Fewer firms go belly up last year in spite of pandemic

THE pandemic dealt a fatal blow to many businesses last year yet the overall number of firms that went belly up defied expectations to fall to its lowest level in five years.

The shutters came down on 43,335 business entities last year, notably fewer than the 47,504 in 2019, noted Accounting and Corporate Regulatory Authority (Acra) data.It was the lowest number since 2016, when 60,750 were recorded.

Figures from the Law Ministry’s Insolvency Office website also showed corporate insolvency numbers fell, with 206 applications filed for winding up between January and November last year, down from 368 in the same period in 2019.Analysts attributed the low numbers to government support and relief schemes which, they said, helped to cushion some of the impact of the pandemic and possibly stopped or delayed the tide of potential bankruptcies.

OCBC Bank chief economist Selena Ling said: “There was unprecedented policy support last year and some of the measures were extended into 2021, so that may have held the bankruptcy and liquidation number at bay.

“The real test will come when the support measures wind down. It would depend on the recovery and progress of vaccination efforts.”

Maybank Kim Eng senior economist Chua Hak Bin added: “Most businesses treated the pandemic as a temporary shock and took cost-cutting measures.”

Dr Chua thinks the economy is past its worst and slowly recovering.“The Government may have to continue extending fiscal support for hardest hit sectors due to border controls, particularly aviation and hospitality. Other sectors, including retail and food and beverage, are on stronger footing, ” added Dr Chua.

Some well-known casualties last year included the closing of home-grown department store Robinsons and retail chain Sportslink.

Robinsons’ operator was put under a creditors’ voluntary winding-up while Sportslink was forced to shut after the High Court granted an application by Adidas Singapore to wind up the company for a debt of over S$1mil (RM3mil).

There were 181 business entities put under creditors’ voluntary winding up last year, 52% more than in 2019.

Acra said the number of members voluntary winding up was down to 473 last year, from 607 in 2019 and 655 in 2018. — The Straits Times/ANN

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