Business closures in Singapore jump almost 13% but openings still outpace shutdowns

SINGAPORE – There were 38,146 business closures during the first seven months of 2026, reflecting a 12.8 per cent increase from the same period in 2025.

Meanwhile, 49,305 new businesses were registered by July 31, with the information and communications sector seeing the strongest pickup in openings.

Accounting and Corporate Regulatory Authority (ACRA) data showed that the construction industry saw the sharpest rise in shutdowns.

This was despite construction being one of the strongest-performing sectors of the economy, with the Building and Construction Authority expecting up to $53 billion in public and private contracts to be awarded in 2026.

A total of 2,127 construction businesses closed in the first seven months of 2026 – an increase of almost 47 per cent from the same period in 2025. Meanwhile, 2,277 firms opened in the sector.

Despite the strong pipeline of work, industry observers said smaller contractors have struggled with higher costs and competition from foreign firms.

An interior designer, who requested anonymity, told The Straits Times that she knows of a few construction firms that have gone bankrupt, and others that shuttered under cost pressures.

“Some owners have decided to retire,” said the designer, citing reasons including the higher cost of labour and raw materials as conflicts like the Iran war drive up energy prices.

Sim Chee Siong, partner at Rajah & Tann law firm, observed that construction firms, particularly smaller subcontractors and building contractors, have come under significant financial strain.

He said: “Many contractors that secured projects on fixed-price contracts in the past few years are now finding those margins eroded or entirely consumed.

“Where parties did not negotiate adequate cost-escalation mechanisms, the resulting cash flow pressure has, in some cases, proven terminal.”

Sim added that the cautious lending environment has accelerated the closures of construction firms that were already operating on thin margins.

Prices of materials such as steel reinforcement bars and ready-mixed concrete have risen by around 10 per cent in recent months, noted Ian Teo, president of the Micro Builders Association Singapore.

He said construction firms have also flagged the growing presence of foreign contractors with greater financial resources and established supply chains that are competing aggressively for projects in the Singapore market.

He added: “Smaller local contractors, which carry Singapore’s manpower, compliance, training and operating costs, may find it difficult to compete purely on price.”

Construction firms that ST spoke to said many of the new foreign entrants are from China.

Food and beverage was the next hardest-hit sector, with closures rising 25.1 per cent year on year to 2,101 in the first seven months of 2026.

At the same time, 2,594 new F&B businesses were registered.

The sector traditionally has a high churn rate because of low barriers to entry and changing consumer preferences. Businesses that recently announced closures include home-grown gelato shop Tom’s Palette, Swedish cafe Fika and cult-favourite patisserie Pantler.

The ACRA figures do not capture businesses that have ceased operations but have not been deregistered.

Among them is Chef’s Tavern, a European-Japanese fusion restaurant in Craig Road, which shuttered in December 2025.

Austrian-born chef-owner Stephan Zoisl, who has been in the F&B scene here for around two decades, told ST that he made the mistake of pivoting from fine dining to a mass-market concept and committing to “rent so high that a few difficult months can sink the restaurant”.

He added: “Even with strong bookings, once the average spending per diner dipped, losses accumulated frighteningly quickly.

“The maths was unforgiving: Rent is fixed and relentless, but diners are not. It only takes a couple of soft months for the two lines to cross.”

Although the restaurant was almost fully booked in the weeks leading up to Christmas and the New Year, it was issued an immediate eviction notice for the rent it owed.

“My team and I had to personally call our guests, many of them regulars, to cancel their festive bookings one by one. That was the hardest part,” said Zoisl.

In April, he started offering fine dining to guests in his home, their homes, or a larger ad hoc venue.

“My new venture is designed specifically to answer the two mistakes of the past. No oversized rent and a return to the craft I’m known for,” he said.

In most cases, a company that wishes to close its business applies to be removed from the ACRA registry. This is recorded as a cessation once the process is completed.

But businesses can also be struck off by ACRA. The number of business closures spiked in March 2026 because of intensified efforts by ACRA to strike off defunct companies, which are entities that fail to renew their registrations or are dormant. A similar increase was seen in February 2025.

An ACRA spokesperson said the regulator is responsible for around 20 per cent of struck-off entities.

“The striking-off of defunct companies ensures our register remains accurate and up to date, and mitigates the risk of such entities being misused for illicit purposes,” the spokesperson said.

In the area of new businesses, around 7,300 information and communications firms opened in the Republic in the first seven months of 2026. This was a 26.7 per cent increase from the same period in 2025.

The administration and support services, and retail trade sectors also saw a significant increase in openings.

Song Seng Wun, economic adviser at the SDAX investment platform, said the proliferation of artificial intelligence has given service providers a boost.

“There is really no shortage of providers selling all kinds of services,” he said. “It is a question of who can make money, and we will have to look again at the churn rate of particular services.”

The expansion of AI is also driving investment into data centres and other digital infrastructure, which could support construction demand for related projects.

Teo said the construction sector will also benefit from major developments such as Changi Airport Terminal 5 and the Marina Bay Sands expansion.

“For micro builders, there are also opportunities in landed housing, additions and alterations, upgrading works, maintenance, green retrofitting and specialised construction services,” he added.

“However, strong headline demand does not automatically benefit every segment equally. Smaller firms must be able to access appropriately sized projects and receive sufficient support to build their capabilities.”