The Singapore Business Federation (SBF) today released the National Business Survey (NBS) 2024 – Annual Business Sentiments Edition, revealing a more positive outlook for the Singapore economy. According to the survey, 40% of businesses are satisfied with current business climate—a 10%-point increase since mid-2024. More businesses also expect the economy to improve (26%) compared to worsen (22%) in the next 12 months.

Conducted from 11 October to 11 November 2024, the survey gathered responses from 519 businesses across all key industries, comprising 83% small and medium-sized enterprises (SMEs) and 17% large companies. The data and insights from the survey seek to inform the Singapore Budget 2025 recommendations to strengthen and build globally competitive and sustainable businesses.

Despite Rising Business Costs and Uncertainty, Businesses Sustain Profitability

While manpower costs continued to be the top challenge for businesses (66%), customer demand uncertainty has risen sharply from 30% in 2023 to 45% in 2024 as the second top challenge followed by rental costs from 36% in 2023 to 43% in 2024. Sectors such as Hotels, Restaurants and Accommodations (80%), Retail Trade (75%) and Wholesale Trade (59%) are most impacted with uncertainty in customer demand.

Despite rising business costs, one in two businesses (57%) have managed to maintain or increase profitability over the past year. The remaining 43% of businesses reported a decline in profitability with an average decrease of 27.5%. To mitigate cost pressures, 51% of businesses have implemented cost-saving measures, 41% have raised the prices of their products or services, and 30% have improved their inventory management.

Reflecting the resilience of our businesses, a significant 54% of businesses indicate they do not face a liquidity issue. However, among the 25% of businesses experiencing severe to moderate credit crunch, 40% lack sufficient funds to sustain operations for the next 3 to 6 months. In response, businesses are prioritising the reduction of non-essential outflows and assessing customers’ credit risks to enhance collections and meet liquidity needs. 70% of businesses also seek government support programmes to help manage their financing needs.

Nonetheless, more companies are investing in their future, with 36% (7%-point increase) planning to focus on staff training, 37% (5%-point increase) on new technologies and digitalisation and 26% (5%-point increase) on new investments over the next 12 months. 

Positive Views on Foreign Talent, but Singapore’s Global Talent Hub Status Wanes

With limited local manpower and low unemployment rate, a complementary foreign workforce is needed to sustain our economic competitiveness. The majority of businesses (59%) believe that their local employees view foreign workers positively, with only 7% perceiving them as competitive. However, the proportion of businesses that rate Singapore as a highly attractive global talent hub has decreased from 43% in the past 12 months to 41% in the next 12 months. The decline is more pronounced among large companies from 55% to 47%.

To foster integration between local and foreign workforces, 42% of businesses rely on cross-functional teams. Only 1 in 5 companies have Diversity, Equity, and Inclusion (DEI) policies and are engaged in community or cultural integration activities.

Businesses Seek Support Amidst Challenges

Companies expressed strong appreciation for the Budget 2024 measures to help them manage rising costs, build strategic capabilities and enhance sustainability. The top five most welcomed initiatives are the Corporate Income Tax rebate (88%), the SkillsFuture Level Up programme (78%), the extension of SkillsFuture Enterprise Credit (73%), the enhancement of the Progressive Wage Credit Scheme (70%) and the increase of salary support cap for Career Conversion Programmes (CCPs) (67%). These initiatives have been crucial in enabling businesses to navigate economic challenges while investing in their workforce and future growth.

In light of the challenges ahead, businesses are seeking Government support to help manage their financing needs (35%), human capital development (34%) and digitalisation for business transformation (33%). The top three wishes from businesses for Budget 2025 are schemes to address cost pressures (64%), attracting and retaining the local workforce (43%) and addressing foreign manpower issues (41%).

Drawing from the survey findings and feedback from engagement with the business community, SBF will be releasing the SBF-PwC Budget Recommendations on 9 Jan 2025. 

Mr Kok Ping Soon, Chief Executive Officer of SBF said, “As we move into 2025, it is encouraging to see a growth in optimism on business outlook, reflecting our businesses’ resilience, adaptability and preparedness for the future by investing in capability building. This survey, conducted before the US Presidential election results, shows that many companies are already concerned with the uncertainty in demand arising from geopolitical forces. External factors such as increased trade tensions, potential tariff wars, and spillovers from regional conflicts are likely to dominate business concerns in the coming year.”

“While rising business cost is a perennial concern which needs to be addressed, we are heartened that more companies are prepared to invest in people, technology and new businesses. Given our manpower constraints, we need to increase Singapore’s absorptive capacity of a complementary foreign workforce to maintain our attractiveness as a global talent hub. With only 1 in 5 businesses having DEI policies and providing community or cultural integration activities, businesses can do more to integrate locals and foreigners at the workplaces.” he added.

Annex A: National Business Survey 2024 – Annual Business Sentiments Edition Report

Full report here.

Infographic report here.