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CNA
23 minutes ago
- CNA
Singapore sees surge in business liquidations, hits 5-year high in first half of 2025
SINGAPORE: A growing number of businesses are going belly up in Singapore, with more companies being liquidated in the first half of 2025 than in the same period in the last five years. From January to June this year, 187 firms were forced by the courts to wind up. This is up from 146 in the same period last year and 95 the year before, according to the latest statistics from the Ministry of Law. Singapore also hit a 15-year high in the number of compulsory liquidations – 307 – last year. Licensed asset recovery firms told CNA they have seen a significant rise in businesses buckling under the weight of debt, unable to pay their lenders and clients. They said liquidation remains the last resort as it typically recovers only a fraction of the amount owed - sometimes as low as 10 per cent. The process involves a company's assets being seized and realised, with the resulting proceeds used to pay off its debts and liabilities. Cash flow problems are a key reason why companies go bust, said liquidators and analysts. This means they do not have enough money coming in to cover what they owe, even if they have assets on paper. Businesses also dealt with rising interest rates between 2022 and 2024, with rates beginning to ease only earlier this year. By then, however, many firms had already been hit hard by the withdrawal of COVID-19 government support at the end of 2023 as well as a weak economic year. FOOD AND BEVERAGE SECTOR BADLY HIT One debt collector firm, JMS Rogers, said an extreme example it handled was a food supplier that worked with major restaurants in Singapore. 'When he approached us, he gave us almost 120 debtors to go after, and the total size of collections was almost S$2.5 million (US$1.9 million) … His cash flow was quite badly affected,' said JMS Rogers' CEO Leroy Frank Ratnam. Debts can range widely from hundreds of dollars to hundreds of thousands, he added. Debt collectors and liquidators said the food and beverage industry has been the hardest hit, followed by the interior design and construction sectors. In some cases, employees band together to demand unpaid salaries and bonuses. Commercial landlords also approach Mr Ratnam's firm to collect rental fees. 'A lot of times, we see that the rental deficit has been about four to six months,' said Mr Ratnam, adding that he questions these landlords on why they took so long to take action. 'Their belief is that the company will turn around and they'll catch up and improve their cash flow, and once that happens, they will be able to pay,' he said. 'However, having been in this industry for a very long time, we know that that rarely happens, so we are there to collect.' This year, his firm has seen a 20 to 30 per cent increase in cases each month. Some clients constantly return to seek help in clawing back money owed to them by businesses, he added. Another licensed debt collector, Assured Debt Recovery, has similarly seen a 30 per cent jump in companies that owe debt and are closing compared with a year ago. Its business development manager Sean Lee attributed this partly to impact from the COVID-19 pandemic. 'Another is rental - because the rental is too high, the product value is too high, and their costs cannot be that high … so they find it's very hard for them to flip it around. Eventually, they choose to close,' he added. 'Some even tried borrowing money outside to fund their business, but at the end of the day they failed.' Debt amounts are growing as well, Mr Lee noted. Among the cases handled by Assured Debt Recovery, a majority of firms last year owed about S$20,000 to S$60,000, but many this year have accrued debts of more than S$100,000. LIQUIDATION NOT THE BEST SOLUTION If debts are not paid back, Mr Ratnam's firm helps clients take the debtor company to court to shut it down and get their money. But they often get only a small fraction of what they are owed. 'Liquidation has always been the last resort that we or our clients want to go for … They're really in that situation because of economic pressures,' said Mr Ratnam 'They're in that situation because someone else in their partnership made a wrong decision, and they still want to carry on running the business … legitimately. They want to honour their debt, but they are in a situation whereby their financial hardship disallows them from doing that,' he added. Mr Lee also said his firm's clients 'tend not to follow through' with liquidation. One of its clients was owed about S$50,000 but only got back S$1,900 after proceeding with legal action. When liquidation is the only way out, it involves clearing and selling assets to get cash – often in drastic ways. Firms and liquidators typically advertise items on sale online or in newspapers. CNA spoke to a warehouse sale operator that had to wind up a furniture company which owed S$2 million in unpaid rent. Sofas that used to retail for S$800, for instance, were on sale for just S$300 in efforts to clear stock. In the worst-case scenarios, assets that cannot be sold will be disposed of. CNA understands liquidators have contracts with junk dealers to salvage what they can. CHALLENGES REMAIN Experts said challenges such as rental costs, demand uncertainty and manpower will continue to plague businesses. But they added that there is strong momentum in new business formation, with more companies being registered this year than last year. 'It appears that despite all the challenges … there is still optimism within the business community in relation to the outlook of the Singapore market,' said Mr Tan Wei Cheong, a turnaround and restructuring partner at consultancy firm Deloitte Singapore. Still, the insolvency practitioner cautioned that the market will continue facing headwinds, including tariffs imposed by the United States that could have a direct impact on sectors like trade and export. Singapore's economic growth is also expected to weaken in the second half of the year due to global headwinds, which could spill over into domestic oriented sectors such as retail and F&B, said the Monetary Authority of Singapore on Wednesday (Jul 30). In April, the Ministry of Trade and Industry downgraded the country's gross domestic product growth forecast for 2025 to 0 per cent to 2 per cent. Mr Tan noted that this year's economic challenges appear similar to those faced two years ago. 'Companies that were struggling in 2023 - they may not have the opportunity to get out of that cycle as of this point in time yet,' Mr Tan added. 'This is particularly true for SMEs (small and medium-size enterprises) where financing options are fairly limited.'
CNA
23 minutes ago
- CNA
China manufacturing sinks again in July as US trade talks stall
China has struggled to maintain a strong economic recovery since the pandemic, as it fights a debt crisis in the crucial property sector, chronically low consumption and elevated youth unemployment. A spate of natural disasters has also hit the country this summer, with at least 48 people killed and tens of thousands evacuated this week as northern China endured some of its worst floods in years. "While the statistics bureau partly attributed the decline to weather-related disruptions to production, the breakdown suggests that demand has softened too," Zichun Huang, China economist at Capital Economics, said. "The new export orders index dropped back as high tariffs began to weigh again," Huang added. "More of the current weakness in demand appears to be domestic in nature," she said. China's bruising trade war with the United States - now on hold pending a deal - has hit the export-dependent economy. Beijing and Washington called a 90-day truce on the staggeringly high duties in May, and held two days of talks this week aimed at avoiding their reimposition on Aug 12.
CNA
an hour ago
- CNA
Indonesia's agricultural sector faces uncertainty with shrinking farming population
Indonesia has taken the lead in rice production in Southeast Asia, surpassing Thailand and Vietnam. It aims to produce 32 million tonnes of rice this year, a 3 per cent increase over last year. But its farming population is declining, raising concerns about the future of the agriculture sector and its ability to meet the nation's food needs. CNA's Chandni Vatvani reports.
