Andrew Ong

With the global financial crisis, businesses especially our SMEs, have been badly affected with many struggling to survive. This article turns the spotlight on our SMEs and highlights some of their concerns.

Amid signs of an expected prolonged recession at home, virtually all businesses, regardless of size or industry, are feeling the squeeze as they try to stay afloat. Our small and medium-sized enterprises (SMEs) are particularly vulnerable.

Concerns of increasing business costs

A recent SME Development Survey conducted by DP Information Group revealed that rising costs is the top concern among SMEs in Singapore. This was ahead of other perennial concerns such as competition, manpower and cash flow issues.

Mr Thomas Ng, Director for NKH Fluid Engineering Pte Ltd a one-stop manufacturer for water pumping systems, has found the increasing cost of doing business a challenge with every year. Part of his strategy for NKH in remaining competitive has been to look for cost-effective industrial land for his factory. Not limiting his choice within our shores, he is also looking at neighbouring countries as possible sites.

“With land a natural scarcity in Singapore, it is imminent that property cost which contributes a large portion of my business cost will spiral upwards,” said Mr Ng. “Re-locating all if not part of my operations will also give us more options for lower labour cost for low-skilled jobs.”  

Mr Ng’s concern seems to be representative of the sentiments of the majority (58 per cent) of SMEs in Singapore. When polled by the Singapore Manufacturers’ Federation (SMa), SMEs indicated that the increasing labour cost continues to be the key cost component that will significantly affect their profitability in the next one to two years.

However, the concerns on increasing labour cost are not limited to the employees’ wages alone. Another SME manufacturer, Utopia-Aire Pte Ltd, which manufactures metal casing for clean air filtration, raised another manpower-related matter.

For some time, Utopia-Aire has observed a number of its employees with S-Passes resigning after working a few months. When the situation was investigated, Dr Jeremy Chia, Utopia-Aire’s Managing Director, found that employees with S-Pass holders could now have direct access in applying for their Singapore Permanent Resident (PR) status through the Internet.  

“This newly implemented procedure has affected our business in terms of recruitment costs, loss of time in recruiting, loss of invested time and cost in training,” said Dr Chia. He added that “this has disrupted our work and productivity where contractual obligations are not fulfilled.”

According to Dr Chia, the new implemented process of PR application via the Internet now takes only 2 to 4 weeks and does not require the approval of the employer. This he feels has allowed foreign employees to take advantage of the easy accessibility in gaining Singapore PR status at the expense of the SMEs who recruit them.

The list of concerns for SMEs such as NKH Fluid Engineering and Utopia-Aire continues with cost of sales (i.e. raw materials / intermediate or final products) ranked second at 57 per cent, an increase of two per cent from a year ago. Rental costs also remain a challenge for most SMEs, with a higher 42 per cent highlighting that increasing rental of premise is eroding their profitability.

With concerns of rising costs at the back of their minds, it is not surprising that improving cost efficiency and productivity is a key business strategy that our SMEs will be adopting for the next two years.

Opinion: Moving forward and growing SMEs

With our SMEs making up about 90 per cent of the total number of businesses operating here, they are no doubt a backbone to our nation’s progress and future. They contribute up to six out of every 10 jobs in Singapore and account for almost half of the total value-add in our economy. It is, therefore, not surprising that our government responded to the cries of “S.O.S” from SMEs with the Budget 2009 on 22 January 2009.

Though not intended as a bailout, the Budget released a set of targeted initiatives aimed at helping viable businesses help themselves. From the Jobs Credit Scheme to the reduction in corporate tax to 16 per cent, our government looks to have provided our SMEs with the right ballast to stay afloat for now.

Having said that, much remains for us to do more in helping our SMEs to expand and become home-grown big companies like Asia Pacific Breweries Ltd, Creative Technology Ltd or OSIM International Ltd.  We need more of such companies that can enhance our nation’s stability and security in terms of investments and employment in downturns.  

