Singapore C-Suite Executives express cautious optimism on domestic economy and business performance for 2014, according to Accenture Research

Cost challenges highlights need to re-think role of
Singapore in regional portfolios.


SINGAPORE – C-suite executives in Singapore are cautiously optimistic on the domestic economic outlook and their organisations’ prospects for growth but challenged by rising costs, according to new research by Accenture (NYSE: ACN) and the Economist Intelligence Unit (EIU).

The latest report “CEO Briefing 2014—The Global Agenda: Competing in a Digital World” was based on the survey conducted by EIU with 1041 C level executives across 20 countries and 11 industries, including five countries in APAC.

Half of the Singapore executives surveyed said that they were optimistic about the global economy in 2014; 56% expressed optimism on the domestic economy and 75% were optimistic about their own organisation’s growth. Overall, they were slightly less bullish than their APAC peers.

Emphasis on New Products and Services

When asked about their growth strategies, 66% of respondents in Singapore intend to drive growth in their domestic markets in the next three years by focusing on selling new products and services, greatly exceeding those who will prioritise selling existing ones (34%).

Reflecting this emphasis on new product development is a heightened focus on R&D. A majority (77%) of Singapore executives indicated that their organisations plan to increase their R&D expenditure in 2014 to support innovation efforts.

The results support findings from another recent Accenture report, ‘Remaking Customer Markets: How Digital Unlocks new Paths to Growth’, in which the majority of executives say their companies will pursue growth outside their traditional industry in the next five years.

Human Capital to Fuel Growth Plans
Human capital is the principle area for investment in Singapore, with anticipated workforce increases reflective of the overall business confidence. A majority (73%) of Singapore executives say that their organisations will increase their human capital investment in 2014, significantly greater than those increasing investment in physical and tangible assets. Fifty-eight percent of firms in Singapore also expect to grow their workforces this year.

Optimism is being tempered by cost challenges

While Singapore executives may be generally optimistic about the economic outlook, the research shows that confidence is being tempered by concerns around rising costs.

In contrast to their APAC peers, who are mostly concerned with recession in key markets and competition from new market entrants, Singapore executives cite raw material costs and the high cost of capital as the biggest risks facing their companies over the next 12 months. They also rank less expensive labour costs as the most important factor for increasing Singapore’s competitiveness.

PCost challenges are reflected in 2014 profit projections: Only 58% of Singapore executives forecast higher profits in 2014 versus 73% in APAC as a whole. “Clearly, businesses in Singapore are facing some challenges,’’ said Jonathan Wright, managing director, Accenture Strategy, ASEAN. “There is a demand for a bigger, bolder Singapore ambition if organisations are to continue to thrive here. Our research shows a focus on the domestic market but companies are also beginning to re-think the role that Singapore plays in their ASEAN and APAC portfolios.”

“As Asian markets develop, we are seeing business models and the role of regional headquarters evolving to provide high value services across the region by leveraging the competitive advantages—stability, highly-skilled workforce, developed infrastructure—that the country has to offer”, added Wright.

Organisations understand the impact of digital technologies but are yet to fully harness potential

The overwhelming majority of surveyed companies in Singapore understand the impact of digital technologies with process efficiencies and cost reduction being the primary focus of digital investment for most (55%). Currently less than one third (32%) claim that their company primarily uses these technologies to drive growth or to find new ways of reaching customers.

“Digital is key in this challenging environment. By leveraging analytics for instance, organisations can drive better decisions around new product development, customer acquisition and talent. We would encourage Singapore companies to shift the balance of their digital investments from achieving internal efficiencies towards driving growth in new sectors and markets, said Wright.

About the Survey

The EIU conducted a survey of 1,041 C-suite executives drawn from 20 countries around the world. Representing a wide range of industries, all respondents are board members or C-level executives. The largest group (36%) of respondents are based in Europe, with 28% based in Asia-Pacific, 15% in North America and the remainder in the Middle East and Africa, Latin American and Eastern Europe. Fully 85% of the firms represented in the survey generate more than US$500mn in annual revenue. To complement the survey findings, the EIU conducted interviews with a range of business and thought leaders, including a range of CEOs.

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