SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY AT THE LOCALENTERPRISE AND ASSOCIATION DEVELOPMENT (LEAD) FORUM “PREPARING FOR THE UPTURN”, ON FRIDAY 2 OCTOBER 2009, 9.00AM AT GRAND COPTHORNE WATERFRONT HOTEL

Good Morning

Ladies and Gentlemen

I am pleased to join you this morning for the LEAD Forum.

Helping businesses through the downturn

This last year has been a challenging one for the global economy. The world is in the worst recession since the Great Depression and the IMF expects the world economy to contract by 1.4% in 2009, with every developed economy in deep recession.A modest growth may be expected only in 2010.

Governments around the world have rolled out sizeable fiscal stimulus packages to combat the recession. Similarly in Singapore, to help us cope with the economic downturn, the government launched a $20.5 billion Resilience Package earlier this year, aimed at supporting the economy and jobs at a time of unprecedented global crisis.

The Special Risk-sharing Initiative (SRI), comprising enhancements to existing financing schemes to ease credit, was introduced as part of this package and it has helped to ensure that financial institutions continue to lend to cash-strapped but otherwise viable companies. More than 10,000 loans amounting to S$4.7 billion have been approved under the SRI with about 92% going out to SMEs.

Though our GDP has rebounded in the last quarter at 20.7% quarter on quarter, many uncertainties still lie ahead. Global growth will remain sluggish in the short term.

All of us, the government, the associations, the unions, the companies and their workers must continue to rally together to ride through this period and prepare ourselves to tap on the opportunities ahead.

Helping SMEs emerge stronger

To help SMEs emerge stronger from the downturn, the S$200 million enhanced capability package Business Upgrading Initiatives for Long Term Development, or BUILD, was rolled out on 1 February 2009 for a period of 2 years. The response to BUILD has been encouraging. To date, we have supported some 850 companies on their upgrading projects in the critical areas of manpower, technology and market development.

As part of BUILD, enhancements were made to the Local Enterprise and Association Development (LEAD) Programme. Grant support for new LEAD projects was increased from 70% to 80% until January 2010 to help SMEs tide over the difficult period.

Over the past four years, the LEAD Programme has achieved good progress in supporting our enterprise growth and industry competitiveness. There are currently 18 associations embarking on some $85 million worth of projects to boost their industries’ performance. When completed, some 3,000 enterprises will be able to leverage on the projects to upgrade themselves. These projects are expected to generate about $1.5 billion of value-add, $3.5 billion of revenue and create more than 9,000 new jobs.

I would like to share with you how a few of the industry associations have sought to improve their member companies’ market access, strengthen management capabilities and grow industry capabilities through the LEAD programme. 

As part of their growth and diversification strategy, members of the Association of Process Industry (ASPRI) are tapping into overseas markets to grow their businesses. They have taken the first step by embarking on overseas missions with the help of LEAD, to subsidise their business missions to Japan and the Middle East. In the Middle East trip during May this year, ASPRI brought 11 participants from 8 member companies and explored potential business with major oil, gas and petrochemical companies. About S$4 million worth of overseas sales was generated just through these two mission trips. 

LEAD provides subsidies in various areas related to training, ranging from the trainers’ fees, courseware developmental costs, and infrastructure costs to support training facilities.Through LEAD, the Singapore National Shippers’ Council (SNSC) and the Singapore Logistics Association (SLA) have training courses that focus on instilling industry-specific know-how in employees of member SMEs. In addition, 9 other associations, among them associations in the marine and environmental industries, have set up dedicated training arms which have trained 21,000 workers in the past 4 years.

One of the most significant LEAD projects is the Containerised Traffic System (CTS) which is driven by a consortium of logistics associations, led by the Container Depot Association (Singapore). The integrated communications system can track the location of vehicles and allow two-way data communication between the drivers and traffic controllers to ensure efficient traffic routing and management of prime movers. Today, we have 57 companies on board this project, with over 1,300 prime mover trucks linked up electronically to our ports and the logistics companies. Based on the strong take-up rate, there is an estimated $9 million worth of productivity gains that can be reaped from the CTS system once it is fully operationalised across theplayers.

Our industry associations have indeed been doing their part in raising the bar for their industries’ performance.The LEAD programme, supported strongly by the government, has enabled them to move faster and further.

Improvements to LEAD

To ensure that potential leads for our companies are not lost just because of the economic downturn, LEAD recently also introduced support for reverse missions to encourage and attract key buyers from foreign countries to visit and purchase from local companies instead of having our companies incur the expenses of overseas travel. The support covers up to 70% on expenses for air travel and covers a fixed allowance for accommodation and local transportation for each delegate.To date, LEAD has supported CDAS, SIAA, SPETA and SWA - in their reverse missions.

We also introduced a Secretariat Training Programme (STP) to help associations enhance their secretariats’ capabilities via training in critical skill sets. The STP supports 90% of course fees for secretariat staff to pursue courses that can improve their execution effectiveness. Such courses include event management, accounting and finance, presentation skills, marketing and HR management.To date, 22 participants have utilised the programme.

The Next Lap

The success of LEAD has attracted interest from the business associations and chambers. Like sectoral industry associations, they also face challenges in this downturn and they hope to launch initiatives under LEAD that will benefit and boost their members’ capabilities through their broad-based industry programmes. We are happy to extend LEAD to include the business associations and chambers and welcome two new members into the LEAD family today – the Singapore Manufacturers’ Federation and the Singapore Malay Chamber of Commerce and Industry.

In addition, two new industry associations, the Singapore Water Association and the Franchising and Licensing Association, will be embarking on the LEAD Programme this year. The key projects undertaken by the two associations are driven by internationalisation initiatives to improve their members’ market access capabilities in Vietnam, Indonesia, and the USA.

As we prepare for the upturn, Singapore's competitiveness needs to be supported via a productivity-driven growth which is applicable to both services and manufacturing sectors. Much can be done to drive productivity at a sectoral level. For example, it would be beneficial to establish industry productivity indicators, and develop innovative solutions to enhance work flow processes. Beyond setting up training centres and developing skills-specific courses, associations can also explore enhancing HR management and practices that are unique to their sectors. In Europe and Japan, industry associations also serve as market intelligence outposts as well as regulators for specific trade registration and skills certification. I would like to encourage our chambers and associations to explore such facilitation in the near future.

Conclusion

I thank all the associations and chambers present today for your efforts in helping to shape Singapore’s economy. To the business leaders who have generously volunteered to take time out from your work to serve as captains of industry associations, and to the association secretariats, your dedication and hard work is commendable.

I encourage all associations and chambers to continue assisting your members in creating innovative products to meet the new market challenges and sharpen their competitive edge in the global arena.

On this note, I wish all of you a pleasant and fruitful morning. Thank you.