SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE AND INDUSTRY AND MINISTER IN-CHARGE OF ENTREPRENEURSHIP AT THE EMERGING ENTERPRISE 2008 AWARD LUNCHEON AT 12.40PM ON WEDNESDAY, 21 MAY 2008 AT THE OLIVER ROOM, RAFFLES CITY CONVENTION CENTRE
Ladies and Gentlemen
Good afternoon
Importance of SMEs to Singapore
I am pleased to be here today at the inaugural award ceremony for Emerging Enterprise 2008.
SMEs play a crucial role in Singapore’s economy. In 2007, 161,000 SMEs employed 62% of Singapore’s workforce, created 145,000 new jobs (which is more than 50% of the 237,000 new jobs created) and accounted for almost half (48%) of total value added. Indeed, since 2005, the SME sector has been growing faster than the national economy.
Today’s inaugural award to recognize the most promising Emerging Enterprises in Singapore is significant in three ways.
Firstly, it is a very commendable example of public-private partnership. While our economic agencies have been given the resources to develop support programs for enterprise development, our approach has been one of allowing and facilitating market forces to function efficiently, and leveraging private sector capabilities where possible to provide solutions to SMEs. Our agencies therefore work very closely with our financial institutions, consulting firms, training providers and the like to design and develop smart solutions for the SME sector. If you visit SPRING’s and IE Singapore’s websites for instance, you will find that they offer many services in partnership with service- and solution-providers.
The spirit of collaboration between the public and the private sector is a unique strength to Singapore. Once, a visiting delegation from the United States told me that they were impressed and at the same time curious about how we had established so much trust between our Government and the business sector in working together. They added that their businesses and government were more suspicious of each other.
Secondly, the award offers a comprehensive capability building program for the winning firms. It includes interest-free loans, financial consultancy, human resource development, IT solutions and operational & technical assistance programs. I think the winning companies will soon realize that beyond the honor and recognition of the award, they benefit even more from the practical and comprehensive help the package confers to them. Building a business from scratch is never easy. That there is a suite of readily-available tools makes it much easier for any enterprise that is tight on resources and short of time.
Thirdly, this award puts a spotlight on firms with less than $10mil sales revenue. Based on SPRING’s 2007 estimates, more than three-quarters of the SME population belong to this category. This is therefore a very sizeable mine from which many gems can be discovered and polished. This award is therefore a good attempt to identify fast growing and promising small firms whose growth paths can be made very different with special grooming and coaching.
For Singapore’s economy to stay robust, we need to ensure that our business environment remains a fertile ground for starting new businesses and encouraging their growth. New firms are a source of new jobs, economic resilience and innovation. In the past five years, the Government has supported ACE (Action Community for Entrepreneurship) to take many important steps to encourage entrepreneurship in Singapore. ACE is one of the best examples of the unique public-private partnership model in enterprise development which I mentioned earlier. Private sector entrepreneurs have worked hand-in-hand with government agencies over the past five years to foster Singapore into a more entrepreneurial nation. Through changing culture and mindset, facilitating regulatory changes and networking, they have built a more pro-enterprise environment. As a result, there are now more and better start-ups.
Consider the rate of business formation in recent years. The number of businesses formed annually increased from 36,000 in 2002 to more than 45,000 in 2006.[1] In the first half of 2007, 25,160 businesses were formed, an 11% increase over the same period in 2006.
On the financial front, the past five years also saw many financial institutions providing SME Banking products and solutions. The importance they attach to the SME sector is reflected in their new corporate structures to spearhead the SME market. Meanwhile, our Venture Capital / Private Equity Industry has grown from $15.8bil in 2003 to more than $19bil in 2007. Not satisfied with what is available in the market, Sirius Venture Consulting announced a $30mil SME Growth Fund to finance growth and expansion stage companies. Whether debt or equity financing, our SMEs now do not consider financing their top three concerns in bringing business forward.
To celebrate entrepreneurship in Singapore, and mark the achievements of five years of the entrepreneurship movement, ACE will be organizing a Blue Sky Festival on 17 July. The theme for the festival, ‘Charting New Growth Paths’, will help us focus on the many challenges emerging enterprises face in seeking profitable growth. Starting from concept, to making the first product, to the first $1mil sales, $10mil, $100mil and ultimately becoming a billion dollar company is the dream of many ambitious entrepreneurs. ACE supports their dreams. The Emerging Enterprise award would also encourage those in the early growth stage.
Conclusion
Finally, I wish to congratulate all the finalists of the inaugural Emerging Enterprise 2008 Award. I wish you all the best as you grow your firms and take them global.
Thank you.
[1]DP-ACE STEPs Survey 2008