Singapore businesses prefer government aid to offset Iran war costs: SCCCI poll

[SINGAPORE] More than 90 per cent of businesses in Singapore picked government grants and subsidies to offset increased costs as their most preferred form of support amid the ongoing geopolitical conflict, based on a poll by the Singapore Chinese Chamber of Commerce and Industry (SCCCI) released on Monday (Apr 6).

This was ahead of a ministerial parliamentary address on Tuesday regarding government measures to cushion the conflict’s impact on businesses and households.

A Homefront Crisis Ministerial committee was convened on Apr 2 to respond to the ongoing Middle East conflict.

A total of 114 businesses, who are also SCCCI members, were surveyed from Mar 30 to Apr 2 to understand the impact the Iran war has on local businesses. The survey aims to inform timely policy responses and targeted support measures to help Singapore businesses.

The respondents span the services, manufacturing and construction sectors. Of these, 90 per cent were small and medium-sized enterprises (SMEs). The remaining companies were large enterprises who made over S$100 million in annual revenue.

The services sector represented about 70 per cent of the businesses polled, followed by the construction sector at 18 per cent and manufacturing companies at 12 per cent.

Apart from government support to offset rising costs, 61 per cent of companies also wanted better access to low-interest working-capital loans, while some 52.4 per cent said they would find support for trade finance helpful.

A smaller proportion, or around 48.6 per cent, also wanted facilitated access to alternative markets.

About 37.1 per cent of companies also indicated subsidised advisory, consulting services for supply chain restructuring and risk management as a helpful form of support.

Higher costs, affected revenue and sales

More than 90 per cent reported an overall increase in operating costs due to the Iran war.

Close to 70 per cent indicated a significant increase in fuel and energy costs, while freight and shipping costs jumped for around 43 per cent of respondents.

The survey also found that the geopolitical disruptions have at least moderately impacted the revenue and sales of 80 per cent of local businesses.

Almost a quarter, or 24.6 per cent, experienced a severe impact on their profit margins due to the war.

This comes as around 60 per cent have absorbed input and logistics cost increases to maintain customer relationships, while a third, or 33.6 per cent, had passed the increased costs on to customers by charging higher prices.

Other strategies to mitigate the effects of hiked energy prices and supply chain disruptions include cost-cutting measures (about 29 per cent), renegotiating contracts or pricing terms with customers (29 per cent) and reducing product or service scopes (about 21 per cent).

Only about 16 per cent of companies have not taken specific actions to manage higher costs.