S'pore firms braced for turbulent 2025 after a year of transformation

US-China tensions, Mid-East war, high costs, labour crunch among uncertainties

- Krist Boo

Companies in Singapore are bracing themselves for turbulence in 2025 after weathering a year of business re-engineering in 2024.

The moves were not by choice, but came as a result of high business costs and talent shortages that forced enterprises to put immediate growth plans on hold to focus on fortifying themselves, industry players said.

While the overall economy improved in 2024, some businesses chose to hunker down, given the global uncertainties and cost pressures, said Ms Joanne Tan, deputy managing director for industry at Enterprise Singapore.

In this "watch-and-see" mode, however, they were nevertheless doubling down on investments in artificial intelligence (AI), digitalisation and sustainability measures to comply with global standards, she added.

There are over 300,000 small and medium-sized enterprises (SMEs) in Singapore, accounting for 99 per cent of enterprises here.

A Singapore Business Federation (SBF) survey noted that 7 per cent more businesses fine-tuned their digital operational processes in 2024, compared with in 2023.

Smaller firms also made efforts to shore up resilience, innovation and productivity, said the Association of Small and Medium Enterprises (ASME).

But performance has been mixed, leaning towards "poor or neutral", said ASME president Ang Yuit.

"High operating costs, cautious client spending and inflationary pressures weighed heavily on many SMEs, particularly in sectors like food and beverage, and retail," he added.

Singapore's economy is forecast to grow 3.5 per cent in 2024, better than earlier forecasts. Official estimates, however, are weak for accommodation, retail trade, and food and beverage services.