[SINGAPORE] Business sentiment in the region has declined sharply following the announcement of US tariffs, with only 48 per cent of firms positive about the business outlook, down from 77 per cent before.
The study, titled UOB Business Outlook Study 2025 (SMEs and Large Enterprises), was conducted in January; about 4,200 businesses in Asean and Greater China were polled, including 900 from Singapore. Following the announcement of US President Donald Trump’s “Liberation Day” tariffs on Apr 2, a dipstick study of 800 businesses was next conducted from Apr 9 to 12.
The survey found under half (48 per cent) of companies in the region “positive” or “very positive” about the business environment, down from just over three-quarters (77 per cent) in 2024 and 2023.
In Singapore alone, 53 per cent of businesses are “positive” or “very positive” about the business environment, down from 82 per cent before the tariff announcements. The study noted heightened concerns around increased business costs and inflation.
The study also found that companies are facing significant supply-chain disruptions – especially those in Indonesia and Hong Kong.
In supply-chain management, 41 per cent of businesses cited rising supply costs due to high inflation as the top challenge; 36 per cent attributed rising supply costs to high interest rates, and 31 per cent flagged difficulties in procuring supplies and raw materials.
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Adjusting business strategies
Nevertheless, the study revealed that businesses in the region are adjusting their strategies accordingly, to cope with tariff developments.
In response to supply-chain challenges, UOB noted that many companies are adopting a localisation strategy, and aiming to improve the stability and resilience of their supply networks by sourcing and operating closer to home.
Singapore companies are adopting better inventory-management practices, investing in stronger supplier relationships and digitalising supply-chain management.
Based on the study, about 67 per cent of respondents in Asean expect intra-Asean trade to grow, following the announcement of the tariffs; 47 per cent expect to quicken the pace of overseas expansion.
Other strategies to respond to the US tariffs included stepping up the pace of digital adoption to improve productivity and customer experience. This was named by 60 per cent of the respondents.
About 56 per cent plan to adopt sustainable practices more quickly, in order to improve the company’s reputation and become more attractive to investors.
UOB’s head of group commercial banking Eric Lian said: “Businesses are actively planning their next steps following the US tariff announcements. Nearshoring looks set to be a longer-term trend as companies rebalance their supply chains within Asean.”
Tackling workforce challenges
Businesses expect manpower challenges to escalate following the announcements of US tariffs, said UOB.
The study revealed that close to six in 10 respondents are affected by workforce or manpower-related issues.
Among the top three workforce challenges flagged were higher expectations from employees on pay and remote working (45 per cent), talent retention (42 per cent) and talent attraction (40 per cent).
To address these issues, 47 per cent of businesses are offering higher pay and benefits, and 44 per cent are providing reskilling and upskilling to staff.
About 39 per cent are embarking on digital transformation; 37 per cent are offering flexi-work arrangements; and 36 per cent are offering job-rotation opportunities across departments or markets.
