HSBC's annual Navigator survey, Singapore firms expand trade and connectivity in face of slower recovery
  • Balancing Supply & Demand
    • Managing Supply Chain

Singapore firms expand trade and connectivity in face of slower recovery: HSBC Survey

  • Article

Singapore firms will be more impacted by the downturn and see a longer recovery path compared to their global peers. To offset this, they are doubling down on their Asian connectivity, and prioritising resilience within their supply chains. The findings come from HSBC’s annual Navigator survey which sought the views of over 200 businesses in Singapore during September 2020.

The survey reveals the deep impact on business outlook in Singapore:

  • 67% of Singapore firms expect profitability to recover by the end of 2022 (73% APAC)
  • 42% foresee sales shrinking in 2021 (28% APAC)

Yet businesses are still increasing their investment in growth:

  • 59% intend to increase investment for growth (67% globally)
  • 87% plan to expand their international business (76% globally)
  • 51% are immediately investing in expansion overseas (44% APAC)
  • 98% have concerns about their supply chains (93% globally)
  • 63% are looking to adopt digital/ technology into their supply chains (48% globally)

Investing in connectivity

Singapore’s firms are continuing to invest in Asian expansion in spite of over two-thirds expecting cross-border trade to become more difficult than it was pre-pandemic. Indeed Singapore’s businesses are doubling down on intra-regional trade; year-on-year trade with mainland China, the leading trade partner, has increased (50%, from 43% 2019) and there has also been strong growth in trade with ASEAN members, including:

  • Malaysia (50%, from 36% 2019)
  • Thailand (32%, from 28% 2019)
  • Indonesia (29%, from 23% 2019)

Iain Morrison, Head of Global Trade and Receivables Finance, HSBC Singapore: “There’s no doubt that Singapore’s businesses have been hard-hit; it comes with the territory of being one of the world’s most internationally connected trading hubs. Yet it’s encouraging to see that they’re still investing for growth; digging deep to strengthen Asian trade links and seeking open, easier and safer trade. The formation of the world’s largest trade bloc under RCEP - signed after Navigator was conducted - couldn’t have come at a better time; creating a more coherent trading zone that hands Singapore firms a step-up to greater market access.”

The Regional Comprehensive Economic Partnership (RCEP) was signed on which ushers in a new era of trade and investment openness, diversity and resilience to Southeast Asia and its partners.1

Reshaping - not restricting - supply chains

As they prioritise growth overseas, nearly all businesses in Singapore express concerns about their supply chain, mainly with regard to time spent on management, instability and possible tariffs – all at higher levels compared to their global counterparts.

The vast majority of businesses are intent on reshaping, not restricting their supply chains in 2021 – investing at a more immediate pace than their global counterparts with a focus on:

  • Usage of digital/ technology (63% vs. 48% globally)
  • Select suppliers who are closer to customers (58% vs. 43% globally)
  • Select suppliers based on operational resilience and ability to deliver quickly (54% vs. 43% globally)

Mr Morrison continued: “Firms are on the front-foot in pursuing technologies to overcome the cracks exposed in global supply chains. They know that digital is the key to building resilience, now the challenge is in formulating an ‘innovation elixir’ – combining technologies to make meaningful changes across their businesses.”

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