Market Risk Analysis for Specific Sectors

Mr Laurence Lien asked the Minister for Trade and Industry whether the Ministry can study and provide more information on the riskiness of each business sector, particularly the food and beverage sector, and include data on the proportion of firms making losses, the extent of losses, the likelihood of business failure and the extent of total accumulated profits or losses upon exit.

The nature of business risk varies across sectors as well as within each sector. For example, externally-oriented sectors such as Wholesale Trade and Transportation and Storage will be significantly affected by external developments via the trade and financial channels. On the other hand, domestically-oriented sectors such as Construction and Food and Beverage (F&B) will be more affected by domestic developments such as infrastructural demand and income growth. Within each sector, the risk faced by individual firms can also vary depending on their specific circumstances.

Overall, net company formation in all sectors has remained healthy, with a greater number of companies entering than exiting in 2012. The proportion of firms making losses in key services sectors has also remained stable over the years.

In particular, for the F&B segment, 877 companies ceased operations in 2012, a 2.7% decline as compared to the preceding year6. Operating receipts of the F&B segment continue to be healthy, rising by 12% to reach $7 billion in 20117. Gross operating surplus reached $526 million in 2011, a 6.4% increase from the preceding year. Furthermore, 67% of F&B companies recorded positive gross operating surplus in 2011.

The Government remains committed to ensuring that Singapore remains conducive for businesses. For instance, Singapore retained its position as the easiest place to do business for the seventh consecutive year in the 2013 World Bank Doing Business report. The Government will also continue to help companies restructure, improve their productivity and move up the value chain. Businesses that tap on the various Government schemes available will be well-placed to make the transition to productivity-driven growth and remain competitive.