SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE & INDUSTRY, AT THE MINISTERIAL VISIT TO THE JCS GROUP ON TUESDAY, 29 AUGUST 2006, 4.10 PM

Mr Jason Yeo, CEO of the JCS Group

Ladies and Gentlemen,

Introduction

I am delighted to join all of you here this afternoon.I would like to thank Mr Jason Yeo and the staff of the JCS Group, for hosting us.

Technology Innovation for SMEs

Singapore’s economic success since independence has been built on quality and efficiency.We have been quick to tap on technology, and thus have been able to build up internationally competitive industries.Going forward, as the global economy becomes more integrated and increasingly competitive, we need to leverage on technology and innovation even more intensively to maintain our competitive edge.The national Science and Technology Plan 2010 which was announced in February this year will help us to build Singapore’s capabilities for research, innovation and enterprise, and develop peaks of excellence in niche areas.

Small and Medium-sized Enterprises or SMEs are a key economic segment that we are engaging as part of this plan.We want to develop a vibrant pool of entrepreneurial SMEs able to tap technology to create high value.Our SMEs need to harness the potential of technology to innovate – to make new products, improve existing processes, create new ways of serving their customers or even develop new business models.

Unfortunately, many of our SMEs are still technology-followers or technology-indifferent today.Only a minority are committed and able to capitalise on technology.The results of DP Information’s SME Development Survey 2006 announced last week showed that many SMEs recognise the benefits of technology.More than half the respondents said that the use of technology has helped to improve productivity, and almost 40% achieved greater cost-efficiency due to new technology.However, only 27% plan to invest in new technology in the next two years.

SMEs’ reluctance to invest in technology innovation could be due to various reasons, including lack of awareness of available technologies and potential applications.Even if they wanted to embark on technology adoption, many SMEs have told us that they lack the in-house skilled personnel and equipment.Our challenge is to help them bridge this gap.

Technology Innovation Programme (TIP)

I am therefore pleased to announce the launch of the $150 million Technology Innovation Programme, the first holistic technology innovation initiative developed with SMEs in mind.Known as TIP in short, the programme will be driven by SPRING Singapore, the government agency championing SMEs.TIP is designed to support SMEs in applying technology for process and product innovation.It will be implemented over the next five years, and is built around three strategies.Let me elaborate.

First, we will develop the supporting infrastructure for SMEs to adopt technology.SPRING is working with the Ministry of Education and the Polytechnics to set up Centres of Innovation for key industries.These centres will provide technology consultancy and advice to SMEs, and develop practical, downstream technology platforms to help them.Each centre will leverage on existing resident expertise in the various polytechnics, and complement the higher-level research being carried out in A*STAR’s research institutes.

For a start, three Centres of Innovation will be launched in the coming months:

1. The Food Innovation Resource Centre in Singapore Polytechnic will support SME food manufacturers;
2. The Marine Centre of Excellence in Ngee Ann Polytechnic will cater to SMEs in the Marine and Offshore Engineering sectors; and
3. The Environment and Water Technology Centre, also at Ngee Ann Polytechnic, will target SMEs in the fast-developing Environment Technology sector.

SPRING is also working with other parties to set up technology centres serving other key industries, including Precision Engineering.

Second, we want to build up SMEs’ in-house technology innovation capabilities.This will be achieved through the secondment of experts to SMEs.A*STAR’s existing GET-UP programme supports secondment of researchers from its institutes to companies.TIP will build on this, and increase the pool of experts to include those in the polytechnics, universities and other local and overseas knowledge institutions.The long-term aim is to help SMEs develop their own innovation capabilities, and expand their capacity for innovation.

Third, we will catalyse technology innovation in SMEs.SPRING will work on raising SMEs’ awareness of the importance and benefits of technology innovation and the different applications available in the market.This will be executed through various channels, such as partnering universities and polytechnics to organise focused technology conferences and seminars.In addition, SPRING will also help defray part of SMEs’ costs of undertaking the more challenging technology innovation projects.

JCS as an example of a Technology Innovation SME

Through TIP, we hope to push out technology as a strategic tool to help our SMEs move up the value chain.JCS is a good example of a local SME which has adopted technology to innovate and grow.While JCS has business units specializing in different jobs, from manufacturing automated cleaning lines for the hard disk drive and optics industries, to making precision components for the aerospace industry, the Group has consistently leveraged on technology innovation to grow.

I am told that one of its business units recently secured a key project to manufacture 3D Aerospace vanes for CFM jet engines, which are widely used in commercial and military planes.A major success factor was a new machining process that the company developed, which allowed them to halve the manufacturing time from eight to four weeks.They also found a way to improve the existing quality management process, making it 10 times quicker than the conventional system.The resultant efficiency has even spurred their customer to adopt this new system.This drive to innovate and improve has served JCS well, and I am sure it will continue to play a significant role in the company’s future growth.

Conclusion

We want to support the creation of more SME success stories like JCS.In the US, four out of 10 highly innovative firms are small firms.With the right support, SMEs can be the source of much creativity and innovation.Our goal is to have a strong cluster of innovative SMEs contributing to and anchoring the higher value-added industries in Singapore.Some, we hope, will become market leaders in their own right.

TIP reflects the Government’s commitment in strengthening the technology innovation capabilities of our SMEs.I urge all SMEs to explore and capitalise on technology as an enabler to boost business growth.

Thank you.