There’s something going on in Singapore – big, well established firms are shutting and leaving the country. Amongst some of the reasons cited include:
- Rising rental rates
- Inability to hire manpower
- Neighbouring countries competing to take businesses away
- Small domestic market
There has to be something said about rental rates. For such a small country, I think we need to understand a little bit more about how REITS affect our prices. Properties managed by Real Estate Investment Trusts (REITs) will only go higher on rental fees for its investors to get a bigger share of the growing business revenue. Property owners have no incentive to keep costs low and in fact, work extra hard to raise them at every opportunity.
Companies are beginning to find that the social standard of doing business is also increasing. By this, we mean that in the course of doing business, you also have to find ways to build good careers for your employees. Good careers and a good working environment – without which you’ll find little support to grow your corporate empire.
Which is why although wages have also been reported to have been increasing, I think it is fair.
Manpower is a powerful investment and its returns go well beyond pecuniary interests, good people help your company grow and expand and in the case of a socialist Singapore, is the very reason why we’re pursuing economic growth in the first place.
Companies have to understand this new social exchange Singapore expects of them – that they can continue to use us to grow and expand, provided that they show us with cold, hard cash what’s in it for us.
And as employees, we also have to understand the difficulty it is in driving a corporation. Good companies have very big bottomlines and a lot of staff to be responsible for. Sometimes when the management takes certain decisions, they have to consider the broader employee base. Because, well…if there’s no money, then there’s no business…and if there’s no business, there’s no employment – everyone loses.
Here are some of the companies that perhaps we can learn something from in recent years:
Five Stars Tours
Five Stars Tours was a popular travel agency that abruptly closed down in early 2014. The company reportedly suffered severe losses after the opening of Singapore’s two integrated resorts, Marina Bay Sands and Resorts World Sentosa. Genting tours fell by as much as 70%. The boss has since moved on to serve drinks at a relative’s coffee stall.
Asia-Euro Holidays might be next to bleed out. It is rumoured to have suffered about $2 million in losses from property investments due to property cooling measures. All services will cease with immediate effect from 22 May. Customers and employees are still in shock by the sudden departure.
If you’re a big fan of Japanese brands, you would have mourned the withdrawal of Lowrys Farm from the Singapore market.
Similar to Japanese lifestyle brand Francfranc and skincare brand Fancl, it had entered in high hopes of expansion.
These brands have all shut down their operations in Singapore – looks like the spell cannot be unbroken.
John Little and Marks & Spencers
John Little and Marks & Spencer will not be gone for good, well, at least not yet. Do not be alarmed if you see their stores dwindling in numbers. This move is supposedly to recalibrate the business to ensure sustainability.
The red plaited icon left once… but returned in 2009, only to leave again. Her last burgers were served on 30th April this year. Reasons for her demise remain unknown.
Canele was one of the pioneers to sell high-end French pastries, macaroons and cakes. The inception of pastry stores such as Paul, Laduree and Japanese bakeries posed threats to the decade-old patisserie chain. The labour crunch fuelled the situation, and gone were the glory days. Its last outlet was closed in August 2014.
Banquet was Singapore’s largest halal food court operator at its peak. However, rising rentals and wages led to irrecoverable cash flow issues. It was forced to exit in early 2014 with $15 million in debt.
These are not the only F&B establishments to shut down. Even strong brands in fine dining such as Guy Savoy, Indochine Waterfront and Au Jardin also closed. So are local names such as Zhen Zhou Dao porridge, Blue Diamond bryanis – most of them attribute failure to the lack of manpower and rental costs.
The financial sector cannot be spared either. Like CIMB and Goldman Sachs, the equities unit of Standard Chartered will be axed.
Higher capital requirements and stricter regulations placed pressure on financial firms globally. These eventually translated to layoffs of employees.
Yes, you read it right… Toshiba is no more. Toshiba will be stepping out of the local television and appliance market, citing stiff competition. Its operations will cease by the end of May. Greater problems will ensue as many small retailers who acquire more than half of their products from Toshiba will be left to suffer.
These are just the tip of the ice berg. Many an SME had also shut their doors, some after decades of business. Eng Neo cinemas, Aussino bedsheets for example. Business conditions seem to be turning against them – and if more and more companies shut and move away, who is going to make up for the loss in corporate tax?
Singapore itself is becoming more expensive to govern – we’re seeing more welfare than the past, there are a lot of projects that involve more expenses, people are asking for more subsidies and more infrastructure must be built.
If these businesses are not here to sustain all this growth, where will the Government turn to next for funding?
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