BUDGET 2014

Some micro-SMEs gradually restructuring

Restructuring Singapore's economy and raising productivity, so as to reduce its reliance on foreign labour and raise average wages, have been a big challenge. In the run-up to Budget 2014, The Straits Times is running a series on how firms are taking steps to transform their businesses, with varying degrees of success. Today, Rachel Scully looks at how micro-SMEs have fared and the challenges that remain.

Small and medium-sized enterprises (SMEs) form an integral part of Singapore's economy and have not been spared from the impact of economic restructuring.

Many micro-SMEs, which are locally registered businesses with a turnover of less than $1 million, are finding it tough going.

Referring to such enterprises, Ms Leung Wai Ling, the group director of capabilities and partnership group at Spring Singapore, said: "Being small and often with non-differentiated products or business models, rising business costs have affected the bottom line.

"Those more heavily reliant on manpower like retail, food and beverage, and services are more affected than others."

Spring estimates that about 70 per cent of Singapore's 170,000 enterprises are micro-SMEs. They include family-run shops in the heartland.

A common gripe is the difficulty in mechanising or automating parts of their business processes.

"Talking to customers and haggling or bargaining is part of the trade at small shops like mine," said Mr Toh Sin Hoe, 51, who owns shoe shop H.X.Y Trading in Toa Payoh.

"Unlike department stores or shops in malls, the fixed price concept does not apply to us."

Mr Alan Wong, 48, who runs Yasashii Trading, an antique shop in Bukit Merah, agreed.

"When it comes to repairing or maintaining antiques or intricate furniture, it's a craft which cannot be easily replaced by a machine."

His two staff are in their 70s and Mr Wong has not been able to hire a younger person with the same skills.

Nonetheless, there is a growing number of small firms which are attempting to restructure their business.

Xin Lai Xin Complete Funeral Services, founded by Mr Goh Mong Hock, 55, is one such example.

His son, Mr Goh Sen Gui, 26, introduced him to schemes such as the Productivity and Innovation Credit (PIC) that helped the firm go paperless.

"We claimed more than $10,000 last year which went to desktops and mobile devices to improve our efficiency," said the elder Mr Goh. Rather than wasting time having to go through paper records, it became much easier to retrieve past details.

He hopes that the Government will provide more funding to groom a new generation of talent willing to take over the business.

"My three children are keen to continue running the business, so I hope they can further their studies in business administration to build the funeral business in a professional manner."

Ms Agnes Toh runs the Mei Zhen Hakka food stall at the Shunfu Mart Food Centre with her sister. The pair took over from their mother.

Ms Toh was linked up with a business adviser from one of the SME Centres last year, who gave her suggestions on how she could speed up the preparation of ingredients.

By tapping the PIC, Ms Toh, 37, was able to buy a food processor and cutting machine, helping to halve preparation time for dumpling fillings.

Feedback gathered from SMEs showed that having too many schemes may be confusing for business owners, said Minister of State for Trade and Industry Teo Ser Luck at the launch of a centre of innovation last week.

He added that the Government will continue to look at how these schemes can be made more accessible to businesses.

As for family-run shops in the heartland, MP for Tanjong Pagar GRC, Dr Chia Shi-Lu, hopes the setting up of a localised merchants workgroup can better serve their needs.

Referring to one in Queenstown, he said: "The merchants workgroup will focus more squarely on bread- and-butter business issues... and can help oversee how the business friendliness of the area can be improved.

"It also hopes to look at ways which can make the neighbourhood shops more price-competitive, and at how we can encourage residents to patronise these shops."

For instance, furniture shops in the area would have to compete with megastores such as the nearby Ikea which offer a wider variety of products at competitive prices.

rjscully@sph.com.sg

This article was first published in The Straits Times on Feb 6, 2014