SINGAPORE (June 6): Amid heightened geopolitical risks, such as the ongoing US-China trade war, 92% of CEOs in Singapore are still confident about the growth prospects of their companies, according to KPMG’s Agile or irrelevant – 2019 Global CEO Outlook: Singapore Edition.
However, confidence in the global economy has dropped to 64% from 77% in 2018, and only 28% of the CEOs expect a revenue growth of 2% and above.
Conversely, 94% of global CEOs are bullish about their company’s prospects and 62% are bullish about the global economy. Globally, 46% of CEOs expect a revenue growth of 2% and above.
Ong Pang Thye, managing partner of KPMG in Singapore says, ““There are expectations that the quantum of growth for companies in Singapore are lower as compared to global peers because trade is the key driver of growth for Singapore. The initial rounds of uncertainty from the trade tensions have dampened Singapore CEOs’ confidence in the global economy and their expectations of top-line growth.”
According to KPMG, trade tensions could results in a significant number of US, China and other multi-national corporations increasing their presence in ASEAN in the medium term. Hence, Singapore could benefit and become an even more attractive regional or global headquarters.
“The trade tensions could well represent a turning point for companies to shift some components of their supply chain towards ASEAN, creating increased demand and a knock on positive effect on growth for Singapore companies with ASEAN presence. If companies are agile enough to seize this window of opportunity, they will capture the growth that they seek,” adds Ong.
This year, Singapore and Asean CEOs have identified operational risks as the top threat for their organisation’s growth. Amid the escalating US-China trade tensions, companies are new concerned if they can sustain their operations in their current form and would need to consider multiple scenarios to address the uncertainty.
Other major risks cited by Singapore CEOs this year include cyber security risk, emerging technology risk, territorialism (protectionism) and environmental risk.
About 69% of CEOs have said that a strong cyber security strategy is key to driving trust with stakeholders. These CEOs also projected stronger revenue growth over the next three years.
As for the organisation’s growth, 32% of CEOs in Singapore say that mergers and acquisitions (M&A) will be the most important strategy for achieving growth objectives over the 3 years.
In terms of where growth will come from and the strategies to build resilience, 63% of global CEOs are targeting emerging markets for geographical expansion in the next three years, with the Belt & Road Initiative (BRI) at the forefront of their ambitions.
On the other hand, the disconnect in innovation is rather large in Singapore organisations as 92% of CEOs said that they want their employees to feel empowered to innovate without worrying about possible negative consequences. Only 40% said their organisation currently has a culture where “fast-failing” innovation is celebrated.
