MR LEE YI SHYAN
Minister of State
Ministry of Trade and Industry
- It is my pleasure to join you this evening at the Spirit of Enterprise awards ceremony.
- This evening's event celebrates the entrepreneurial spirit in our SME sector. Our SME sector, which has proven very resilient in riding out last year's recession, is now contemplating strategies for future growth. In my view, two factors are critical for our SMEs' future: (a) riding on demand of growth markets and (b) raising their own productivity.
Riding on Growth Markets
- Throughout the economic crisis that we just witnessed in 2008-2009, we saw how important it was for different countries across continents to act in unison in order to improve liquidity and shore up confidence. Thankfully, most part of Asia led by China was restored to growth. Domestic consumption was up alongside with export activities. Clearly, going forward, developing economies in Asia, especially China, would have to contemplate ways to sustain domestic consumption for their own good.
- In the meantime, China is overtaking Japan as the world’s 2nd largest economy in the second quarter of this year. It’s GDP now stands at US$5 trillion , is poised to grow at 10% this year and more years to come. There are projections that China may even overtake the United States by 2030 or even earlier. When this will happen exactly is less important than the direction of the trend is moving: that a very large market is looming at our door step. Measured by flight time, this market is just 4 hours away. Clearly, would this not mean a game-changing operating landscape for our SMEs?
- The implications for SMEs are indeed many and profound. Not least of which would be that kind of growth opportunities that our SMEs can participate in, if they know how to give themselves that kind of lift that only rapidly-growing markets would afford. The most asked question pertaining to this is whether our SMEs are expanding into China, bringing with them their business models, products and services. In fact, many of them are already doing so. IE Singapore now has 8 offices in China and they know in which cities our SMEs are setting up their operations.
- The other equally valid but less-asked question is: are our SMEs helping Chinese companies venturing out into Southeast Asia, South Asia and the Middle East?
- I asked this question because firstly, many fast growing Chinese SMEs are very pre-occupied with domestic opportunities. They do not have enough bandwidth to expand into South East Asia and beyond, even though they recognise they have to do so one day.
- Secondly, many Chinese SMEs are improving their product designs and service qualities through economies of scale in their domestic market. Their internationalisation efforts will take place in a matter of time. Could our SMEs, because of our proximity to South East Asia and regional markets, and our language similarities, render ourselves relevant to the fast growing SME sector in China?
- Conceivably, our SMEs could start representing their Chinese counter-parts in the South East Asia market and beyond. Even our associations, such as SOE, can initiate interactions with their counterparts in China, with a view to bring about such representative-relationships and partnership. After becoming familiar with each other, Singaporean and Chinese SMEs can consider joint-ventures in each other's markets or in 3rd countries. Through this, our SMEs can increase their relevance to the world’s second largest economy, and possibly the world’s largest in years to come.
- Turning to our home front, the subject of productivity improvement actually determines the continued well-being of our SMEs. While our SMEs actively seek growth opportunities, they must have the capacity back home to innovate, create new business models and improve existing product and services. The objective is to stay ahead of global competition, by creating new values from their solutions. To achieve this, our SMEs need to invest in their innovative capacities.
- The government has set aside $1 billion out of the recently announced $16.1 billion R&D national budget to commercialise R&D outputs into new products and services. This funding will be used to support the work of translational-innovation centres, proof-of-concept and proof-of-value funding, enterprise incubators and accelerators. SMEs can leverage on these initiatives and work with our scientists to innovate and realise the commercial value of the discoveries.
- One such initiative is the Centres of Innovation (COI). There are currently five COIs that offer technology consultancy and advice to help SMEs identify practical, downstream technology platforms for quick adoption. These five COIs currently specialise in areas of Precision Engineering, Electronics, Marine and Offshore, Environment and Water, as well as Food. Today, they have engaged about 2,700 companies and worked on 450 projects in collaboration with industry. With the new funding, up to 5 additional COIs will be set up. The scope of the COIs will be expanded to help SMEs develop intellectual property into new products and services.
- Our long-term goal is for Singapore to be among the most research-intensive, innovative and entrepreneurial economies. SMEs can be small but beautiful. They can be unique and centres of excellence in the segment they compete in.
In closing, let me say that our future will not be a straight line growth curve. There will be surprises like the one we saw in 2008-2009. But our SMEs today are far more sophisticated and market savvy than before. This is because our SMEs are continuously learning and improving themselves. Going forward, they have to live by innovations.
It remains for me to offer my warmest congratulations to the winners of this year’s SOE Entrepreneurship Award. By your great work you will inspire many out there trying out and validating their new ideas in the marketplace. Each time I look at a new batch of winners, I have increased confidence in our economy and society. I wish you all great success ahead. Thank You.