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Singapore: Rising Costs and Labour Shortage Main Concern for SMEs
Source: channelnewsasia.com
Source Date: Wednesday, December 05, 2012
Country: Singapore
Created: Dec 10, 2012

SINGAPORE: Many small and medium sized firms are increasingly facing rougher tides exacerbated by higher costs and labour shortages.

In 2011, streetwear brand 77th Street had 14 stores in Singapore.

Now there are now only seven.

Founder Elim Chew said the consolidation was partly due to higher rentals and shortage of staff.

As a proportion of revenue, Ms Chew said rental has risen from about 15 per cent to 35 per cent in the last 10 years.

She said the company decided to close shops that saw an increase in rental and transfer their staff to the company's other main shops.

77th Street currently hires 50 staff across its seven shops and plans employ another 10 workers to cope with extended shopping hours during the Christmas period.

Made In Candy, on the other hand, has shifted its headquarters from Singapore to Bangkok.

The confectionery company has benefited from the ample labour supply in Thailand, which is 30 per cent to 40 per cent cheaper than Singapore's.

Thailand now accounts for 60 per cent of the company's sales, with Singapore making up the rest.

"We started out with three Thai staff in Bangkok in November 2011. Right now I have 18, that's a one-year growth and I've increased by six-fold," said Ruan Lim, director and co-founder of Made In Candy. Mr Lim also expressed hopes to triple his staff by 2013.

Made In Candy also has a presence in the Philippines and hopes expand to Myanmar and China in 2013. Mr Lim still has one store in Singapore, which started ramping up candy production in August to cope with the festive demand.

Food and beverage businesses have also cited labour shortage as a big challenge.

Paradise Group, a restaurant-chain, introduced a new flexi-work scheme in its restaurants to attract more Singaporean workers to ease their manpower crunch.

"We have attracted a lot of retirees and housewives who don't mind working that four hours a day," said Chief Operating Officer of Paradise Group Edlan Chua.

Paradise Group runs 32 restaurants in Singapore and hires 1,000 workers, including part-timers.

Its manpower cost rose by up to 15 per cent this year, compared to the 5 per cent increase last year.

To cope with higher costs, Paradise Group has implemented ways to boost productivity. These include improving procurement processes and outsourcing some kitchen functions.
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