Therefore, it is encouraging to note that our government has started being pro-active in engaging our SMEs and promoting their growth through SPRING and with the support of enterprise development centres (EDCs) from some trade associations. However, as highlighted above, more can be done in the area of helping SMEs minimize costs and having a keener grasp of the impact of manpower policies on business.

With our SMEs playing a bigger role in the economy, this might be a timely long-term strategy to strengthen Singapore’s economic capabilities.

——– 

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
You May Also Like

Reform Party unveils new youth leadership and logo

The Reform Party takes great pleasure in unveiling the new leadership of…

A note about moderation on TOC

TOC explains comments moderating.

新中天津生态城10周年人口逾十万 仅达明年目标三分一

我国副总理张志贤在昨天结束为期六天访华行程,在接受媒体访问时,提及随着新中关系步入下一阶段,对接中国区域发展的合作,将成为两国关系发展更突出的要素。 他说新中关系在明年即将迎来30周年纪念,自1994年两国即开启政府间合作(G2G)的项目, 例如当年开启的苏州工业园也已迈入25周年。 他指出,中国正迈向区域集群发展,而新中两国目前的七项区域经贸合作理事会,和政府间合作项目虽起源于旧框架,但是对于契合中国新阶段的发展提供扎实基础。 张志贤提及的其中一项新中合作项目天津生态城,被视为新中合作的指标性项目。2007年,时任国务资政吴作栋和时任中国总理温家宝构思生态城,选定天津滨海新区为生态城所在地。 天津生态城是两国开展的第二个政府间合作项目,也是新中双边合作联合委员会(JCBC)推动的项目之一。张志贤是JCBC新方联合主席。 两国的目标是将生态城建设成人与人、人与自然、人与经济和谐,可持续发展并可复制的城市。 时任国家发展部暨贸工部长李奕贤,在2012年的第八届绿化建筑峰会上,曾放眼该生态城在2020年完全完成,规划人口35万。 他形容,新加坡乐意透过合作分享及学习绿化科技,新中天津生态城则是两国合作的典范。 天津生态城占地30平方公里,在去年迎来10周年纪念。当时《联合早报》一篇报导揭露,有10万人在生态城生活和工作,建成并售出三万套住宅。 然而,距离明年要达到35万人口目标,显然仍有巨大差距。 据了解,目前累计入驻生态城的企业达7700余家,其中智能科技企业占三分之一。…

【选举】欣赏俄作曲家用音乐传达民意 方月光冀望把群众心声带入国会

民主党在此次选举,派出林文兴、达曼胡理、江伟贤和方月光团队攻打马西岭-油池集选区,硬撼由原国家发展部长黄循财领军的人民行动党团队。 尽管仅派出11名候选人,不过民主党在此次选举也算“下足重本”,竞选团队不乏拥有博士、医学教授等资历的人才。至于该党秘书长徐顺全在武吉巴督不屈不挠的精神,选民看好后者有望此次选举突围而出。 除了早前本社介绍过的林文兴、达曼胡理和江伟贤,马西岭-油池集选区团队中的方月光背景亦不可小觑,据民主党竞选官网介绍,他曾在外交部、内政部和国防部等机构担任要职,也曾担任新加坡驻北京大使馆首席秘书(政治与经济)。 事实上方月光还是奖学金得主,以及英国剑桥大学音乐系毕业生。《联合早报》稍早前专访方月光,从轻松角度谈他过去曾作曲追太太的经历,以及家人如何看待他从政等。 询及他将用什么古典乐来形同现在的新加坡?方月光表示自己最喜欢的音乐家是俄国作曲家肖斯塔科维奇(Dmitri Shostakovich),因为他的音乐非常有深度,也有很多政治内容,每个作曲都是对整个国家政治文化的表态。 “他有他的想法、理念,但也尽量把民生透过音乐带出来,让领导阶层者也能听到民声”。 他也表示这也是自己的理想,期望若有机会入国会,能把群众的心声带到国会。