SPEECH FOR MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE CITIGROUP-IE SINGAPOREASEAN SME FORUM 2006, RITZ-CARLTON MILLENIAONTUESDAY, 18 APRIL 2006 AT 9.25 AM

Distinguished Guests, Ladies and Gentlemen,

Good morning.

Introduction

I am very happy to see such a good turnout for the ASEAN SME Forum 2006.This shows the growing importance of Small and Medium Enterprises (SMEs) in ASEAN.

Importance Of Asean Cooperation

The spectacular growth of Asian giants like China and India presents challenges and greater competition for all of us in some sectors. But it also presents a myriad of growth opportunities that ASEAN can leverage upon. The growing integration of the Indian and Chinese economies with the rest of Asia would give a boost to intra Asia trade. With the re-emergence of the pan Asian trading network, ASEAN has an important role to play.

In an increasingly competitive and volatile global landscape, sustained growth in the region is possible only if we continue to build on our strengths and synergies our efforts in engaging the major economies around the world. To this end, ASEAN provides cooperative platforms to catalyze business collaborations and trade among countries. Aside from accelerating the liberalization of trade and services through the ASEAN Free Trade Agreement or AFTA, ASEAN has also identified 11 priority sectors, in which the region can further integrate such as electronics, auto motives, textiles and apparels, and tourism. Our companies should leverage on such frameworks to enhance their competitiveness and grow their businesses.

Growing Importance Of SMEs In Asean

SMEs are the backbone of the economy. According to the “ASEAN Development Blueprint for SMEs 2004-2014”, SMEs in ASEAN account for more than 90% of all private sector firms, and employ 75 – 90% of the domestic workforce. The development of a thriving SME sector in ASEAN is therefore critical to the growth and success of the region.

SMEs have a critical role to play in developing world-class industries. A strong cluster of SMEs within an industry will draw top-notch MNCs here to exploit their products and services. More companies will emerge to support the industry, and the entire sector will grow. SMEs in turn will benefit, as they grow large enough to become international players in their own right. This has been our experience with many sectors in Singapore, including the electronics cluster.

Increasingly, some of the most innovative products in the market are also developed by ASEAN SMEs. Many have grown to become successful transnational corporations, including OSIM from Singapore and Jollibee from the Philippines.

Strengthening The SMEs In Asean

There are three key ways to strengthen our ASEAN SMEs: (i) equip them with capabilities to expand overseas; (ii) match them with international buyers and suppliers; and (iii) facilitate collaboration opportunities for them.

Equip SMEs to expand overseas

Let me first touch on how the SMEs can be equipped with strong business capabilities to expand overseas. Branding in particular is an important capability that can distinguish a company and its products in an overseas market. Since the launch of Brand Pact by SPRING and IE Singapore in April 2005, to help companies build strong brands, over 500 companies have benefited form workshops and seminars conducted by the two agencies last year. These companies would be better able to assess the strengths and weaknesses of their own brands, and work towards building up their branding capabilities.

To tap on external growth opportunities, companies must have access to overseas markets. To this end, ASEAN has consistently promoted free trade between member countries and is actively building up a network of FTAs as a regional group. This has paved the way for increased access to overseas markets beyond the region.

Match local businesses with foreign buyers/seller

Next, in terms of how the local businesses can be matched with foreign buyers and sellers, we can leverage on the Internet, which has become a strong and pervasive medium for securing new businesses and deal flows. Recognising the importance of e-commerce as a critical factor in economic development, ASEAN has identified e-commerce as one of the cornerstones of the e-ASEAN framework. Online portals provide a suitable medium to bring businesses together and to foster an online business community. To this end, IE Singapore is developing a portal that will match local businesses with overseas companies. Singapore businesses can tap on this portal to grow their business networks in the region and beyond.

Facilitate collaboration opportunities for ASEAN SMEs

Last but not least, we can facilitate collaboration opportunities for the ASEAN SMEs. In fact, the ASEAN has already taken several steps in this regard. The ASEAN Incubator Network, for instance, was established to help ASEAN SMEs and entrepreneurs to network with venture capitalists and techno-preneurs. The ASEAN Pioneer Project Scheme was also launched as a vehicle to expedite approvals in regulatory procedures such as customs clearances, technical regulations and product standards. SMEs in ASEAN should embark on collaborative activities and business partnerships together and reap the benefits from such schemes.

Naturally, many companies that are venturing beyond its shores for the first time will look at its immediate markets. Today’s forum is an outstanding example of how we can bring together SMEs in the region to network and carry out business matching activities. The forum also includes specific industry tracks in sectors such as Transport & Logistics. This provides an open channel on latest industry development and sharing of best business practices in ASEAN.

We can look forward to more ASEAN related activities to enhance stronger business interaction among businesses from the region. I understand that the Small & Medium Industries Development Corporation or SMIDEC of Malaysia will be organizing an ASEAN + 3 SME Convention this year.

Conclusion

I strongly believe that SMEs have immense potential and promoting them would yield wide-ranging benefits for ASEAN countries, both individually and as a regional group. There is much scope for business cooperation and networking that can be explored and leveraged upon. I trust that this event will mark another step towards a greater influx of SME activities and collaborations within ASEAN.

I would like to thank Citigroup for helping to co-organize this event. I wish all participants a fruitful time at this forum.