Mr Teo Siong Seng, Chairman, Singapore Business Federation
Mr Lawrence Leow, Chairman, SME Committee
Distinguished Guests,
Ladies and Gentlemen,
Good morning.
It gives me great pleasure to be present at the SME Convention today. The convention is an important event on the SME calendar, and reflects the Singapore Business Federation’s role in championing the needs of SMEs.
Economic restructuring is on track
The theme of this convention is “Economic restructuring: are we there yet?” I must admit that when I heard the theme, I was a bit surprised; because I think we all know that we are not yet at the end of our restructuring journey. As PM said yesterday at the opening of the National Productivity Month, productivity is a long-haul, and we must keep confidence in our efforts, and keep working at it together to transform our economy.
So why did the SBF choose this theme? I think that it aptly expresses the question that is on every businessman’s mind. “Are we there yet?” is a question that we ask when we are on a journey, even when we know that we are not yet at the end. Businesses understand that restructuring is necessary. Nonetheless, the restructuring journey is hard work for businesses.
There is a deeper underlying aspect to the theme, which is centred on how we are doing in the restructuring journey. This is a more complex question that has a number of facets.
First, are businesses taking steps to adjust? Here, the answer is clearly yes. Surveys show that the majority of businesses intend to undertake productivity improvements[1].The take-up of government’s productivity incentive schemes has been ramping up. For example, the number of active companies that claimed the Productivity and Innovation Credit (PIC) increased by more than 50% between 2011 and 2013, with some 40,000 companies having claimed the PIC as of last year. Of the companies which claimed the PIC last year, nearly 80% were small and micro enterprises.
Second, have businesses been able to cope with the pace of restructuring? The government has been closely monitoring this, and the answer at the overall level is yes. The number of SMEs is still growing, with a net formation of about 14,000 SMEs each year. The quarterly SME Index[2] published by SBF and DP Information Group rose from 54.4 for the 2nd quarter of 2014, to 54.9 for the 3rd quarter of 2014, indicating that our SMEs expect the business outlook to be positive.
Third, are we seeing the desired outcomes from restructuring? Here the answer is mixed. Overall productivity growth has been positive but weak, with labour productivity growing by 0.2% per annum from 2010 to 2013. But a deeper sectoral analysis shows encouraging signs of improvement. Productivity has grown in export-oriented sectors such as precision engineering and transport engineering. However, productivity has declined in some domestic sectors, such as construction, retail and F&B. Clearly our restructuring journey is not yet done. We need to continue to push ahead, and pay particular attention to helping SMEs in these areas restructure.
Government is committed to supporting SMEs
The government is committed to helping businesses take effective steps to position themselves for the future. These include investing in technology, innovating, upskilling staff, or internationalising.
In Budget 2014, we introduced enhancements to some key programmes to help our SMEs. These include improvements to the PIC and the Innovation and Capability Voucher (ICV) to better support SMEs in capability upgrading and productivity improvement. In addition, we have continued to engage closely with SMEs through the SME Workgroup and the network of SME Centres, in order to help SMEs understand what assistance is available and to ensure that we have our ears close to the ground to know what businesses are concerned with. Over the past year, the SME Workgroup and SME Centres have collectively reached over 20,000 SMEs. While much has been done, further work is still needed. We will continue to fine-tune our programmes to ensure that economic restructuring remains on course, and our businesses are supported throughout the journey.
SBF and SMEC are a key part of the SME support ecosystem
Feedback from businesses is crucial to help the government refine our programmes so that they are relevant and useful. This is where business associations such as SBF play an important role. I am encouraged by the SMEC’s contributions in engaging the broad business community to identify and surface key business concerns and possible solutions to government.
For instance, I understand that the SMEC is studying how government procurement can be used to help SMEs build up track record and capabilities. The government procures over $10 billion dollars worth of goods and services every year, and it is worthwhile to study what more can be done to help SMEs bid for government contracts. I look forward to receiving the SMEC’s recommendations on government procurement later this year.
I also understand that the SMEC has been working on a proposed voluntary Fair Tenancy Consideration Framework to set out guidelines and principles for fair tenancy practices. This is a laudable effort by the business community to ensure win-win partnerships between tenants and landlords, and I would like to commend SMEC for taking the initiative to champion this.
Facilitating business partnerships and collaboration
Another way in which SBF plays an important role is in helping businesses to collaborate. This is something that the government has been encouraging through the Partnerships for Capability Transformation (PACT) Programme. PACT supports collaborations between large organisations and local SMEs. This enables SMEs to learn from large organisations in upgrading their capabilities and building track record. I am pleased to share that SBF will be working with SPRING to identify and implement PACT projects.
Conclusion
Let me close by reiterating a few key points. Our economic restructuring is gaining momentum, and we are proceeding with restructuring at a steady, sustainable pace. However, there remains a lot to be done, and all of us have a part to play in the success of our restructuring efforts. The government will continue to provide support to businesses. Business chambers such as SBF also play a crucial role in reaching out to businesses, giving voice to business concerns, and providing suggestions on how policies can be fine-tuned. On their part, individual businesses need to be pro-active in changing so that they can be well prepared for the future.
Finally, I would like to thank SBF for organising this event. I hope that you will all have a fruitful day of discussions ahead. Thank you.
[1] The DP Info SME Development Survey 2013 indicated that 58% of companies intended to undertake productivity initiatives.
[2] The SBF-DP SME index provides a 6-month outlook for the SME sector. Scores above 50 indicate that SMEs have a positive outlook for their business prospects over the next 6 months.