4 in 10 Singapore executives pessimistic about domestic economy: survey

Amidst rising cost pressures.

C-suite executives in Singapore are cautiously optimistic on the domestic economic outlook and their organisations’ prospects for growth but challenged by rising costs, according to new research by Accenture and the Economist Intelligence Unit (EIU).

The latest report “CEO Briefing 2014 - The Global Agenda: Competing in a Digital World” was based on the survey conducted by EIU with 1041 C level executives across 20 countries and 11 industries, including five countries in APAC.

According to the survey, 44% of Singapore executives said they that they were pessimistic on the domestic economy. Meanwhile, 56% expressed optimism on the domestic economy and 75% were optimistic about their own organisation’s growth. Overall, they were slightly less bullish than their APAC peers.

Optimism is being tempered by cost challenges
While Singapore executives may be generally optimistic about the economic outlook, the research shows that confidence is being tempered by concerns around rising costs.

In contrast to their APAC peers, who are mostly concerned with recession in key markets and competition from new market entrants, Singapore executives cite raw material costs and the high cost of capital as the biggest risks facing their companies over the next 12 months. They also rank less expensive labour costs as the most important factor for increasing Singapore’s competitiveness.

Cost challenges are reflected in 2014 profit projections: Only 58 percent of Singapore executives forecast higher profits in 2014 versus 73 percent in APAC as a whole. “Clearly, businesses in Singapore are facing some challenges,’’ said Jonathan Wright, managing director, Accenture Strategy, ASEAN.

“There is a demand for a bigger, bolder Singapore ambition if organisations are to continue to thrive here. Our research shows a focus on the domestic market but companies are also beginning to re-think the role that Singapore plays in their ASEAN and APAC portfolios.”

“As Asian markets develop, we are seeing business models and the role of regional headquarters evolving to provide high value services across the region by leveraging the competitive advantages – stability, highly-skilled workforce, developed infrastructure – that the country has to offer”, added Wright.

Organisations understand the impact of digital technologies but are yet to fully harness potential
The overwhelming majority of surveyed companies in Singapore understand the impact of digital technologies with process efficiencies and cost reduction being the primary focus of digital investment for most (55 per cent).

Currently less than one third (32 percent) claim that their company primarily uses these technologies to drive growth or to find new ways of reaching customers.

“Digital is key in this challenging environment. By leveraging analytics for instance, organisations can drive better decisions around new product development, customer acquisition and talent. We would encourage Singapore companies to shift the balance of their digital investments from achieving internal efficiencies towards driving growth in new sectors and markets, said Wright.