SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY, AND ADVISOR TO INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF SINGAPORE, AT THE ICPAS SME-SMP FORUM 2012 ON 20 MARCH 2012, 9.05 AM AT GRAND HYATT HOTEL

Dr Ernest Kan, President of the Institute of Certified Public Accountants of Singapore (ICPAS)

Mr Ho Meng Kit, Chief Executive Officer of Singapore Business Federation (SBF)

Distinguished Guests


Introduction

Good morning. Thank you ICPAS for inviting me to the ICPAS SME-SMP Forum 2012.   It is my great pleasure to be here today.

I am heartened by this initiative by ICPAS, in collaboration with Singapore Business Federation (SBF) and the Association for Small and Medium Enterprises (ASME). The title of the forum, “Small and Medium-Sized Businesses: How to Grow Amidst Market Uncertainties” aptly sums up one of the fundamental market challenges that we are currently facing and need to manage for sustainable business and economic growth.


Importance of the SMEs

It is important that the needs of small enterprises and the challenges they face do not slip between the cracks. They make up a large part of our economy. Today, 99% of enterprises in Singapore are SMEs, employing 70% of the workforce and contributing up to 60% of the national gross domestic product (GDP)[1]. Without doubt, SMEs play a key role in our economy by keeping our business market vibrant and continuing to contribute to the job market. In 2011 alone, SPRING Singapore committed $98 million in grants to support the upgrading of SMEs’ capabilities. When fully implemented within the next three years, these projects would create more than 15,000 new jobs and generate an additional value-added of $4.4 billion for the economy[2]. This expansion would contribute to sustaining economic growth in Singapore over the longer term.


Symbiotic Relationship between SMEs and SMPs

As they expand their businesses, SMEs often engage the professional services of public accounting firms in areas such as tax, valuation, mergers and advisory. The increase in demand for such services spur the growth of SMPs and enable them to venture beyond the traditional auditing services to widen their service offerings and upgrade their capabilities to meet increasing expectations of their SME clients. This positive outcome contributes to raising the overall quality of the accountancy profession.


Key Challenges Ahead

Both SMEs and SMPs face business challenges. Resource constraints, talent attraction, productivity and rising business costs are some of the key common issues that have always plagued small business set-ups. Beyond these challenges, SMPs also have to constantly develop their capabilities and technical expertise to meet clients’ rising expectations and keep abreast with the latest knowledge and trends in the accountancy profession.

As we move forward amidst the backdrop of a more subdued economic outlook, global economic conditions are still expected to be uncertain and volatile. For example, global demand and trade are expected to deteriorate, and credit market conditions may tighten if the economic situation worsens[3]. Singapore, as an international hub with a small and open economy, will certainly face challenges arising from these global developments.


Enhancing Organisational and Manpower Capabilities

To continue to do well in such conditions, SMEs and SMPs have to continually enhance their internal organisational capabilities and develop a competitive workforce. They need to have the relevant resources, knowledge and mindsets to be able to quickly identify and tap on business opportunities as well as lucrative markets.

To do this, firms should engage in strategic planning to help identify the right opportunities. This would require the management to be familiar and up-to-date with the local and overseas business landscape. Companies should also invest in developing technological capabilities and know-how in order to streamline processes and reduce costs. Hiring the “right” person for the job and developing such talent within the firm is also a critical success factor to grow the business. Finally, firms should also continually seek to improve their productivity – this would help them overcome constraints especially on the manpower front.


Tapping on Government Schemes

The Government has been proactive in encouraging our local enterprises to increase their productivity, such as the use of technology; or improving HR practices by encouraging training and staff development. I strongly urge our local enterprises here today, to tap on the existing suite of productivity-related schemes to upgrade their operations. For instance, the Productivity & Innovation Credit (PIC) scheme offers enhanced tax deductions for companies that invest in improving productivity and driving innovation, such as automation and skills upgrading. Further, the Innovation Voucher Scheme provides vouchers of $5,000 to encourage our smaller companies to develop ideas and adopt technology that will help enhance their productivity. 

Another example is the iSPRINT scheme offered by IDA, which provides funding support for SMEs to use infocomm technology to improve the company’s business operations, resulting in greater efficiency. SPRING Singapore also offers programmes such as the Productivity Management Programme (PMP). Companies can tap on the Enterprise Development Centres at key trade associations and chambers to learn more about the schemes and programmes available.

Likewise, I also encourage promising companies with overseas growth aspirations to tap on the various schemes that government agencies such as IE Singapore have to help them venture overseas. These efforts will help ensure they are well-poised to take advantage of opportunities when the economy recovers.  The Government will continue to make these assistance schemes more easily accessible by our companies.


Exploring Opportunities in Regional and Emerging Markets

Many Singaporean companies will be familiar with regional markets in Southeast Asia, China and India. They should also explore new, untapped opportunities in emerging markets such as such as the Middle East and Africa, and consider moving into the fast-growing markets.  We have made good connections at the government-to-government level. The Government will continue to work closely with our companies to explore business opportunities in these markets.      

During my business trip to Kuwait and Qatar last week, I met senior government officials and business leaders. In 2010, the Kuwaiti government unveiled a U$125 billion economic development plan to liberalise the Kuwaiti economy. The plan includes privatising public firms and the construction of mega-projects through public-private partnerships. Qatar’s successful bid to host World Cup 2022 is expected to create an infrastructural boom in the lead up to the event. The private sector can look forward to opportunities in areas relating to architecture, engineering, facilities management, and construction subcontracting.


ICPAS Plays a Key Role

In January this year, the NPCEC, identified the accountancy sector as one of the 16 sectors with the potential for productivity gains. The sector can tap on the National Productivity Fund of $2 billion set aside to provide more targeted support for industry efforts to restructure and upgrade over the next 10 years.  The productivity plan for the accountancy sector is still being worked out and will be finalised later in the year.  As the national accountancy body, ICPAS can play a lead role in improving productivity in the sector.   

In addition, ICPAS also plays an important part in moving the sector towards its goal of developing Singapore into a regional accountancy hub. I applaud ICPAS’s efforts in its transformation to reinforce its strategic focus, developing both a renewed vision for 2020, as Singapore positions itself as a global accountancy hub, and a full-fledged strategic plan to provide assistance to the SMPs and bring the Institute to greater heights. One of these initiatives by ICPAS is the Quality Assurance Framework to help SMPs build up and maintain the quality and professional standards of their services. I am certain that this new framework would be of great value to the SMPs. We will hear more about this framework at one of the breakout sessions in the later part of the day.


Conclusion

As Advisor to ICPAS and Patron of the Small and Medium Enterprises Committee (SMEC), I am pleased that ICPAS and the business associations recognise that SMPs and SMEs can work together to achieve greater success. Through channels such as today’s forum, SMEs and SMPs can acquire the vital tools to help them better manage their business issues and at the same time, enhance their awareness of the assistance available for them to address the challenges. In addition, the Government constantly engages the industry stakeholders so that we can understand your needs and concerns.  We will also collaborate with the companies to bridge the gaps and to develop policies and programmes that will be useful to them.  

Today’s speakers come from a diversity of industries which would bring forth different perspectives and stimulate refreshing discussions. Many insightful topics would be covered, such as business management, and the essentials for cross-border expansions. There will also be a panel sharing on the importance of skills upgrading and investment in technology. I am certain that participants would gain valuable lessons by drawing on the speakers’ experiences.

To conclude, I wish to thank the organisers for hosting today’s forum and also thank you for your participation.