Nurture the spirit of enterprise

Finance Minister Heng Swee Keat spoke at the end of a three-day debate in Parliament on the Budget yesterday. Below are edited excerpts.

The success of our SMEs (small and medium-sized enterprises) matters to our people's jobs and well-being.

SMEs provide a range of services important for our daily life and add buzz to our neighbourhood. Some will grow to be future large firms. Even if they don't, our society will be richer to have the opportunity where people just try to do something.

We want a vibrant SME sector but to support our SMEs, we must recognise that they range from micro enterprises in the heartland to fairly sizeable firms with an international presence; some are in sectors that are doing well, while others are facing difficulties.

Listening to all your comments, however, there is a common thread running through on how we can help firms and workers. The common thread is to nurture, celebrate and reinforce the spirit of enterprise and not undermine it even as we provide support. To go for long-term vitality and not short-term fixes.

A business leader once asked me this very intriguing question. "In every place," he said, "from the poorest neighbourhood in Africa to the richest precinct in Silicon Valley, there are firms that succeed and firms that don't. Why?"

Good question. Last year, both the SBF (Singapore Business Federation) and the SCCCI (Singapore Chinese Chamber of Commerce & Industry) honoured companies and business leaders from our founding days. The SBF award recipients include longstanding names such as Shaw Theatres and Yeo Hiap Seng, the SCCCI award recipients include the founders of Lim Teck Lee, Pan-United Corporation and Sing Lun Holdings.


Mr Ng, seen here with test engineer Wong Yok Jung, was sent to Germany for five months' training after joining Feinmetall. On his return, he helped develop a machine to improve a process, boosting productivity by four times and cutting training time for the process from nine months to a week. PHOTO: FEINMETALL

These companies and pioneers started out in an environment with few grants, incentives and agencies to support them - a point which engineer Lee Bee Wah also raised. In many cases, they started from scratch.

TRANSFORMING SINGAPORE

To take this journey, we have to keep our eyes on the road, keep our eyes on the horizon and keep our eyes out for the people we journey with. Every journey, even the longest journey, is taken one step at a time. And so too with a country.

Though we keep our sights on the distant future, we move towards it one Budget at a time. If we gaze upon the distance and don't look at the road immediately in front of us, we risk falling into a hole and will never reach our destination or we will take injury and recovery before we get there. In this Budget, we have taken targeted steps to address short-term pressures to make sure that we don't fall into the hole.

We have to know our direction and we have to know how far do we hope to go, do we have it in us to go that distance and we have to budget for our journey. We can't use up all our supplies at the start and we have to have ways to grow our store of supplies. It's not possible for the Government to keep handing out goodies for everyone year after year. Instead, each Budget must build on the previous ones to carry forward momentum to future Budgets.

How do we keep our eyes on the horizon? Our firms need to look outwards and look forward to find new markets, grow capabilities, transform, look ahead, see opportunities where others see only problems.

The Committee on the Future Economy will continue that looking towards the horizon to plot out what we can of the road ahead so that we can take the right steps of a vibrant, strong future economy that creates good opportunities for our people.

Each of us too must continually learn, get the skills the world needs and must have the resilience to overcome personal setbacks and adapt to change.

For this reason, we will keep investing in SkillsFuture. I hope Singaporeans will make full use of SkillsFuture and that all employers do their part to redesign jobs, facilitate learning and build a better future.

And the Government must know when to step in and when to step back. We must not inadvertently undermine the spirit of enterprise and the natural workings of markets or undermine the spirit of caring and resilience such that we weaken the bonds of family and community.

Instead, we must reinforce critical values and our spirit as a society. Resources hard won and wisely managed will nourish us for the road ahead. Our values and our spirit, these are what will truly energise our journey.

The last thing we have to do for this journey is to keep our eyes out for the people who journey with us.To me, there's no meaning to this journey unless it is a common journey. So we must look out and care for one another as we journey. Is someone getting tired, is someone struggling, what can we do to keep all of us going together? At the heart of this, we must recognise that every member of our society is not just valuable but precious.

MR HENG SWEE KEAT, calling on Singaporeans to work in partnership with the Government and with one another to transform Singapore.

Whether you look across countries or you look across time in our own history, why do some firms succeed while others don't? The common element for success is this - the spirit of enterprise. This is the critical element needed for economic vibrancy in Singapore and anywhere in the world.

