Soaring costs and manpower shortage the biggest growth hurdles for local firms: UOB

More companies are now looking to expand overseas.

Rising costs, a shortage of skilled workers and flagging customer demand are the top three concerns of Singaporean businesses, UOB’s Asian Enterprise Survey 2014 revealed today.

The report revealed that 23% of the respondents cited rising costs as the main factor limiting their business growth while 16% said their regionalisation plans were affected by labour shortage.

Even as opportunities to serve Asia’s rising middle class abound, many Asian enterprises are grappling with the increasing cost of doing business in the region. Enterprises in the manufacturing sector in particular say that they are looking to set up facilities in relatively less expensive markets such as Vietnam and Myanmar.

According to Suan Teck Kin, Senior Economist at UOB “Production and labour costs in developed cities in China and Singapore are inching upwards. As a result, Asian enterprises are now exploring lower-cost cities within China or are relocating their labour-intensive operations to less expensive Southeast Asian countries. This allows businesses to trim their costs and remain connected to Asia’s large middle class consumer base.”

Here’s more from the report:

The results of the UOB Asian Enterprise Survey 2014 paint a very clear picture that while Singapore enterprises are looking beyond the country’s shores, they are also addressing issues and challenges they face on the home front, especially a tight labour supply. 

Clearly, productivity is a priority for both companies and the government in Singapore. With rising domestic production costs, investments in talent, innovation, processes and equipment are helping Singapore enterprises cultivate the high-value workforce necessary for the country’s next phase of development.