OPTIMISM about economic expansion has increased significantly among Singapore finance executives in tandem with growing sentiment from global peers, according to additional details of the 2017 Global Business & Spending Outlook survey released by American Express on Wednesday.
However, political uncertainty in other countries is deterring Singaporean companies from expanding into new markets.
Conducted by Institutional Investor Thought Leadership Studio, the survey polled 650 senior finance executives from companies around the world with annual revenues of US$500 million or more, including 30 Singapore-based respondents.
The survey responses were gathered after the 2016 US election, in late November and early December 2016.
The percentage of Singapore finance executives who expect "substantial economic expansion" in the coming year rose to a seven-year high of 37 per cent from 12 per cent in 2016. Globally, that number increased from 19 per cent last year to a 10-year high of 38 per cent.
"It is pleasing to finally see optimism return after years of suppressed growth, and companies appear to be ready to increase their spending," said Nigel Fox, vice-president and general manager of global corporate payments for Singapore at American Express.
He noted that the results showing that Singapore companies' hesitation to enter new markets comes despite the Singapore government's offers of grants and funding schemes to encourage small and medium enterprises (SMEs) to expand overseas.
"Entering new markets" dropped to fourth place in spending and investment priorities for Singapore companies this year, from second place in 2016. It was listed as the top spending priority in 2015.
Eighty per cent of the Singapore companies polled acknowledged that political and economic uncertainty outside of Singapore is a factor in their hesitation to expand, and 93 per cent said they were likely to withdraw their business activities from high-risk areas if threatened.
Remaining competitive with other companies is the top spending priority for 2017, with 93 per cent of companies saying that they will spend more in this area. Mr Fox cited examples of increased competition in several industries such as food, with the advent of food delivery services altering the business landscape for restaurants and cafes.
Improving financial returns to owners or shareholders and pursuing business transformation and innovation were the second and third top priorities for Singapore companies.
Hiring is likely to slow, with 83 per cent of respondents expecting headcount to increase, down from 87 per cent last year. More companies are also planning to spend less on labour and headcount compared to the previous year, with 27 per cent intending to reduce spending in this area compared to 22 per cent in 2016.
All the Singapore respondents said that difficulty in hiring and retaining sales and marketing staff has affected company performance.
However, the survey results indicated that they will be prioritising IT-support, mid-level management, finance, and general administration and support talent in their hiring plans.