Here's the main domestic hurdle Singapore firms are facing right now

Is it about corporate debt again?

According to CIMB, for the corporates, the main domestic challenge today remains the transition towards a more productivity-focussed economy, in contrast to an input-based economic growth model in the past.

Here's more:

The labour restructuring has obviously driven up labour costs. Anecdotally, we see shops closing not because of the rising cost of labour but because of a lack of available labour in some industries.

The banks are guiding that Singapore‟s economic transition has caused some hardship among some of the smaller boys in the services industry but the bigger boys are coping well.

The manufacturing industry is also not suffering much as players have already moved out of Singapore. With business termination mostly being one of the owners‟ own choice instead of environment, asset quality (typically deteriorating first from business loans in any downturn) is thus pristine at the moment, and we doubt it will deteriorate significantly.

Singapore does not have a sovereign debt or corporate debt problem. We have written before (The other side of debt is savings, 19 Sep 13) that the household debt issue is overhyped as well.

Other than some segments of the lower-income households who have an unsecured credit problem, we believe that Singapore household gearing levels are fine.

The wealth of the household is evident in the latest selling out (90%-sold in one weekend) of a core city region mixed-development project despite high stamp duties and LTV limits in place.