Business confidence in Singapore stalls in 2012

A sharp decline in business confidence in many rapid growing economies is raising a warning flag that global business may face continued volatility for some months to come. In Singapore, confidence levels have stalled, falling 1 point in the Regus Business Confidence Index (BCI) (from 122 to 121) since April 2012.

Business confidence in some of the world’s leading growth economies has dropped significantly over the last six months.

Despite the fall, levels of business confidence in rapidly growing economies still remains well ahead of levels in mature economies – yet this setback should act as a warning flag for businesses across the world to stay nimble and expect further volatility before a general global upturn, finds the latest BCI based on the views of more than 24,000 senior business people from 92 countries.

Confidence among small businesses in particular has flat lined in both mature and developing economies, andgiven the important role of small and medium-sized enterprises as an engine of growth and provider of jobs, this finding is of particular concern.

Access to affordable credit and cash-flow management were among their biggest concerns, highlighting the need for flexible, pay-as-you go business services allowing businesses to remain flexible and agile.

Globally, the confidence levels have shown little change compared to six months ago, recording only down 2 percentage points to 111 since April 2012.

Locally though, the proportion of Singaporean companies reporting revenue increases rose from 56% to 62% within the last six months. As far as Singaporean business people are concerned, when it comes to government’s involvement in supporting and accommodating business growth, 85% agreed that the government’s strategies are of great assistance.

As the small businesses and start-ups have been recognised to play an important role in stimulating the economy, major challenges have been accordingly identified as impeding with their growth, these include sales figure, cash-flow arrangement, costs associated with marketing and promotion and last but not least, the issue of finding a suitable work location/headquarters.

In this respect, Singaporeans have identified and accordingly suggested some key measures for the government to adopt in order to minimize the effect of the challenges for the small businesses and start-ups to grow, which include tax exemptions, low interest loans and accommodating information services.

The latest BCI clearly shows there’s been stagnation in business confidence, accompanied by significant falls in some rapidly developing economies since the last BCI report in April. This suggests that slowing trade with Europe and Western economies, combined with a host of national factors, is taking its toll.

If there is some good news it’s that, globally, the proportion of companies reporting revenue growth is stable while profits increased slightly.

It is particularly striking there is the lack of any improvement amongst entrepreneurs and small businesses. In order to improve their cash situation, respondents identified affordable and flexible business services – especially for overheads such as workspace, administrative support and sales/marketing.

45% of respondents, for instance, reported that one of the major burdens during the downturn has been inflexible property leases. Flexible services allow businesses to be more agile and free-up cash for investment without relying on credit at a time when it is so difficult to secure.