Becoming an entrepreneur may be one of the hardest jobs there is. Especially at the start, you’re in charge of everything – from sales to marketing to accounting and everything else in between.
With the rise of side-hustles, more individuals are perhaps getting a taste of what it may feel to run their own business – if they ever choose to do it full-time. This, though, may not have gone to plan for many.
Here are some reasons we think the state of entrepreneurship among Singaporeans may not be flourishing.
Read Also: What Does The Average Business In Singapore Look Like?
#1 Fewer Workers Running Their Own Businesses
In 2020, there was a spike in “Own Account” workers – likely due the extremely challenging jobs market during the pandemic. Since then, however, the proportion of Own Account workers have slipped from a high of 9.7% in 2020 to about 8.7% by 2023.
For this bunch, running their account accounts or businesses may not have worked out. This may have been due to stronger jobs market post-COVID-19 – offering more stability amid rising economic uncertainties.
One argument is that the rise of “Own Account” workers may have been mainly in platform work rather than “real businesses”. But, again the statistics depict a decline in the proportion of workers who carry the tag of “Employers”.
In 2023, just 3.1% of the workforce was considered an Employer. This was the lowest it has been in the past 10 years (and likely even longer). In fact, the proportion of Employers in the workforce have more than halved from 6.3% in 2013 to the 3.1% today.
#2 More Businesses Are Closing Down
At the same time, 2024 is shaping up to be a year where many more businesses are closing down compared to recent years.
Disregarding the years between 2015 and 2017, where there was a spike in business closures, we can see that post-2020, there is a gradual rise in the cessation of business entities.
In 2023, 51,761 business entities were ceased according to the Department of Statistics Singapore.
The Accounting and Corporate Regulatory Authority (ACRA), which likely collect a different data set, shows that the number of businesses closing down in 2024 is likely higher than in 2023.
Read Also: Guide To Closing Down A Company In Singapore: Striking Off Company & Winding Up
#3 Foreign Enterprises Maybe Becoming More Competitive?
Just looking at the statistics, we cannot be sure about whether foreign enterprises are really becoming more competitive, but what we can see is that the number of foreign enterprises is growing at a faster pace compared to local enterprises.
Between 2010 to 2023, local enterprises did grow – but at a rate of about 3.1% each year. In the same time frame, the number of foreign enterprises grew nearly 5.1% year-on-year. Today, there are 245,600 local enterprises and 65,500 foreign enterprises.
This becomes more apparent when we look at the “Share Of Nominal Value Added Of Enterprises” – which can refer to the value of goods and services produced.
As of 2023, local enterprises had a 29% share, while foreign enterprises had a 71% share.
Compared to 2020, local enterprises had a 35%, while foreign enterprises had a 65% share. Looking even further back, in 2015, local enterprises had a 42% share and foreign enterprises had a 58% share.
We can also see in the chart above, that the distribution was relatively stable until 2016 – when foreign enterprises started seeing an increasing share of Nominal Value Added.
#4 More Companies In Compulsory Liquidation
After a brief spike of compulsory company liquidations in 2020 – again likely due to COVID-19 pandemic – the number of companies wound up (in grey line) have come down. However, it has been at a higher rate between 2021 to 2023, compared to the years before COVID-19.
Nevertheless, when we look at the longer term, the number of companies winding up has been on a rising trend – perhaps due to the increasing number of enterprises in Singapore.
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