Singapore’s small and medium-sized enterprises (SMEs) should be able to compete based on the “equivalent economies”, not based on the land pricing, said former People’s Action Party (PAP) Member of Parliament (MP) Inderjit Singh.
Mr Singh was among the panellists in the webinar titled, “The Future and Challenges to the Singapore Economy”, organised by the Future of Singapore (FOSG) via Zoom on 17 Apr.
The webinar touched on the fractured global economy with Singapore caught between the US and China blocs, disruptive technological revolutions to jobs and global supply chains in artificial intelligence (AI), the internet of things, 3D printing as well as future pandemics.
During the Q&A session of the webinar, the panellists were asked about the concerns primarily related to land costs.
In response, Mr Singh implied that the cost structure – particularly land and utility costs – are the main contributing factors that determine whether an SME could excel or survive in Singapore.
“We should look at the strategic pricing of some of these things. For example, if I want the semiconductor industry to succeed in Singapore, let’s look at the cost structure of the semiconductor industry in Taiwan. How much do land, utility and all these factors cost there?
“Can we have a zone, an area where we allow our SMEs and companies to also compete based on equivalent economies that they compete with, not based on land prices?” he noted.
Mr Singh pointed out that many SMEs are struggling to pay the high rents due to the industrial lands being mostly held by government-linked companies (GLCs) and multinational corporations (MNCs).
“Many of these [lands] unfortunately are also empty,” he said. “There’s an opportunity for the Government to acquire all of these back and then rationalize by creating new industrial zones.”
Govt owns 90 per cent of the land, but the lands were given to GLCs who charge high prices, says Yeoh Lam Keong
One of the key advantages that Singapore can leverage is that the Government owns 85 to 90 per cent of the land in the city-state, which means that it can spare the use for developmental public purposes, said former GIC chief economist Yeoh Lam Keong.
Mr Yeoh noted that the Government could support the SMEs by giving them competitive rents or utility cost, and compare the cost with the country’s main competitors, such as South Korea, Taiwan, China and the United States.
“But instead, we give it to our GLCs to become landlords who charge them the market price that they cannot afford to be competitive internationally. That’s crazy,” he added.
Additionally, Mr Yeoh highlighted that the Government can control the utility cost for the manufacturing sector and some of the key industries.
“We are the price setter and price maker in power, gas and water. So we can make sure these are competitive for the sectors we want,” he noted.
Govt should break the culture of “risk-averse”, says WP’s Yee Jenn Jong
The Workers’ Party (WP) politician Yee Jenn Jong believes that the Government should consider providing “land advantage” or “certain subsidies” to companies in sectors that it wants to develop.
Mr Yee, who is a former Non-Constituency Member of Parliament (NCMP), recalled that he had pushed for sandbox and technology innovation for certain sectors in Parliament.
However, the Minister – who was not named by Mr Yee – replied that the Government “cannot have discount or competitive advantage for local companies” because they need to “follow by the rules”.
“We need to look into providing land advantage, certain subsidies, or some kind of support structure if we really believe in certain areas that we want to develop,” he added.
Mr Yee also highlighted the need to break the culture of “risk-adverse”, as he noted that most of the Government projects and initiatives are meant for the “big companies”.
“We can’t really pick exactly which company will be a winner [of certain projects] but we can let them beat for it without all these big players crowding out. So I think this is one area that we might want to look at,” said Mr Yee.
The rules and cost inhibited startup companies to try out ideas, says Tay Kheng Soon
Veteran architect Tay Kheng Soon believes that the Government can increase the floor area of the NUS campus “tremendously” without affecting the quality of the urban spaces.
However, Prof Tay noted that under the Urban Redevelopment Authority (URA) rules, only 5 per cent of the non-teaching spaces can be used for any other purposes.
“Imagine if you have a start-up set up there and he only pays S$1 per square foot for his floor space. That will be a very important boost for him to dare to try out his new ideas.
“But the rules at the moment inhibited and the cost also inhibited. This is the problem,” he noted.
SDP’s Alfred Tan shares his company’s experience of being rejected by Govt
Entrepreneur and member of Singapore Democratic Party (SDP) Alfred Tan shared that his company had previously wanted to gain more spaces for food automation and bid for a 100,000 sqft land, but was rejected by the Government.
He noted that the Government would rather give the land to a business that has “higher value-added”, which turns out to be a warehouse for semiconductors.
However, Mr Tan noted that his company eventually found opportunities to expand in other countries.
“What ironic is that we have a government in one of the countries that we mentioned offering us a 100,000 sqft of land, free, as long as we site our operation there and they can use our product of Singapore’s branding.
“What I’m saying is that sometimes the local enterprises are never welcome by their own home country,” he remarked.
“The SGX is not performing their role,” says PSP’s Leong Mun Wai
The Singapore Exchange (SGX) is not providing capital to the companies, it only provides capital for the real estate investment trusts (REITs), said the Progress Singapore Party (PSP) Non-Constituency Member of Parliament (NCMP) Leong Mun Wai.
“The SGX at the moment is not performing their role. They’re not providing capital to the manufacturing company, the industrial company, even for the development of venture companies they are not providing the capital. They’re providing capital for the REITs,” he noted.
As such, Mr Leong believes that there is a need to build “a proper market” for the ventures in Singapore which would, in turn, require “tax credit” by the Government.
He also observed that the Government is not providing enough “leeway” for companies to “test things out” in Singapore.
“Maybe we don’t need a 100,000 sqft project in Singapore, but we must do the initial testing in Singapore, then only we bring the project overseas to develop further.”