Electronics SMEs urged to tap region's value, Industry 4.0 tech

On The Future of Electronics panel yesterday were (from left) Mr Irvin Seah, senior economist at DBS; Mr Edwin Ng, managing director of Markono Content Solutions Group; Mr Jason Jameson, director, IBM Watson Internet of Things, Asia Pacific@IBM; Mr D
On The Future of Electronics panel yesterday were (from left) Mr Irvin Seah, senior economist at DBS; Mr Edwin Ng, managing director of Markono Content Solutions Group; Mr Jason Jameson, director, IBM Watson Internet of Things, Asia Pacific@IBM; Mr Derrick Yap, CEO of PBA Group; and moderator Mark Jansen, Technology, Media & Telecommunications and Data Analytics leader at PwC Singapore.PHOTO: DBS

Economist notes challenges from ageing population here, and scope for South-east Asia's value chain to drive growth

Will big global firms want to set up shop, as DBS senior economist Irvin Seah put it, "in a place that looks more like an old folks' home"?

He put the blunt question to an industry symposium yesterday while highlighting the challenges faced by small and medium-sized enterprises (SMEs), which are getting squeezed here by cost competition and demographic changes.

But there are opportunities as well, he added, noting that the regional value chain could drive growth for local electronics manufacturers here but they must tap South-east Asia's value and "Industry 4.0" technology tools.

Mr Seah noted: "Singapore has been very reliant on (multinationals) in the past. Now... would you think that (they) would be interested to set up shop in a place that looks more like an old folks' home? Obviously, what I'm trying to say is that we will become less and less attractive to (multinationals)."

He pointed to Japan, which faced similar issues: "In the 1980s, Japanese companies ventured all over the world because they knew that their market was slowing down, greying, and as a result, there was a push factor.

"But there was also a pull factor, because it meant higher revenues for them. The same happened to Taiwanese companies in the 1990s. So, going forward, I do foresee this will happen in Singapore as well. Much greatly depends on whether our SMEs are willing to answer the call and to take that plunge overseas."

SUSTAINING GROWTH

Leverage the regional market, you scale up, you grow. As you grow, you generate revenues, which will be repatriated back to Singapore, which will then finance the cost, the social expenditure associated with the ageing population. This is the way we can sustain growth. ''

DBS SENIOR ECONOMIST IRVIN SEAH, on cushioning the blow from a Singapore silver tsunami.

Mr Seah was speaking on a panel at a DBS event on electronics that attracted about 200 people, mostly small-business owners.

He cited production trends in South-east Asia, where companies spread their activities across different countries depending on cost and value, adding: "You can see from that, the intra-regional trade in infocomm technology does reflect this very close interconnectivity."

He predicted that more global SMEs would cushion the blow from a Singapore silver tsunami. "Leverage the regional market, you scale up, you grow. As you grow, you generate revenues, which will be repatriated back to Singapore, which will then finance the cost, the social expenditure associated with the ageing population. This is the way we can sustain growth."

Fellow panellist Edwin Ng, managing director of printer Markono Content Solutions Group, told the gathering: "One advantage is that we can leverage the strong (intellectual property)... which makes it a safe environment for you to take risks, try new things. Then, once you get the secret sauce right, we scale up regionally."

Mr Derrick Yap, chief executive of PBA Group, noted: "Many years ago, we were debating within the company whether we should follow the bandwagon. Everyone was 'China!', so if you didn't talk about China, you were dead, really. Your company had no future."

But Mr Yap, whose family's robotics business branched out of distribution into design and manufacturing, said the company opted to "concentrate our efforts in South-east Asia, where we felt we might have a better reward".

"And I think that paid off fantastically, because now you see outflows of people from China going into South-east Asia," he said.

Mr Yap added that SMEs can now punch above their weight with the help of automation and other tools.

Mr Jason Jameson, who oversees the IBM Watson Internet of Things in the Asia-Pacific, agreed that advanced manufacturing "isn't just for big companies".

"I think a good strategy as an SME is often to be able to... get it both ways. You can eat their lunch and/or you can work with them to grow bigger," he said.

A version of this article appeared in the print edition of The Straits Times on May 10, 2018, with the headline 'Electronics SMEs urged to tap region's value, Industry 4.0 tech'. Print Edition | Subscribe