Singapore firms cautiously optimistic

Singapore firms cautiously optimistic

SINGAPORE - Food and beverage chain Thai Express Concepts had over $100 million in sales last year, but increasing rental and labour costs have been making it harder for the chain to attain growth in its profits.

Its chief executive, Mr Dellen Soh, estimated that he had to fork out between 10 and 20 per cent more for rentals in the last two years, while labour costs shot up by about 15 per cent last year.

"If we are able to hit the same amount of sales this year as we did last year, I would be very happy," he said, adding that he hoped the Government would address rising business costs in the upcoming Budget.

Mr Soh's sentiments echoed the findings of business-outlook surveys released yesterday by the Singapore Business Federation (SBF) and DP Information Group.

They highlighted that sustained concerns over high business costs and the global economy have led companies here to be less optimistic about business prospects this year than last year.

Most sectors are expecting weaker turnover and profits in the next six months, although they remain confident that they will still attain growth and reap profits.

One poll - the latest SBF-DP small and medium-sized enterprise (SME) index survey, which involved 3,000 SMEs across five sectors - found that firms in only the construction and engineering industry are expecting higher turnover in the next six months.

This is mainly due to them having projects in the pipeline. But such firms also said that they are seeing profit margins weighed down by higher operating costs, so they are not foreseeing higher profits.

Firms from the commerce and trading sector are the only ones expecting higher profits. They cited high regional demand and the strong Singapore dollar as reasons.

Given this cautiously optimistic outlook, more SMEs said that they are looking to increase capital investments to boost productivity, instead of increasing headcount, in the next six months.

In line with this, a separate National Business Survey, also released by SBF and DP yesterday, showed that 74 per cent of the 1,006 companies they polled said that they will focus on increasing cost efficiency and productivity as their key business strategy this year.

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