Full Breakdown
Singapore Firms Face Profit Decline Amid Rising Costs
11/28/2025, 1:11:32 PM
Current Business Sentiment and Profitability Outlook
A recent survey conducted by the Singapore Business Federation (SBF) reveals a concerning trend among Singaporean firms, with only 4% reporting increased profitability over the past year. In contrast, 34% of businesses indicated a decline in profits. The Business Sentiment Index (BSI) has dropped to 48.5, reflecting subdued expectations for profitability in 2026. Key challenges identified include rising manpower costs (63%), uncertainty in external demand (44%), and increased rental expenses (40%). The impact of these pressures varies across sectors, with the hospitality and retail industries facing the most significant declines in profitability expectations.
Key Concerns Driving Business Requests for Support
As business confidence wanes, a larger proportion of firms (37%) anticipate worsening conditions in 2026, compared to only 14% expecting improvement. The SBF's National Business Survey 2025 highlights that businesses are looking to the upcoming Budget 2026 for essential support. The top requests include schemes to manage rising costs, workforce development initiatives, and measures to improve cash flow. Notably, 82% of the surveyed businesses were small and medium-sized enterprises (SMEs), which expressed greater pessimism than larger firms, with 38% of SMEs expecting deteriorating conditions.
Industry-Specific Challenges and Strategic Shifts
The profitability squeeze is particularly pronounced in the retail, hotel, and restaurant sectors, while banking and insurance firms report higher profitability expectations. As companies navigate these challenges, they are adjusting their strategies. In 2026, businesses plan to prioritize increasing employee salaries (39%), investing in new technologies (33%), and pursuing overseas expansion (30%). The focus on revenue growth (65%) and maintaining positive cash flow (49%) remains paramount, reflecting a shift towards commercial resilience in a challenging economic environment.
Official Statements and Responses
SBF CEO Kok Ping Soon emphasized the urgent need for government support in managing costs, cash flow, and workforce development. He noted that the survey results underscore businesses' desire to maintain resilience while investing in capability-building. The call for assistance comes as firms grapple with a deteriorating profitability outlook, with rising manpower, rental, and logistics costs cited as the primary contributors to this decline.
Criticism and Opposition
Despite the calls for support, some critics argue that the government’s response may not adequately address the root causes of these challenges. Concerns have been raised about the effectiveness of proposed measures and whether they will sufficiently alleviate the financial pressures faced by SMEs.
Verbatim Quotes
- “Businesses are calling out for support in managing costs, cash flow and workforce development in Budget 2026,” — Kok Ping Soon, CEO of Singapore Business Federation
- “It reflects their desire to maintain resilience while investing in capability-building.” — Kok Ping Soon, CEO of Singapore Business Federation
Conclusion
The current economic landscape for Singaporean firms is marked by rising costs and declining profitability, prompting a call for government intervention in the upcoming Budget 2026. As businesses navigate these challenges, their focus on strategic investments and resilience will be crucial for sustaining operations and growth in the face of ongoing uncertainties.
