Singapore businesspeople are split on the reasons for the increase in complexity. The economic environment/ recession is considered at least partly to blame by 23 percent. Market rules and regulation changes, and increasing competition, are also strong factors (both 18 percent), although rules and regulations are thought to be less of an issue than in most other countries – the global average is 26 percent.
There is little hope of business complexity easing in Singapore over the next two years. Two thirds of firms believe there will be some sort of increase, ranging from minimal to very significant. Conversely, only 32 percent expect complexity to ease or remain the same.
Although a large majority of Singapore firms, 82 percent, believe that operating in more countries contributes to business complexity, when asked to define only the most relevant factors, operating in more countries registers only 4 percent. Instead, by far the most significant cause is believed to be government oversight (48 percent). Tax policy, at 34 percent, is also a major trigger for complexity, although the burden of regulation (excluding tax) appears far less of an issue than elsewhere – highlighted by only 26 percent of Singapore respondents, compared to a global average of 42 percent.
Matching the picture worldwide, businesses in Singapore identify two major risks associated with increased complexity – increased costs (84 percent), and more risks to manage (80 percent). Although the need for new skills to offset these challenges is recognized by 68 percent of respondents, it appears to be a less significant issue here than in other Asia Pacific (China – 92 percent, Japan – 90 percent and South Korea – 82 percent).
Offsetting these risks, some 82 percent of Singapore respondents believe complexity creates new opportunities – the highest of the Asia Pacific economies. Four out of five Singapore businesspeople believe that complexity provides an opportunity to expand into new markets while 68 percent thought it would allow them to build a competitive advantage or create new business strategies.
The management requirements imposed by operating in more countries are expected to cause further complexity over the coming two years, identified by 57 percent of respondents (global average – 46 percent). However, even more believe the biggest cause of rising future complexity will be Singapore's tax policies (64 percent). Beyond the taxation element, general regulation is not thought to be especially troubling, noted by just 46 percent of Singapore firms – considerably less than most European countries and North America. The global average for regulation as a key future cause of complexity is 63 percent.
Corroborating the actions taken by the majority of other countries worldwide, businesses in Singapore have focused on two primary areas for improving how they manage complexity – better information management (90 percent) and reorganizing all or parts of their business (68 percent). A large proportion (64 percent, against a global average of just 49 percent) have attempted to tackle complexity by investing in new countries or geographies, although far fewer than the global average (30 percent against 45 percent) undertook mergers and acquisitions.
Tactics to address complexity will differ among Singapore businesses over the next two years. Although improving information management is the most common method cited, at 38 percent it is much less than the global average of 73 percent, matched only by Spain. Some Singapore firms will try influencing public policies or reorganizing their businesses (both 29 percent), although these again lag behind the worldwide averages of 40 percent and 59 percent respectively. Very few Singapore businesses will attempt to combat complexity with mergers and acquisitions (15 percent) or by changing their approach to human resources (18 percent).
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