Running a business is a complex thing because you'll be faced with a myriad of unforeseen problems. The more problems one solves, the further one gets ahead. Solving problems also allows the entrepreneur to develop the entrepreneurial instincts to then see opportunities where others see problems.

Associate Professor Randolph Tan hits the nail on the head when he said that the principles that have propelled us since independence are, and I quote, "self-reliance, openness and a determination to remain updated and relevant". These are what nurture the spirit of enterprise.

One element of this spirit of enterprise is the need to look outwards and forward to see challenges and opportunities in the world around us. Mr Lee Yi Shyan reminded us of how robotics is shaping the global economy. Now which country in the world buys the most industrial robots? Well, the country with the most people in the world - China.

If even China at their lower level of wages is automating, what does this mean for us? Minister Chan Chun Sing related how e-commerce is changing the face of retail. As consumers, we want the best deals. I've heard of many people who go to a shop to view, feel and try products and then go home to purchase them online at lower prices.

Retail shops are under stress. But some in the sector are looking ahead into the future. Funan DigitalLife Mall, known for years and years for selling IT products, is closing to reshape itself to become an experiential creative hub. Mr Liang Eng Hwa cited insourcing trends in both the US and China and this means that the global supply chain which we are a part of is shrinking. China and the US will produce more and more of their goods at home.

How do we continue to create value within the world, among the world's biggest markets?

One way of supporting this spirit of enterprise is to make sure that viable firms can survive this period of cyclical weakness, otherwise we lose precious capabilities that are difficult to rebuild later and our people's livelihoods could also be at stake.

This is why this year's Budget is carefully calibrated to address cyclical concerns without impeding restructuring.

Costs remain a concern for many SMEs. Rental costs have declined over 2015. Retail, office and industrial rents fell by 4.1 per cent, 6.5 per cent and 2.1 per cent respectively. I appreciate that the experience can be different for different firms in different locations. That is why we are careful to shape the overall macroeconomic conditions to be supportive of growth to make sure that we do not price ourselves out of the global market. We released more space, implemented anti-speculative measures and calibrated our exchange rates carefully and these are medium-term measures and we are seeing results.

Others such as Dr Lily Neo spoke about manpower costs. Wages have been rising, which is good for our workers. But it puts pressure on businesses, especially those with lower margins. We must understand where these cost pressures come from. They are fundamentally based on demand and supply. Our supply of land and labour is limited but the demand for our resources is growing, which, in fact, indicates that our economy is still growing. So prices are bid up. While we should be careful not to price ourselves out of the global market, we must accept that we cannot be a low-cost location. Even China, which used to be a cheap place, with its vast land and population, 1.3 billion people, is experiencing rising business costs. Its businesses are automating, are moving out from coastal region to inland as well as to cheaper locations outside China.

So we cannot permanently subsidise costs. All firms, large or small, in whatever sector, must compete on productivity and innovation. This is the way to reinforce the spirit of enterprise and to build vitality in our firms for the long haul. This is how we will compete.

A business leader, Mr Steven Koh, put it to me this way. He said: "Government support is like push-starting a car that has gotten stuck in a difficult patch. It can get the car going again but the government cannot be pushing the car for miles and miles. It will run out of resources. So once the car is moving, it has to rely on its own engine to go for the long haul."

To go back to the question of why some firms succeed, we also observe that some economies and some regions of big countries produce more winners than others and have been able to create many more good jobs. In these economies, the governments have played an important role, an enabling role, enabling enterprising individuals and businesses to go further than they could have on their own. They have created a stable political and business environment with clear policy and regulations, invested in the R&D and first-class infrastructure and, most of all, in their people through education, through lifelong learning.

In this Budget, we seek to:

  • Help entrepreneurial firms scale and internationalise;
  • Support automation to build capacity;
  • Encourage innovation;
  • Support our shops through the revitalisation of the heartlands;
  • Provide a broad range of support to SMEs so that everyone has the opportunity to upgrade, to raise capability, to compete.

For our people, we seek to support the development of deep skills and match these to growth areas.

Engineer Lee Bee Wah sums it up well: "In the short term, Singaporean firms might rightly expect some fish from Government to keep their workers fed. But ultimately, the country will run out of fish if they don't develop bigger, smarter and faster fishing ships to get fishes from international waters."

And indeed, the Government can help businesses to develop bigger, smarter and faster ships but ultimately the captains of industry must navigate these ships and help our firms go the distance.

