How well will Singapore's businesses, and Singaporeans generally, cope with an extended economic slowdown? What needs to be done to ease their burden?
GOOD times mask poor corporate performance, but it is during downturns that excellent management distinguishes itself. We see the following to be key competencies which companies require to manage in uncertain times:
Strategic cost management;
Risk management;
Customer centricity.
Singapore companies which demonstrate these capabilities will be able to seize the opportunities emerging in a downturn - to gain market share, forge new customer relations, strengthen product and service positions, and progress towards high performance.
- Teo Lay Lim
Country Managing Director
Accenture, Singapore
Since the last Asian meltdown in 1997, we have fine tuned our already efficient financial system and although the global crisis will somewhat affect us, but it will not be as catastrophic as what happened back then unless something worse comes along.
I agree that diversified economy will help Singapore ride out this crisis as we are not as reliant on the US economy as before. Anyway, the world emerged from every crisis and went on to enjoy economic booms and this one should not be different, so look at the brighter side of things. This is just a deep in the roller coaster ride and it must go up again.
- Elim Chew
FOUNDER & MANAGING DIRECTOR
77th Street
Having lived through the difficult times of the Asian economic crisis and the downturn caused by the SARS outbreak, I believe that Singapore's businesses as well as Singaporeans are resilient and resourceful enough to ride out the economic storm. With relentless skyrocketing costs of fuel, food and utilities together with the global financial crisis, we still found creative means and ways to stretch every dollar.
Saving costs is a pertinent issue, but the mistake many companies make is to cut loses indiscriminately such as putting training programmes and branding initiatives on the chopping block. Investing in staff development and brand building may be a hard pill to swallow in difficult times, but the cost spent will mitigate cost incurred in the long run. Assembling a properly trained workforce will give companies an edge over their competitors and ensure they are ready to face the possibilities of future crises while brand building helps to reinforce a company's market presence.
Diversification or refocusing business strategies is another way companies can brave through the economic slowdown. Constant innovation and change as well as the ability to adapt to evolving market conditions are more crucial than ever during these difficult times. Recalling the SARS outbreak five years ago, GMP modified its business tactics to specialise in providing highly demanded healthcare screeners to organisations at that time.
While monetary subsidies can help businesses and Singaporeans handle the economic crisis, being ever ready for challenges is the best contingency plan businesses and Singaporeans can adopt. Businesses and Singaporeans should not depend on government handouts. Cutting down on the littlest things like luxurious wants and focusing on the serious needs can go a long way.
- Annie Yap
CEO
The GMP Group
It is a challenging time to be running a business when the global financial storm is causing a crisis of confidence on all fronts. The global economy is so interdependent that every business decision made elsewhere affects people everywhere. There is not much we can do about these dynamics. But in business as in life, I believe we always have the option to turn crisis into opportunities. One man's panic is another man's gain so they say.
This is an enormous challenge that requires no less than the deepest level of business insight. Staying lean with cost structure while increasing productivity, and underlining a shift in priorities will be a must for business to remain viable. As to prospects for investments during a downturn, I am of the opinion that the investor's focus should not be on the share price but rather to pick companies with good fundamentals and long-term growth prospects in its chosen industry.
We also derive confidence from Singapore's strong fiscal position and diversified economy to see us through the downturn. Hopes are still up that Asian economies will continue to be key drivers for overcoming the current slack. I believe that growth will slacken but will be able to bounce back. Currently, Asian business leaders are giving emphasis to integrated cooperation among economic groupings of member nations in South East Asia on the one hand, and counting on the robust economies of China and India on the other, to cushion the blow of the current situation. Despite the gloomy outlook, there is no option but forge ahead, and consider that this is not the first time a recession of great proportion has swept us. It has visited us during the Asian financial crisis of the 1990s when we were little prepared for it but we managed to survive.
