January 20, 2023
SINGAPORE – China’s reopening and the growing divide between it and the United States present opportunities for businesses here but also pose concerns such as higher costs, experts noted on Thursday.
They urged firms to step up efforts to digitalise their businesses, be more sustainable and broaden their potential talent pools. The Government could also do more to help companies in these areas, by improving access to funding, for example.
These were among a range of suggestions raised at a pre-Budget roundtable organised by the Institute of Singapore Chartered Accountants (Isca).
Co-chair Liang Eng Hwa, MP for Bukit Panjang and chairman of the Government Parliamentary Committee for Finance and Trade and Industry, said Singapore will need to navigate an increasingly complex and volatile operating environment amid a slowdown in economic growth globally.
It will have to contend with geopolitical fragmentation, including competition between the US and China that has seen both countries attempt to decouple in areas such as trade, technology and finance.
There will also be a need to tackle disruptions due to technology and respond to the global sustainability agenda, which has involved a shift towards renewable energy and might result in new energy superpowers emerging.
Mr Suan Teck Kin, head of research at UOB, told the event that China’s reopening is set to boost tourism in Singapore and the region but will also worsen labour shortages and lead to higher costs.
The decoupling of China and the US will create opportunities for companies here in “friendshoring” – when companies relocate their supply chains to countries with low risk of disruptions. But it also means more inefficient supply chains, he said.
“Your supply chain used to be working as a well-oiled machinery. Now, there’s sand in the machinery and you’ll be breaking up all these supply chains,” said Mr Suan.
Association of Small and Medium Enterprises president Kurt Wee said companies need to figure out how to reorganise their business structures amid shifting global dynamics.
There will be an increase in mergers and acquisitions as Chinese nationals seek assets and business opportunities here, he added, noting that higher borrowing costs are a challenge as the impact of interest rate hikes becomes more keenly felt this year.
Mr Chew Sutat, protem chairman of the listed-company association SGListCos, asked whether the Government can help banks to provide capital at a better cost to small and medium-sized enterprises which want to take up green loans. Risk sharing could be one option, for example.
Ms Fang Eu-Lin, sustainability and climate change leader at PwC Singapore, called for a “reverse domino” effect where the strong sustainability policies at multinational companies trickle down to other players in their supply chains.
There also needs to be continuity in sustainability training as it involves various aspects, added Ms Fang, who is deputy chair of Isca’s sustainability and climate change committee.
Mr Lim Hock Yu, secretary-general of the Singapore Chinese Chamber of Commerce and Industry, said the Government can work with trade associations to close knowledge gaps about how sustainability can translate to business opportunities.
Education can be improved for businesses when it comes to technology as it is difficult for them to decide on which solutions to adopt amid rapid developments, said SGTech councillor Howie Lau.
He added that the Government can look at ways to strengthen trust in companies’ digital capabilities: “In a connected world… this will make a big difference, whether it’s for our companies going overseas, our ability to attract talent and to work with talent around the world.”