Mr Lee Yi Shyan at the BlueSky Enterprise Symposium

OPENING SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY, AT THE BLUESKY ENTERPRISE SYMPOSIUM ON THURSDAY 27 JULY 2006, 9.00AM AT SUNTEC SINGAPORE INTERNATIONAL CONVENTION & EXHIBITION CENTRE

Ms Elim Chew, Chairperson of ACE Blue Sky Festival Organizing Committee

Distinguished Guests

Ladies and Gentlemen

Introduction

It is my pleasure to join you here this morning for the Blue Sky Enterprise Symposium 2006.

The Blue Sky Festival is an annual event organized by the Action Community for Entrepreneurship, or ACE for short, to celebrate and encourage the spirit of entrepreneurship.

Ace Scorecard

Launched in May 2003, ACE is a public-private partnership movement to champion the promotion of entrepreneurship in Singapore and the region. While as newly appointed Minister-in-Charge of Entrepreneurship, I hold the Chairmanship of ACE, it is really the passion and commitment of all the ACE members from the private sector, the co-operation of our partners, sponsors and supports that gives life to ACE and drives the movement forward.

Over the last three years, through its four Action Crucibles of Culture, Rules, Financing and Internationalization, ACE has led several key initiatives in promoting Entrepreneurship and creating a more pro-enterprise environment.

To highlight just a few of these initiatives. The Culture Action Crucible looks into promoting a culture of Entrepreneurship with programmes such as the Entrepreneurship Talent Development Fund. Aimed at supporting new young Entrepreneurs, this scheme for Institutes of Higher Education has so far provided a total of $1 million worth of financing for 25 new student ventures. Overall, we have seen a significant increase in entrepreneurial undertakings in Singapore - net firm formation more than doubled from an average of 8,100 over the period of 1990 to 2001 to around 18,000 between 2002 and 2004.

Under the Rules Action Crucible, the annual Pro-Enterprise Ranking Survey of Government agencies, as several of you may have heard about last night, has been central in helping government agencies improve customer responsiveness and focus on needs of their business customers.

The Internationalization Action Crucible has been actively providing mentoring to selected companies looking to internationalize. It is also currently working on a book of best practices for companies looking to expand overseas.

In its efforts to solve the perennial problem of financing faced by businesses, the Finance Action Crucible has led the development of several new financing schemes for businesses. One of its initial projects, the Deal Flow Connection, is an online platform facilitating the matching of good deals with smart money. As of March this year, some 900 deals have been facilitated.

Together, these initiatives have each formed part of a greater framework to create a more pro-enterprise and pro-business environment in Singapore. In the recent Doing Business 2006 report by the World Bank, examining the ease of doing business in 155 countries, Singapore was ranked second, one place ahead of the US. While Singapore scored well across the board, the report did particularly note that Singapore offered very strong investor protection, which I am sure is great news for all you investors here today!

We are of course greatly encouraged by such reports but it is still not time to relax and rest on our laurels. Going forward, we will further capitalize on our strengths to offer businesses greater opportunities to grow and succeed.

Internationalising For Growth

The year’s festival also marks a significant milestone for the ACE movement. This is the first time that we are privileged to have with us so many distinguished delegates and speakers not only from Singapore but also from the wider Asian region, exploring issues critical for growing and internationalizing your business in “Singapore and Beyond”, which is our theme this year.

In an increasingly competitive and volatile global landscape, businesses must seek to explore beyond their shores and engage with the major economies around the world to sustain long term growth.

The dynamic growth of the Asian giants of China and India and their emergence as major players not just on the regional but also the global stages have created new challenges for businesses but also opportunities. With the growing integration of the Indian and Chinese economies with the rest of Asia, Asia is moving rapidly to becoming the biggest growth market in the world. To take advantage of this, companies must create strong regional network links and look to expand overseas.

Our distinguished speakers joining us this year - from Top Glove (Malaysia), Garuda food Group (Indonesia), Jollibee (Philippines), Out blaze (Hong Kong) and eSys (Singapore) – are amongst those who have expanded their businesses overseas and are today successful global companies.

In Singapore we are very keen to help even more companies grow their external wings and succeed overseas. International Enterprise (IE) Singapore provides a wide range of services to grow enterprise capabilities and help businesses tap on global opportunities.

Access to financing has often been cited as an obstacle for company growth and I am pleased to share with you two new developments, firstly the progress by Singapore’s first Over-The-Counter or OTC trading platform, and the new Internationalization Finance Scheme, or the IF Scheme.

Over-The-Counter (OTC) Capital

One of the objectives of the Finance Action Crucible is to introduce as many avenues as possible for entrepreneurs to raise capital, be it through bank loans or tapping public markets. The OTC trading platform is one such avenue.

Over the past 2 years, the ACE Finance Action Crucible has been working closely with several private organizations and the relevant authorities to explore the establishment of an Over-The-Counter (OTC) platform. The popularity of this concept in countries, such as UK, Taiwan and Australia, suggests that they are useful in helping SMEs fill a funding gap between IPO listing and private equity. It is in this light that Phillip Securities has set up the first OTC trading platform in Singapore, called OTC Capital.

The Securities & Futures Act (SFA) was amended last year to facilitate the establishment of such a trading platform. By relying on exemptions in the Securities & Futures Act, the OTC seeks to help SMEs raise capital by offering new shares to interested investors without the need to publish a costly prospectus. This new financing platform allows shares of unlisted companies to be traded, thus providing a chance for companies with high growth potential but not ready for public listing to access private equity financing.

The whole idea is to allow SMEs to raise funds through the equity market in a more cost-effective manner. I am happy to note that costs of raising funds through the OTC platform is less than one-third of that of an IPO on the stock exchange.

I would like to congratulate Phillip Securities for hitting the initial milestone, in getting their first company on board the new OTC trading platform.

This first company to tap on OTC is Global Roam Group Pte Ltd, a provider of integrated internet technologies and communications roaming services. Formed from the merger of two companies, namely Fatte Telecoms and Global Roam, Global roam will begin trading on 7th August 2006. I wish Global Roam the best in their continuing growth.

I understand Phillip Securities is looking to further admit half a dozen more companies into the OTC by next year.

Internationalisation Finance Scheme

Next, I would like to move on to the IF Scheme. This new scheme will avail S$500 million worth of loans targeted to reach some 250 Singapore-based companies planning to expand overseas.

Addressing directly the feedback received from companies, banks and other financial institutions, this scheme will provide not only asset financing loans but also structured working capital loans. Asset-light companies may be happy to know that this scheme has no specific requirements for collateral. Featuring variable rates, the new Scheme will allow more companies to access loans for different purposes, while giving financial institutions the flexibility to attractively package the facilities based on companies’ risk profiles.

Other complementary financing schemes offered by IE Singapore are:

a. The Enterprise Fund which was launched early this year, with a fund size of S$39 million;

b. The Trade Credit Insurance Programme with 124 subscribed companies and $751 million of receivables insured; and
c. The Loan Insurance Scheme II with 41 loan applications processed for S$145 million worth of short-term working capital loans.

I am confident that through these schemes, more enterprises will be able to access the necessary finances to grow bigger, develop better and reach further.

Conclusion

I strongly believe that there is immense potential for companies within and without Singapore to join forces and tap business opportunities available in the region. You have in your midst today a good mix of entrepreneurs from all over the world.

I wish you not only an insightful symposium but the development of many lasting relationships that can propel your businesses beyond domestic shores.

Thank you.