More business entities closed down recently
Retail sector one of hardest hit by economic slowdown and restructuring, says MTI
The percentage of businesses and companies shutting down has increased in recent years amid a challenging economic environment, according to data compiled by the Ministry of Trade and Industry (MTI).
The increase in closures was recorded across sectors, but retail was one of the hardest hit.
The data showed a slight pickup in the cessation rate of companies in recent years, from 7.3 per cent in 2014 to 7.6 per cent in 2015 and further to 7.8 per cent last year.
"This could be due to the economic slowdown in 2015 and 2016 as well as ongoing economic restructuring," said the study, which was released on Friday alongside the latest Economic Survey of Singapore.
Still, the cessation rate last year came in below levels recorded in 2011 and 2012, "suggesting that the overall corporate health of companies has not deteriorated significantly".
When it comes to businesses, however, cessation rates spiked over the last two years to reach 22 per cent last year.
"This suggests that businesses may be more vulnerable to economic slowdowns than companies, as they likely have weaker balance sheets and may lack access to financing to tide over a period of slower economic growth," the MTI study noted.
This could be the case for younger businesses, as a significant proportion of the businesses that ceased operations in 2015 and last year was less than two years old.
The data also showed that the increase in company closures in 2015 and last year was broad-based, with all sectors recording a larger number of exits in these two years.
In particular, the business services and wholesale trade sectors contributed the most to the overall increase in company cessation in that period.
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