Speech by Mr Lee Yi Shyan, Minister of State for Trade & Industry and Manpower at the Official Opening of the 7th Asia Pacific Food Expo on 19 November, 6pm at Singapore Expo

Mr Wong Mong Hong, President, Singapore Food Manufacturers’ Association

Distinguished guests

Ladies and gentlemen

Introduction

I am pleased to join you for the official opening of the 7th Asia Pacific Food Expo. To all our overseas participants, I would like to extend a very warm welcome.

Overview of Singapore’s Food Manufacturing Sector

The food manufacturing industry is an important sector of Singapore’s economy. There are about 800 food manufacturing establishments employing some 24,000 people. Our food products have earned a reputation for their high quality and being safe for consumption.

The industry has also proven to be resilient.Output has continued to rise despite the global financial downturn. In 2008, the sector’s output was $6.1 billion. In 2009, this had risen to $6.6 billion.This amounts to 3.1% of the total manufacturing output.I commend our food manufacturers for responding quickly to the changing business environment.

MTI announced yesterday that we are likely to grow by 15% this year. The key economic engines of Asia, led by China, India and Southeast Asia, are likely to carry their growth momentum into next year. With rising affluence and demand for higher quality food products, Singapore food manufacturers will find great opportunities for growth. Yet, our players must look beyond the current demand and prepare themselves to compete in more profitable markets. They can start doing so by focusing on four key areas:

a.food safety,

b.productivity,

c.Innovation,

d.Exports.

Maintaining Food Safety Standards

Food safety is and should continue to be a priority for our food manufacturers. Manufacturerswith products complying with internationally-recognised standards such as the Hazard Analysis and Critical Control Point, or HACCP, increase consumer confidence.SPRING Singapore has been providing support for SMEs to implement and obtain HACCP certification. I am happy to note that to date 31% of local food establishments are HACCP certified.More food manufacturers should do likewise.

Improving Productivity for further growth

To achieve sustainable growth, our food industry must continuously raise productivity. For those that can’t produce fast enough for the market, they ought to consider better production methods and automation to raise output and consistency in quality. For those that suffer from thin margins, they need to think about innovation in products or services that give them higher margins. Consider Gold Kili Trading Enterprise’s investment in a universal automated packing line for its Kopi O series. Now, the company needs only one worker to generate 7200 sachets per hour. The investment quadrupled the average number of sachets of Kopi O a worker can generate, from 1800 sachets in an hour to 7200 sachets!

Earlier this year, MOF announced the introduction of the Productivity and Innovation Credit (PIC). Companies can claim 2.5 times the qualifying expense of $300,000 per financial year to offset investments in productivity –enhancing measures.Companies can approach Spring Singapore or the Enterprise Development Centres (EDCs) for assistance to make best use of the credit scheme.

SMEs also can tap on any of the five EDCs under the Productivity Management Programme (PMP). Under this industry-led programme, productivity experts will help companies identify areas for productivity improvement and tailor implementation plans to their needs. PMP is the latest programme initiated under the SME Productivity Action Roadmap (SME-PRO), which is managed by SPRING Singapore and Workforce Development Agency.

Continuous Product Innovation to gain market share

Productivity is not just about optimising processes to generate more of the same output. We must also continually innovate to meet changing consumer needs. Many SMEs lack the infrastructure to conduct extensive research and development for product innovation. That’s why the Food Innovation & Resource Centre (FIRC) was set up in 2007. The centre’s team of professional food technologists help SMEs in the food manufacturing sector to create new products, improve product formulations, and extend product shelf lives for export. To date, FIRC has assisted about 170 companies and developed more than 50 new products.Some of these new products have also been commercialised.These include the ready-to-drink version of Singapore Sling for True Heritage Brew, and frozen mousse cakes for The Patissier. More recently, Kim Hing Food Industries tapped on the expertise of FIRC to formulate a soft serve ice cream mix with a unique flavor, which complements their bird’s nest topping. Consumers will soon be able to savour this dessert when it is launched at the end of this year.

For companies that have yet to consider investing in R&D, I encourage you to take the first step by tapping on the Innovation Voucher Scheme (IVS) managed by SPRING Singapore. The IVS is a S$5,000 cash grant to support the costs of R&D projects conducted byCentres of Innovation or Institutes of Higher Learning.Since its launch in March 2009, SPRING has supported some 98 projects for the industry.

Intensifying Singapore Food companies’ Overseas Presence and Exports

For many other Singapore food manufacturers, the hurdle towards the next phase of growth would be to scale up their overseas presence by successfully penetrating fast-growing mainstream retail markets. Over the past year, there have been collaborations between IE Singapore and the industry to drive B2B outcomes through B2C initiatives such as the retail promotions held in China, across Beijing, Guangdong and Shanghai. A total of 21 Singapore-based companies participated in the food promotion under the Tasty Singapore umbrella. Even though most of the food products are new in these markets, we are happy that generally the Chinese consumers responded well to them.

Tapping on IE Singapore programmes to internationalise

To catalyse internationalisation strategies, companies can leverage on the wide array of assistance schemes provided by IE Singapore. For example, the International Partners (iPartners) Programme encourages companies to work together to form alliances to present a total solution to the market.

Consider the iPartners consortium comprising Chye Choon Foods, a manufacturer of rice vermicelli and rice noodle; Prima Food, a sauce and paste manufacturer (a member of the Prima Group)and ACE Synergy, representing the Gold Kili range of instantbeverage products. With complementary products, the iPartner companies pooled their resources to set up a broker network to overcome the entry barriers in the US retail market. Through this approach, they are presenting their range of products to the different retailer chains via national and distributor shows.

Increasing export competiveness through Singapore’s extensive FTA network

Companies can also leverage on Singapore’s extensive Free Trade Agreement (FTA) network to further their overseas expansion plans.Currently, Singapore’s network of FTAs includes 18 implemented FTAs with a total of 24 trading partners.We see this as an important tool to assist Singapore-based enterprises to penetrate and entrench in high growth markets and sharpen their competitive edge. For instance, Singapore food exporterswith products that meet the respective rules of origin can enjoy tariff savings of between 0% - 35% from the Singapore-China & ASEAN-China FTAs.Singapore food manufacturers can also look forward to enjoy preferential tariff treatment for the Middle East market once it is implemented.

Conclusion

The outlook for Singapore’s food sector is most promising. In Asia, there is growing demand for high quality and safe food products driven chiefly by a rapidly growing middle-class.This puts our food manufacturing industry in a good position to make inroads into these emerging markets.I urge food manufacturers to draw on science and technology, raise productivity levels and constantly innovate their products, so as to remain competitive in the global market.

I commend the organisers, Singapore Food Manufacturers Association, for the Expo’s strong and growing response. I wish everyone a fruitful and rewarding time at the Expo.Thank you.