RIGHT JOB, RIGHT SKILLS, RIGHT MATCH

All over the world, people are concerned about jobs as major economies grapple with job losses and structural unemployment. In some countries, there's overcapacity. China is rebalancing its economy from heavy industry to services and may lay off over 1.5 million workers from the coal and steel industries alone. In other places, such as the United States or Europe, underinvestment has held back economic and employment growth.

Underemployment and structural unemployment due to skills mismatches are issues that many economies are grappling with. We are in a better position because we have invested in creating jobs and enabled our people to acquire relevant skills.

Our overall unemployment rates are low compared with other countries. At the end of 2015, the unemployment rate was 2.9 per cent for residents and 3 per cent for citizens, which most economists would regard as close to full employment.

Importantly, real median income has grown by 3 per cent per annum over the last five years. Now, overall, our economy is still creating jobs. The ratio of job vacancies to job seekers remains above one.

But I understand the anxieties of Singaporeans about jobs because it's not just about jobs, it's about our families. We cannot take for granted that there will good jobs and incomes in the future. To address these concerns we need a coherent approach: First, create the right jobs; second, develop the right skills; and third, enable the right match.

Associate Professor Randolph Tan said: "It is no mean feat to continue to generate jobs in an increasingly sophisticated economy packed into one of the most congested cityscapes in the world."

Indeed, this is no mean feat.

We not only need to create jobs but, given our high-cost structure, given the high level of wages already, also need to create jobs of high value that meet the aspirations of Singaporeans. And to do that, our firms must be competitive and productive. Productive firms generally pay higher wages. This is why industry transformation is so important, why we need to transform enterprises, transform industries and transform through innovation. Because the industry transformation programme is the engine, the means for us to create better lives and better jobs for our workers.

All these require changes which require us to create new companies, to create new jobs and which will require new skills.

As part of this transformation, firms must also redesign jobs and develop their staff. Many firms are doing this and reaping the benefits.

Take Feinmetall, a precision engineering firm I recently visited where I met Winson Ng, a young polytechnic graduate who joined Feinmetall after his course in mechatronics at the Singapore Polytechnic. After working for five months, he was sent by Feinmetall for advanced training in Germany and upon returning to Singapore, Winson noticed that one of the processes used to bend needles for semiconductor wafer testing could be done better.

So he conceptualised a way to automate it, then worked with a systems integrator to develop a machine for it. As a result of this innovation, productivity increased four times and operations run 24 hours a day. The machine also reduced the training time required for the process from nine months to one week.

Employers play a very, very critical role in not just upgrading their firms but really in developing their people. I hope that all firms will invest in their people, young and old, and start a virtuous cycle of higher skills, higher productivity, higher wages, which can then be reinvested to develop the firms further.

While firms create the right jobs, our people must also develop the right skills to take on these jobs.

Preparing our people for the future starts from an early age, when our children develop the fundamentals and the love for learning.

We must build the confidence of our young, broaden their learning and stimulate their curiosity as early as possible. It is a powerful force that will keep them learning and help them overcome challenges in their lives. To deepen lifelong learning, we launched SkillsFuture, with a focus not just on skills of today but also skills for tomorrow.

In 2015, over 260,000 residents took up WSQ (Workforce Skills Qualifications) courses. Twenty-two thousand were enrolled in part-time diploma, post-diploma and degree level programmes in our polytechnics and publicly funded universities.

I've met many people who are pursuing part-time courses. I know it's not easy juggling the demands of work, family and studies. The spirit of resilience and lifelong learning is most commendable. The success of SkillsFuture depends on everyone playing their part, not just employees but also employers. So the Government will provide support and resources for those who are willing and motivated to acquire new skills and deepen their skill sets.

Now, we need the right match. Job seekers, including those currently in employment, can avail themselves of a suite of employment and training assistance. These include Professional Conversion Programmes and the Career Support Programme.

WDA (Workforce Development Agency) and (the labour movement) NTUC's Employment and Employability Institute or e2i help match workers and jobs and provide training to improve their employability of workers through their career centres. They have successfully placed over 14,000 job seekers in 2015. Besides employment and training assistance, wage support is also provided in some cases.

This year's Budget builds on these programmes with the launch of Adapt and Grow programme, which will provide support for more Singaporeans to reskill and gain employment.

As new industries and new types of jobs emerge, we will need to take our skills and job matching efforts even further. What is critical is to sustain the long term vitality of our labour market.

A version of this article appeared in the print edition of The Straits Times on April 07, 2016, with the headline 'Nurture the spirit of enterprise'. Print Edition | Subscribe