The challenges of small and medium-sized enterprises are well-known. They have entered an economic phase marked by a fundamental need to raise productivity, particularly as curbs on the once ample supply of cheap foreign labour have come to stay. The fate of SMEs is a national issue because they employ 70 per cent of Singaporean workers. Clearly, SMEs will need to be supported by the continuing fine-tuning of economic policies within the tripartite framework that brings together the state, employers and employees to ensure the overall economic health of the nation.
However, while SMEs remain rooted in Singapore as an essential part of its economy, there is another way for many of them to thrive - by expanding into emerging Asia. The aspirational energy required for that effort has been highlighted by a new Boston Consulting Group report, which calls for a mindset shift among SMEs to escape their comfort zone and tap the region's potential.
China, India and Indonesia are among the laboratories of Asian growth where opportunities await the adventurous. Certainly, such countries exhibit a range of problems as well. In some, physical infrastructure lags well behind economic ambition. In others, poor governance has bred an infectious culture of petty corruption, nepotism and collusion among powerful vested interests intent on keeping foreign competition at bay.
In yet other countries, there is a sense of conditions not being quite ripe for SMEs to take a risk. Nonetheless, a market is generally appealing so long as it is in the making, and not when it's saturated to perfection. Hence, smaller Singaporean firms need to leverage the imperfections of foreign systems to their own advantage before similar companies from elsewhere corner the market. Habitual adherence to Singapore's clean and safe operating environment, including its insistence on upholding scrupulously the rule of law in business dealings, is one of the best practices associated with Singapore's brand name that should help the firms to stand out on foreign shores. At the same time, they will have to be enterprising and inventive to navigate their way through wild undergrowth elsewhere.
That would not be a new voyage. A policy of economic regionalisation allowed Singapore companies to escape the constraints of the city-state's limited size and manpower by tapping into the potential of its neighbours and others farther afield. While the emphasis in earlier decades was on heavyweights going regional, now it is the turn of smaller firms to venture out and tap into niche areas where they can use their expertise to competitive advantage. Companies successful in expanding abroad would deepen the bases of their success in order to register a firmer presence back home. In the end, the rise of Singapore companies abroad should also help workers back home.