Singapore businesses position to prosper as confidence ups, says report
Report finds Singapore corporates’ business confidence strengthening and above global average, as the city-state overcomes trade war fears and bolsters growth opportunities
Targeting China and US for future growth, Singapore corporates are showing a bullish trade outlook, according to a HSBC report. Supporting the growth agenda is a similar confidence amongst Singapore's key trading partners as well as the imminent signing of several Singapore-relevant free trade agreements.
The findings are part of HSBC Navigator - a global survey of more than 8500 corporates across 34 of the world's major markets gauging business sentiment and expectations on trade activity and business growth. The survey also sought the views of 200 Singapore-based firms.
Singapore business confidence on the rise - China and US the growth focus
HSBC Navigator finds Singapore firms are more confident than their global peers currently, as well as when compared to Singapore's business sentiment from the HSBC Navigator report six months ago.
According to the October 2018 HSBC Navigator report, 80% of Singapore businesses surveyed said they have a positive trade outlook, compared to the global average (77%).
These finding suggest Singapore businesses have heightened confidence levels. The previous Navigator report (in March, 2018) showed 70% of Singapore businesses expected an increase in trade volume over the medium term compared to global average of 77%. Singapore corporates are targeting China for future growth with 26% of seeing it as a key growth market, followed by the US and Malaysia (both nominated by 16% of Singaporean firms surveyed).
China is Singapore's largest trade partner, with S$137.1 billion total merchandise traded between the two countries in 2017. Despite Singaporean businesses seeing equal growth opportunities with Malaysia and the US, Malaysia is the Republic's second largest trade partner (S$108.billion) with the US in third place (S$79.9billion).
HSBC Navigator reveals that improving productivity and digitalization will be the key focus areas for Singapore corporates as part of their expansion into other markets.
Greater use of technology (38%) tops the list of factors expected to drive growth for corporates in Singapore, followed by increasing product demand (33%) and developing stronger supply chain connectivity (29%).
Focusing on supply chains specifically, the report demonstrates the awareness and importance of technology for Singapore businesses in increasing competitiveness and profitability. Both goods (36%) and services (30%) businesses prioritized investment in technology as the top change to their supply chains.
Tony Cripps, chief executive officer, HSBC Singapore, says: "Singaporean corporates are certainly in growth mode, and targeting US and China shows that not only are they undeterred by noise around geopolitical trade disputes, but that shrugging off global trade tensions, they are placing a two-way bet on both markets. This may seem counter-intuitive at first glance but when there's disruption, there's opportunity."
He adds, "As the trade dispute unfolds, US and Chinese companies will continue to re-examine their trade partners, and Singapore's trade centrality means its corporates can position themselves favourably if a supply chain trade diversion for corporates from either nation is on the cards. But the opportunity won't magically swing their way; instead, agility in business models and adoption of technology is necessary to ensure they're positioned as an attractive alternative."
Regional neighbours' trade bullishness and FTAs also underpin Singapore business confidence
The robustness of Singapore's key regional trade partners and imminent regional free trade agreements will also underpin Singapore corporates' business confidence.
Respondents from key trade countries of Singapore - Malaysia (89%), Vietnam (94%) and Indonesia (86%) – have stated that they are very bullish on their business outlook.
Navigator also found that 64% of Singapore firms think that free-trade agreements will have a positive impact on their business over the next three years. This compares to the global average of 51%.
Mr Cripps continued: "Despite protectionism coming from some directions, Singapore is entering a period of heightened trade liberalization elsewhere as it awaits ratification of several trade pacts including CPTPP, EUSFTA and RCEP. Even if these FTAs change as part of the final negotiations, they will certainly offset any economic headwinds coming from trade tensions or currency fluctuations."
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1 Nov 2018