Overseas Expansion × Digital Transformation × Cost Management: What Singapore’s Latest Business Survey Reveals About Sustainable Growth

The latest survey indicates that business sentiment among Singapore companies remains cautious. The Business Sentiment Index (BSI) declined to 52.2 compared with the previous quarter. While a BSI above 50 still indicates expansion, the margin remains relatively modest, suggesting that many businesses are adopting a wait-and-see approach amid uncertain market conditions.

Profitability Expectations over the next six months fell to 48.5, below the benchmark level of 50. Ongoing uncertainty in demand and continued cost pressures are limiting expectations for near-term profit growth. These concerns are not limited to small and medium-sized enterprises (SMEs); large corporations are facing similar challenges.

Against this backdrop, businesses are becoming more selective about investments and workforce expansion. At the same time, improving operational efficiency and restructuring revenue streams have become increasingly important strategic priorities.

Business sentiment varies significantly by sector. Financial services, insurance, and professional services continue to demonstrate relatively strong confidence, while retail, hospitality, and IT-related services remain under greater pressure. For retail and hospitality businesses in particular, slowing demand combined with fluctuating cost structures has made short-term profitability a key concern.

The financial and insurance sectors continue to maintain comparatively strong profitability expectations and appear more resilient to external economic volatility. Nevertheless, these industries are not immune to rising costs. Long-term competitiveness will still depend on improving operational efficiency and managing expenses effectively.

As a result, companies must develop strategies that reflect both sector-specific challenges and broader economic conditions. Industries that experience greater demand fluctuations will particularly benefit from adopting more flexible operating models.

To address rising costs, companies have adopted a variety of measures. The most common responses include cost reduction initiatives (51%), price increases (36%), inventory optimization, and renegotiation of procurement terms.

Cost reduction remains the most widely adopted strategy, often involving office space consolidation, process improvements, and delays in capital expenditures. Although some companies have increased prices for products and services, they must carefully consider potential impacts on customer demand and sales volumes.

Inventory optimization and supplier diversification are viewed as particularly effective medium-term strategies. Reassessing supply sources and updating contractual arrangements can help reduce exposure to logistics disruptions and supply chain volatility.

Workforce Trends: Salary Adjustments and Employee Retention
Many businesses intend to increase employee salaries over the next twelve months as part of broader talent retention and workforce stability efforts. Intensifying competition for skilled workers continues to drive these decisions.

Although investment in employee training and development has declined compared with the previous year, skills development remains a critical long-term competitiveness factor. Organizations are increasingly seeking training programs that deliver measurable returns on investment while enhancing workforce capabilities.

Looking ahead, companies are expected to place greater emphasis on upskilling existing employees and redesigning workflows to improve productivity and operational efficiency.

Continued Commitment to Digitalization and Global Growth
At the same time, businesses continue to prioritize digital transformation initiatives. Key focus areas include automating business processes, adopting digital tools, and strengthening online sales channels.

Interest in overseas expansion also remains strong. Many organizations are exploring new markets and international partnerships as part of their growth strategies. However, companies are approaching expansion cautiously, favoring phased investments and gradual market entry rather than large-scale commitments.

Internally, organizations are also reviewing workforce allocation and operational structures. These efforts are aimed at improving both productivity and cost efficiency through organizational transformation.

Over the next twelve months, companies identify revenue growth, cash flow stability, and cost management as their top priorities.

To drive growth, businesses are focusing on entering new markets, enhancing products and services, and redesigning sales channels. International expansion continues to attract significant interest, with many organizations testing new markets through pilot programs and limited initial investments.

Meanwhile, maintaining healthy cash flow has become essential in an unpredictable business environment. Companies are strengthening working capital management and liquidity planning to ensure financial resilience. Together with cost reduction efforts, these measures are viewed as critical to sustaining short-term profitability.

Cybersecurity and data privacy have emerged as major business concerns across industries. SMEs are particularly vulnerable, as many lack sufficient cybersecurity preparedness, creating significant business continuity risks in the event of a cyber incident.

Even organizations with limited resources can implement practical measures such as regular data backups, access control management, and employee phishing awareness training. Depending on their risk profile, companies may also consider cyber insurance and Software-as-a-Service (SaaS)-based security solutions.

As digitalization accelerates, cybersecurity risks will continue to grow regardless of company size. Establishing a baseline level of cyber resilience is increasingly becoming a prerequisite for maintaining competitiveness.