- Dora Hoan
Group CEO
Best World International Ltd
With the imminent economic slowdown, businesses and employers will be looking at various ways to manage slackened demand, higher prices and help their employees cope with rising living costs. One of the greatest mistakes organisations must avoid is to adopt short term cost cutting strategies by reducing headcount as this will hurt their talent pipeline and leadership bench-strength. In fact, as businesses shift to a period of slower growth, it becomes even more critical for organisations to retain their talent by openly, consistently and frequently communicating in order to motivate and retain their best talent and boost employees' confidence in their leadership and organisation.
While the Government and its agencies ensure that a pipeline of investments continue to create jobs in sectors such as tourism, oil and gas and healthcare, lowering consumption and expenditures is one of the ways which Singaporeans can cope with the economic slowdown.
In the midst of the current economic uncertainty, there will be some who face the future with trepidation and others who look forward through the eyes of an optimist. It is critical for organizations and the population to be smart and know that this bearish crisis will pass and we need to remain relevant for the future through skills upgrading, training and looking out for opportunities in new and growing industries so that we will catch the booming bull that follows.
- Dhirendra Shantilal
Senior Vice President, Asia Pacific
Kelly Services
The current global economic crisis is more severe that the Asian financial crisis in 1997-98. Singapore has fortunately weathered past economic crisis, including the Asian Financial crisis, Asian Sars, dotcom clash, oil shock etc, quite well. The government has strengthened Singapore's economic foundations (fiscal and monetary) rather well after each crisis so that the economy can withstand the next economic tsunami, including the current global financial meltdown.
Public confidence is of paramount importance in any national crisis. In this instance, the government has been very forthcoming in painting a clear scenario for all stakeholders to see. The key government agencies, e.g. MAS, Temasek, GIC, are actively monitoring and intervening in the markets to protect the money market, Singapore export market, Singapore dollar and foreign assets. The timely disclosure of GIC's investment portfolio also serve to reassure investors and citizens alike on the strength of Singapore's overseas assets and reserves. A prudent financial management policy should be pursued by both businesses and consumers. Do not speculate or make risky decisions. Adopt a cautious mindset in spending, savings and investment practices.
'Save for a rainy day' is a good motto these days. Cut out luxury and extravagant expenditure. Focus on the basic needs and fundamentals. This will see us through another economic crisis in next 12 months.
- Derek Goh
Executive Chairman & Group CEO
Serial System Ltd
I think the current global financial and economic meltdown is unprecedented unless you have been around during the Great Depression. Even as I write, the full extent and impact of this financial meltdown has not been fully felt. Many of us still do not know how long it will take before confidence can be restored especially in the financial sector. Being a major financial centre, I believe Singapore cannot escaped unscathed especially given how interconnected the world is.
If we try to look positively, this isn't the only major economic problem that Singapore has faced in the last decade. In the previous decade, we have seen Singapore and Singaporeans weathered through the Asian Financial Crisis in 97, the tech meltdown and world trade centre attack in 01 and the SAR crisis in 03. The ride may be tough but generally Singaporeans has emerged every time stronger and more united as a country after each crisis. Going forward, Singapore still has a lot of positives going for it. I think once the storm clear, Singapore will emerge in a good position again.
In the interim, it would be good be the government can help smoothen the rough ride by postponing costs increases and stimulating our domestic economy.
- Wee Piew
CEO
HG Metal Manufacturing Ltd
The reverberation of the financial crisis from the US is now being felt amongst Singaporeans and has caused much trepidation and anxiety. Consumers are already belt-tightening and this would mean that several cutbacks
can be expected in spending patterns. The local car industry is usually spared from drastic plummeting in sales, as the Government has put in place a system that is governed by COE. There is still a demand, and people are still buying cars, but frugality may cause the luxury cars sector to slow down a little. To cushion the effect of a slowing down in demand, and in the midst of an impending weakened Singapore dollar, the government could provide assistance for import businesses, like ours. In recent months, living costs in Singapore have increased and the recent hikes in electricity and telephone bills, have raised questions about how Singaporeans are going to cope; and have worsened the already unsettling atmosphere.
