Singapore companies need to look beyond price competitiveness and develop niche products so they will not be easily displaced in the global supply chain, said Minister for Trade and Industry Chan Chun Sing.
In what he called a four-pronged strategy, Mr Chan said government support will now be focused on encouraging local manufacturers to make innovative products, innovate their production processes, access larger offshore markets and develop the local talent base.
On a visit to Sanwa Plastic's Woodlands factory yesterday, he said there will be increased emphasis on small and medium-sized enterprises (SMEs), which represent more than 90 per cent of the local manufacturing sector.
"Our SMEs are competing in an increasingly challenging business environment. There is an urgent need for our SMEs to innovate their offerings to meet customers' changing needs and stay relevant in today's evolving landscape," he said.
The minister described the various government initiatives and schemes available for SMEs, like Sanwa, to build their capacity to innovate and ride the next wave of growth.
The schemes include the Productivity Solutions Grant, Scale-up SG, Enterprise Leadership for Transformation and the Automation Support Package, he added.
Mr Chan's visit to the precision equipment and medical device maker's factory follows last month's announcement of Singapore's plan to be a global business, innovation and talent hub for advanced manufacturing by 2030.
He said: "To strengthen the capabilities of our local enterprises, it is not sufficient for us to let them depend just on their own network. We will make available to them many other capabilities and services in order to help them strengthen their competitiveness and product development."
The minister declined to comment on the new incentives that will be in Budget 2021, but stressed that the Government has always given high priority to developing local innovative businesses that can scale themselves overseas, improve the skill sets of their existing workforce and groom fresh talent.
For Singapore's economy, the manufacturing sector is a critical pillar that defied the disruptions brought about by the coronavirus pandemic.
While the economy shrank by a record 5.8 per cent last year, according to advance data, manufacturing is estimated to have grown by 7 per cent.
Mr Chan stressed that SMEs must undertake the transformation to ensure continuous productivity improvement, for example through the adoption of Industry 4.0, which refers to the automation of traditional manufacturing.
He said there are also great opportunities in the region and beyond.
SMEs must also strengthen their ability to develop their leadership bench and attract local talent at all levels, the minister said.
While upscaling their capacity through innovative technologies, companies should also prepare their existing workforce for the transformation by reskilling and upskilling them, he added.