Singaporean Consumers in 2020: A Look into the Future
As Singaporeans celebrate the Republic’s Golden Jubilee this year, how are they preparing themselves for the future? What does the future hold against the backdrop of an ageing population and the passing of the country’s founding father Lee Kuan Yew?
Singaporean Consumers Today
A nation of avid travellers
More than 90% of the Singaporeans surveyed by research firm Data Spark, a part of the country’s largest telecommunications company Singtel, have gone overseas either for business or leisure in the past year. The January study, which surveyed 1,694 Singaporeans’ travel habits, found that Malaysia, Thailand and Hong Kong are the top three destinations, with Taiwan and South Korea as the rising destinations. In line with Singaporean culture, shopping and food are the most sought after activities. 66% of travellers get information from online travel websites, followed by recommendations from family and friends. According to Euromonitor International data, Singaporeans are expected to spend US$6.5 billion on packaged holidays this year, an increase of 28.3% on five years ago.
A greying population
The Singapore 2015 budget aims to strengthen social welfare for the elderly with measures such as increasing contributions and paying more interest on pension savings, locally known as CPF. However, many still prefer to keep working due to rising living costs. According to official figures, Singapore’s employment rate for people aged over 60 is among the highest of all OECD nations; in 2013, 40% of Singapore’s elderly population aged 65 to 69 was in the labour force, compared to less than half that figure a decade ago.
Population of People Aged 15-65+ in Singapore: 2015-2030
Source: Euromonitor International from national statistics/UN
Note: Data for 2016-2030 is forecast
A greener mindset
More Singaporeans are getting into the ‘green movement’ by growing their own food, making recycling a daily habit and striving for a more waste-free or toxic-free lifestyle. Eugene Tay, director of consulting firm Green Future Solutions, said that social media has made it easier for people to form communities online and to get people talking about specific issues. The National Environmental Authority said it is seeing more people and groups coming forward on green issues.
Emerging Singaporean Consumer Trends
Property investment ventures overseas
Despite lower property prices last year, 60% of those polled by online real estate portal PropertyGuru between October and December 2014 said they believe properties are still overpriced. Nonetheless, 43% said they were likely to purchase a property in the next six months, suggesting that buyers are holding out for a price they deem fair. “For mid-sized private homes of 800-1,100 square feet, the sweet spot range will typically be between S$900,000 and S$1.1 million (US$648,000 and US$720,000)”, Lewis Ng, Singapore managing director at PropertyGuru, told CNBC. Meanwhile, with the Singapore dollar strengthening against currencies in the region, more Singaporeans are looking to invest overseas, reported Asia One news website.
Crossing the border for affordable nursing care
In addition to crossing the border to Malaysia for grocery shopping, there is a growing number of Singaporeans who are utilising nursing home services there. Nursing home fees in Singapore range from S$1,200 to S$3,500 (US$864 to US$2,520) a month, but in the southern Malaysian city of Johor Baru, nursing home fees start from S$600 a month. Frankie Ker, director of a 210-bed facility called Spring Valley, said most of his Singaporean residents are parents of the “sandwiched middle class” – those who have parents and children to take care of.
Home is where the money is
Singaporeans are known to venture overseas for work due to the country’s high level of education and linguistic proficiency. However, many who did so told recruitment firm Hays they would return only if offered a better salary than what they are currently earning, despite missing the local culture and family ties. The Hays report, released in March, also found that most respondents viewed their time overseas as an asset for future job assignments, as 45% said cross-cultural communication skills were their number one advantage over local candidates. “Many returning Singaporeans are aware that their Westernised way of thinking and business experience, mixed with their local knowledge and cultural understanding, adds value to a company”, explains Christine Wright, managing director of Hays in Asia.
Singaporean Consumers 2020
Higher disposable income for most
As Singapore celebrates its 50 years of independence this year, deputy prime minister and finance minister Tharman Shanmugaratnam declared that the government will “keep the tax burden on the middle income low, so that they get to keep what they earn, as much as possible”. As for the nation’s next phase of development, Tharman outlined major steps in four areas: building a pool of highly skilled workers, helping businesses innovate and expand abroad, investments in economic and social infrastructure, and strengthening the social security network for retirement. Euromonitor International data shows that the average annual disposable income per capita in Singapore now is US$27,664. This figure is predicted to reach US$30,143 in 2020.
An older labour force
While local employment growth grew in 2014, the Ministry of Manpower (MOM) warned that the pace of local hiring is expected to “slow considerably over the rest of the decade”. Total employment growth in 2014 grew by 3.7%, or 122,100, according to MOM data. There were more women and older Singaporeans joining the labour market. However, the MOM noted that growth is not expected to be sustained: “The net entry of younger locals in working ages will fall. In 2020, for every one local exiting working-age, only 1.1 are expected to enter, down from 1.6 in 2014”.
Singaporeans continue to enjoy impressive air hub
On the heels of Singapore’s Changi Airport maintaining the top position for the third year at the Skytrax 2015 World Airport Awards, a fifth terminal, named T5, is being announced. It will have an initial capacity of about 50 million passengers per year, said Minister for Transport Lui Tuck Yew. Some critics, however, have a differing view. “Changi’s current success and successful completion of the expansion alone will not guarantee that the new capacity is utilized”, Graham Pickett, a global aviation and transport analyst at Deloitte, said via email to CNBC. Similarly, in a research note last August, Maybank-Kim Eng analyst Derrick Heng noted that Changi’s flight traffic was expanding faster than its passenger throughput. According to Euromonitor International data, Singaporeans’ expenditure on air travel is expected to rise to US$175 million from the US$171 million in 2014.
A new era begins
With the passing of Lee Kuan Yew, dubbed the founding father of Singapore, who once ruled as Prime Minister for three decades, experts believe a wave of change is coming. “The middle class will inevitably challenge the paternalistic, top-down, and centrally controlled governance models Lee adopted”, said Ernie Bower, a Southeast Asia expert at the Center for Strategic and International Studies. “Instead of having an undeniable father to say ‘yes’ or ‘no,’ Singaporeans will now make more consensus-based decisions”, he added. For now, Euromonitor International forecast data shows that Singapore’s real GDP growth will remain at a healthy 3.7% in 2020.
Read “Marketing to the ASEAN Consumer” for more insights.