- Glenn Tan
Group Chief Executive
Motor Image Enterprises
' While the economy is on the verge of a recession but looking around the malls , weekend crowds at the restaurants , the
the lag effect of F1 , the slowdown may not feel like one . Frankly the effects have not fully filtered down to the ground yet . Another reason for the time lag is the low unemployment rate and wage growth was healthy early this year because of good performance of previous years . This will however change with the external environments continuing to worsen . Unemployment is expected to go up specially in the financial services and manufacturing . Singaporeans will have to tighten their belts , cut holidays , picnic at home, defer purchases of luxury goods , use local transport etc . Against all this the expectation will be high for the government to provide some relief particularly for the lower income group to overcome the pain while the business would have to consolidate , improve productivity and be innovative to improve profitability'.
- Kanwal Nain Sahney
Managing Director
Specvision
Business impact will vary across industry, and companies will need to build contingency plans best suited to their individual needs. With exports being affected, we see a slowdown in shipping and manufacturing, though prospects remain upbeat in the high technology and construction sectors.
To weather the economic turmoil, companies will have to prudently manage cash flows and maintain a long-term view on retaining performers. Those who are engaged in businesses overseas will need to closely monitor the impact of the economic crisis in-country, and continuously assess the prevailing mood in the region.
We believe financial institutions will need to ensure enough liquidity in the market so trading can continue smoothly and there are sufficient funds to sustain small and medium businesses. If the Government plans to subsidise basic expenses for citizens, this will go a long way in maintaining a level of spending that will prop up the market.
While Singapore is definitely not immune to the impact of the crisis, we share the optimistic view that it will remain resilient and buoyant given its strong economic fundamentals and sound policies. In fact, we may even see Singapore ride on its reputation as the most stable economy in the region, to attract investors seeking to mobilise their investments into this region.
- John R Brells
Senior Vice President and Managing Director, Asia-Pacific
Hill International
Singapore and Singaporeans were used to a recession until about two years ago. The recent spurt of growth was fraught with inflation. In a sense, we have not been carried off to delusional level of wealth. We will have to adjust back to the difficult times.
This time round, the slowdown is affecting not just the US but also Europe and even the Middle East. The severity is offset by the glimmer of hope of Japan coming out of its erstwhile doldrums and China and India powering away. Hopefully our connectedness to them can prove a countervailing force.
Stagflation, that dreaded word, may be what we have to endure the next one to two or more years. The real battle may be as much psychological as financial. A contagious pessimism will be self-fulfilling. However there will be people and sovereign funds which come in to pick up the spoils in the financial turmoil and far from seeing them as opportunists may be the antidote to a downward spiral.
For the man in the street, the loss of jobs and high cost of living will haunt them. Hence preventing job losses, helping workers cope with job changes and keeping the lid on prices, even if a large amount of inflation is imported, will be crucial.
- Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd
The recession caused by the financial crisis we are experiencing will be more severe than any we have seen in the past. The crux of the problem is that the crisis is a worldwide phenomena, starting first from the US and now appearing in the European Community. Singapore with its large surpluses is well placed to cope with such a crisis. I beleive that most affected are those that export to Europe and America. These exporters will see a fall in demand.The goverment can assist by lowering the value of the Singapore dollar for a strong Singapore dollar is no longer neccessary in a deflationary recession.. In the Shipping Industry, a reluctance by Banks to extend credit to Shipowners and Shipyards may stiffle the growth of this sector. The Goverment might wish to inject credit into the Industry, as they did some time back with the EDB sanctioned Ship Financing Scheme.Generally I think the Singapore economy may scrape through the recession with a small negative growth and a negative budget surplus if the right policies are put in place.
- Tan Ser Giam
Chairman
Eastern Navigation Pte Ltd
I have thought for some time that Singapore was on the verge of a recession. The minister's comments that the economy could 'slow down for several quarters' is a tacit admission of this (in my opinion). Those of us in the business world who have witnessed the unnecessary greed of increased commercial and residential rent without a similar increase in the price of goods, services and salaries have often wondered how far the elastic band can stretch. How the government keeps a lid on inflation will be very interesting. I feel the best way to cope is to broaden their regional and international business base where Singaporean standards and competitive pricing will stand most companies in good stead.
- Tony Sealy
Managing Director
Intense Animation Studio
