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By The Editors
27 April 2020
Singapore’s Business Closures Surge as Bankruptcy Applications Soared to Record High in Q1 2020
As many as 5,128 companies have ceased or cancelled registration while another 238 went into liquidation in Q1 2020 alone. Applications for Bankruptcy recorded 1,278 in Q1 2020, up from 757 in Q1 2019 according to the Ministry of Law’s Insolvency Office. The almost 70 per cent hike is expected to climb as the detriments of COVID19 and Singapore’s ‘Circuit Breaker’ continue to twist the knife in the domestic economy. The extension on the length of the ‘Circuit Breaker’ and stricter definition of Essential Services announced on 21st April 2020 is driving more business into limbo.
The economic impact of COVID19 is laying waste to increasingly more industries, as introduction of tighter measures to curb the spread of the virus are now disrupting previously exempted businesses. The COVID19 outbreak was the coup de grace to many struggling organizations as Singapore’s already turbulent economy in 2019 has left them particularly exposed to existing downside risks.
Local companies had been observed tightening their purse strings – payment performance for Singapore firms plunged to a new three-year low for the first quarter of 2020 in a recent study done by Dun & Bradstreet Singapore. Prompt payments plummeted to 43.20 per cent in Q1 2020, down from 46.23 per cent in the previous quarter, the lowest since it hit 42.18 per cent in Q3 2016. The decadent performance came on the back of cash flow difficulties arising from the onset of COVID19 as businesses struggle to stay afloat. The downtrend is expected to continue as firms are exposed to a higher risk of payment delinquency in the months to come when the fallout of the COVID19 pandemic ripples to increasingly more partners and suppliers.
The disruption to daily operations and productivity are further straining local businesses as the transitions to facilitate a digital workplace demands additional investment. The paradigm shift for traditional infrastructures require an even more drastic polish to conform within the legal boundaries of government mandated restrictions. For some, these erratic time serves as an unlikely impetus for businesses to innovate and reform rigid organizational structure.
The domestic economy is expected to maintain its decline as the Ministry of Trade and Industry (MTI) 2020 revised its growth forecast to a range of -4.0 to -1.0 per cent down from an earlier estimate of -0.5 per cent to 1.5 per cent. The uncertainty surrounding the full extent of the ramifications from the COVID19 pandemic continue to keep businesses on the edge of their seat.
D&B Singapore and Singapore Commercial Credit Bureau help safeguard your business, during and beyond the crisis:
• Tradeline Monitoring alerts you to possible red flags when your accounts depict alarming payment behavior.
• Credit Monitoring prompts you in the event of adverse news, aberrant financial behavior or designated triggers on your monitored accounts.
• Resilience Index identify and predict at risk business partners and your overall portfolio crisis resilience.