian trade links and seeking open, easier and safer trade."
Almost all respondents in Singapore had concerns about their supply chains, mainly with time spent on management, instability and possible tariffs. Some 63 per cent are looking to include digital tools or technology, compared with 48 per cent of global firms surveyed.
Commenting on the survey, several firms here said the pandemic has underscored the need for more resilient supply chains and more diverse market opportunities.
Sanitary ware specialist Eilumina Resources director Lew Ee Ling said it does not make sense to focus on only the local market, given the small size of Singapore's economy, as it would not be able to reap the advantages of economies of scale. She said the South-east Asian market has always been on the radar, adding that the pandemic has halted its ambitions.
"In fact, it helped us to relook our strategies and made us more determined to get our brand across to our markets now that big players are probably dragged down by high expenditure, and us being small and nimble can change our course and adapt more quickly to ride out this wave," Ms Lew added.
Certact Engineering managing director Ellis Eng said the firm's supply chain was greatly disrupted, with lead time for delivery of plastic raw materials from its supplier in the United States raised from four to 20 weeks.
The firm has started exploring other options from countries such as Japan and South Korea. Its capital investment this year has been the highest so far despite the Covid-19 outbreak, she said, as it has acquired more machinery and manpower after adding plastic engineering to its capabilities.
