Budget debate

Firms must lead change

Restructuring is becoming increasingly critical for Singapore companies but the impetus to transform cannot come solely from the Government, MPs said.

Speaking on the first day of the Budget debate, they lauded Finance Minister Heng Swee Keat's more targeted, sector-specific approach towards helping firms raise productivity, but noted that companies themselves must be driving change.

More also needs to be done to gauge the effectiveness of the Government's billion-dollar industry transformation programmes, they said.

Their comments come as Singapore companies continue to face the uphill task of transforming for the future amid an ongoing slowdown, tight labour market and rising business costs.

MPs welcomed Budget measures targeted at helping small and medium-sized enterprises (SMEs) tide over the current rough patch, as well as moves such as the $4.5 billion Industry Transformation Programme that aims to foster innovation, help companies automate and gear industries up for the future.

However, some raised concerns that billions spent on help for companies might create a dependency mindset, especially as some of these measures have been in place for many years.

"Businesses are always hopeful and confident that the Government will introduce measures to help them tide over the crisis. And indeed, the Budget always delivers," said Dr Lim Wee Kiak (Sembawang GRC). "We are encouraging local businesses to venture out, but the business climates in other countries are far harsher. There will be more obstacles, and nobody will be at hand to provide them with aid and assistance... Let businesses learn to grapple with the crisis and come out stronger."

Ms Foo Mee Har (West Coast GRC) noted that resources are scarce, and asked how outcomes on big-ticket investments like the Industry Transformation Programme will be tracked.

"What lessons have we drawn from our experience of years past, where well-intentioned productivity schemes, costing billions of dollars, ultimately failed to lift productivity levels?

"We have been on this restructuring journey for some time now and with each passing year, the urgency to show results grows while our margin for error shrinks," she added.

Mr Alex Yam (Marsiling-Yew Tee GRC) noted that efforts like the Wage Credit Scheme, in which the Government co-funds 40 per cent of pay hikes given to Singaporean employees, and the popular Productivity and Innovation Credit (PIC) have benefited firms but more accountability is needed in measuring outcomes.

"But for how long more... should more tax dollars be used, is something the Finance Minister would have to address," he said. "The onus is on businesses to innovate and be productive. If they do not, and if their businesses suffer, who is to blame?"

Meanwhile, business MPs said shifting mindsets among business owners is vital.

"Some industry players have no confidence in their own industries. This kind of mindset is in fact sunset thinking, which would sooner or later lead to their elimination," said Nominated MP Thomas Chua, who heads the Singapore Chinese Chamber of Commerce and Industry.

Mr Chong Kee Hiong (Bishan-Toa Payoh GRC), the chief executive of OUE Hospitality Trust, said attitudes towards failure also have to change.

"We await the day when we have people comparing how many times they have failed and are still trying instead of which company are they working with," he said.

A version of this article appeared in the print edition of The Straits Times on April 05, 2016, with the headline 'Firms must lead change'. Print Edition | Subscribe