CFOs give Singapore economy the thumbs up

But HK CFOs most gloomy.

A resounding 82% of Chief Financial Officers (CFOs) in Singapore expect the country’s economy to continue growing, either modestly or substantially over the next year, an increase from 78% in 2013. Within the Asia Pacific region, Singapore’s optimistic outlook is only behind India (86%), while China (75%), Australia (73%), Japan (55%) and Hong Kong (48%) follow after. Globally, 72% of the CFOs surveyed say they are positive about growth.

This is among the key findings from the latest American Express/CFO Research Global Business and Spending Monitor, an annual global survey exploring the attitudes and sentiments of some 507 senior finance executives from large global companies with revenues exceeding US$500 million.

From the survey findings, CFOs in Singapore, while poised for growth, are seemingly careful about managing investment and spending, and are manoeuvring capital carefully to ensure they are spending wisely. This could be due to downside risks arising from vulnerabilities in the external environment, even though the global recovery is on track and the outlook for Asia remains steady.

These uncertainties may compel CFOs to tune their companies’ growth engines, rather than opening them full throttle; in this environment, it becomes more important than ever to focus resources on the areas that can deliver the most immediate results.

Driven by muted optimism, a large majority (66%) of the CFOs surveyed expect to increase their companies’ spending and investments by 10% or more, a notable increase from 48% in 2013.

“This year’s survey indicates that a majority of CFOs in Singapore are favouring modest spending and investment to boost top-line growth while improving profitability. Remaining competitive with other companies, entering new markets and better meeting customer needs are the top three priorities these CFOs identified for increased spending and investment,” said Nigel Fox, Vice President and General Manager of Global Corporate Payments for Singapore, American Express.

CFOs in Singapore intend to increase investment in new product or service development (34%), mergers and acquisition (32%) and improvements to gain additional efficiencies in production processes (28%). Spending is also expected to increase in the areas of IT systems (44%), advertising, marketing and public relations (34%) and production inputs (34%), followed by labour/headcount, computer hardware, depreciable assets (including real estate, facilities, and property, plant and equipment), as well as financial reporting and compliance.

In recognition of the importance of information technology to support business processes, the respondents had also cited information technology as a key focus to enabling the company’s growth strategy, namely to improve the ability to meet customer needs (53%), and to improve efficiency and productivity or reducing cost (44%).
In line with higher expectations for growth, 66% of the CFOs in Singapore also expect business travel spending to increase in 2014, mainly to meet with suppliers, vendors and customers.

“Nearly all CFOs agree that business travel is either important or critical to their company,” said Fox. “At the same time, they see opportunity where an improved travel spending management process can contribute to the company, by reducing travel cost such as using more discounts or lower-cost travel alternatives, and strengthening partnership programmes with travel service providers.”

According to the results of the survey, 78% of the CFOs report a strong working relationship with other executive management, and actively engage with key decision makers such as the CEO, marketing head, IT head, HR head as well as various department leaders to discuss business challenges.

Nearly seven out of ten respondents also stated that the finance function is a strong (53%), if not dominating (16%), influence in strategic and operational decisions of their companies.