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Thursday, 19 February 2009

Accountants expect economy to get worse

The profession cites sales growth, collections and high costs as top concerns for business during this economic downturn

According to the latest CPA Singapore Business Confidence Index, accounting professionals are not confident about the economic outlook. 95 per cent of the respondents rated the current Singapore economic conditions as less favourable now compared to six months ago. 86 per cent of them also expect the economy to worsen. Given that opinion, it is not surprising that 75 per cent of them expect their business situation to worsen in the next six months as expressed in their responses. (Download white paper below)

A high 44 per cent indicated that sales growth is the topmost concern of businesses, according to the survey that was conducted between 2 to 15 January 2009 amongst members of Institute of Certified Public Accountants of Singapore (ICPAS). Accountants are also worried about collections, which is the second top concern of businesses as voted by thirty per cent of those who participated in the survey, suggesting that they are affected by uncollected receivables. The survey also revealed that businesses also grapple with high costs during the economic downturn, which is third in ranking for top business concerns as voted by 28 per cent of the respondents. Attracting talent and staff retention seem to be the least worries of businesses for now.

Accountants’ economic expectations, though gloomy, do not appear to be holding back on investment during this crisis. More than half of the respondents (58 per cent) shared that their companies will be increasing or maintaining their level of investment. A slightly smaller percentage (42 per cent) indicated that they are looking at reducing investment.

Healthcare as well as Information & Communications are two sectors enjoying a brighter outlook, as voted by ninety per cent and seventy per cent of the respondents respectively. Conversely, Manufacturing, Wholesale & Retail Trade, Hotels & Restaurants as well as Financial Services are expected to be the worst hit during this difficult time.

Only a quarter of the respondents expect their workforce to be reduced while seventy per cent of them indicted that they are looking at maintaining their workforce. Some, at least, can expect an increase in head count but this is only a small percentage (six per cent).

Commenting on the results, Dr Ernest Kan, ICPAS Vice-President said, ”Maintaining investment and sustaining the current level of workforce suggest that companies are hanging on and fighting the economic turmoil. Although battered, they remain resilient. This is a positive sign. Coupled with the Government’s well thought-out and calibrated approaches to counter the financial crisis, we are well poised to ride out this storm.”

He was speaking at the inaugural CPA Singapore Powwow on 16 February, where the Index results were announced. The breakfast event brought together industry leaders – Ms Penny Low, Member of Parliament for Pasir Ris-Punggol GRC, Dr Ernest Kan, Vice-President of ICPAS, Mr Aw Soon Beng, Chief Executive Officer of Westcomb Financial Group and Mr Tim Hird, Director of Robert Half International Pte Ltd – who discussed on the Business Confidence, Concerns and Control in Volatile Times.

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