Jan 22, 2014

    Economic restructuring 'too fast'

    SINGAPORE companies are lamenting that the pace of economic restructuring here has been too fast and that they need more help to cope.

    About two thirds of the companies, or 65.8 per cent, polled in a recent survey by accounting giant KPMG lamented the rapid speed of restructuring, while only about one in 10 felt that the pace was "just right".

    Almost half of the 159 companies surveyed felt that the tight labour market, a result of the restructuring drive, is increasing manpower costs faster than productivity gains.

    About 65 per cent said they have benefited from the schemes rolled out by the Government in the past few Budgets to raise their productivity.

    However, almost as many - 63 per cent - said they are still struggling with the bread-and-butter issues of rising business costs and manpower shortages that have been the result of the restructuring drive.

    KPMG's survey, aimed at taking the pulse of companies here ahead of the upcoming Budget, also found that many firms have been too caught up with dealing with day-to-day survival issues to think about investing in their long-term growth.

    "The rapid pace of the Government's policy changes was a likely contributor to decreased productivity in Singapore from 2010 to 2012, as businesses chose to reject new contracts or businesses over concerns about their ability to deliver," said KPMG Singapore's head of tax, Mr Tay Hong Beng.

    "The speed of changes could also be why many enterprises are just starting to come to grips with the need for greater productivity and how it can be achieved within their organisations."

    Indeed, 96.8 per cent of respondents said they want the popular Productivity and Innovation Credit (PIC) scheme, which offers cash payouts or tax deductions to firms that invest in productivity measures, to be extended beyond next year.

    About half the companies polled said they want less complex business regulations and more simplified rules for tax incentives.

    Many said they would also like to see tweaks to the PIC and other schemes.

    They also felt that existing measures have not had the desired impact on their innovation-related activities.

    Another one fifth of respondents said they were still unsure of how to restructure and needed more help, while one in six said the Government should place more emphasis on value-creation activities, such as branding and innovation.