Speaking at the SME Technology and Innovation Day on Tuesday (15 May), Minister of Trade and Industry Chan Chun Sing said that innovation was essential for Small and Medium Enterprises (SMEs) to grow and innovate. This was to “maintain a vibrant and competitive economy” and to “stay ahead of the competition”.
Minister Chan – whose portfolio show that he is new to business dealings – said that there was a “wave of change [that was] driven by digitalisation [which had] impacted many sectors”. He then urged businessmen not to forget that “our competitors are moving very quickly too” and that “others will leapfrog and overtake us” should we be complacent.
He said that there was a Research, Innovation and Enterprise 2020 Plan where the government is investing up to $19 billion in 4 years to support public sector R&D. The purpose was to ensure that we have “the technological capabilities to capture opportunities from digitalisation to other emerging technologies”.
The former army chief was happy that many SMEs “are stepping up their investments in innovation and technology” and that expenditure on Research & Development grew by a compounded 4% from 2006 to 2016. The government has rolled out Industry Transformation Maps (ITMs) which address 23 sectors where 80% of our GDP is derived.
The government would then further support this by a variety of grants including the Productivity Solutions Grant and Technology for Enterprise Capability Upgrading (T-Up) scheme. He noted that 1,300 enterprises have adopted over 50 solutions and have an average of 25% productivity improvement.
Yet, Chan’s speech may show that he lacks an understanding of how SMEs works.
Strategy Consultant: Government should not take the soft option and do more to help with SME growth
In a letter to the ST Forum on Thursday (17 May), strategy consultant Liu Fook Thim said it was a good idea that the government was helping SMEs as they are the future of Singapore’s economy because MNCs have moved out of the country. Nonetheless, such SMEs in Singapore were “ill-prepared” for internationalisation.
He gave an example of how “the billions that the National Research Foundation pumps into research must directly benefit our SMEs, which are not currently on their radar”. He also said that it was important that “all policies [which] benefit multinational companies must also be offered to our SMEs to strengthen their position”.
Mr. Liu added that the government should ensure that “selling out” should not be an option when government-linked companies are facing market challenges. He cited an example on how the government, “instead of learning how to disrupt our own shipping line” took “the soft option to sell Neptune Orient Lines”. This was a mistake “given that one key strategy of the Sea Transport ITM is to build up a well-connected international maritime centre”.
More than 1 in 3 SMEs are bogged down by payment issues while many find it difficult to venture abroad
According to a survey by DP Information Group earlier this year, more than 1 in 3 (35%) of SMEs surveyed said they had issues with cash flow management. Of these, 81% said that their cash flow issues were due to delays in payments from customers. This figure of 35% represented a 50% jump from the year before and is the highest since DP Group began tracking the issue in 2011.
SMEs also face a lack of collaboration opportunities with other market players – Government-linked companies in particular – to venture abroad for higher growth. Working alone, the most difficult part came from currency fluctuations, keen competition and difficulty in finding overseas partners.
The newspaper then interviewed one such who said that “there is great potential [in emerging markets] but laws are complicated to navigate. Another issue is our lack of understanding and experience of a different culture. It's difficult to do business when you don't understand the language and customs."
So, given financial and practical difficulties, do you think Chan’s speech was more rhetoric than reality?