S’pore to encourage firms to take more risks to capture growth opportunities amid changing world

SINGAPORE - In a fundamental shift, local companies will be encouraged to accept risk-taking as part of their strategy to capture new business opportunities in a changing world.

A midterm update of the Economic Strategy Review

(ESR), unveiled at a Jan 29 press conference, sought government support for companies, including start-ups, that are able to establish or extend Singapore’s global leadership in key growth sectors, such as advanced manufacturing and modern services, even if that entails the risk of failure.

The recommendations made by the ESR committees include government support for local firms to go overseas and with big projects. This could also be risk-prone as most countries are raising barriers to trade and investments.

Deputy Prime Minister Gan Kim Yong said that while Singapore will continue to focus on bringing in big investments from multinational corporations, it will increase its focus on emerging global players as well. He said that in the past, Singapore was hesitant to offer support for companies that had yet to show a successful track record.

“In the past, we may say, ‘Let’s wait for you to become big because we don’t know whether you will succeed or not’,” he said, adding that now, Singapore needs to change that approach.

“You need to take a bit of risk. Invite them to be here, grow with them. Some will not succeed, but some will. And they will grow from Singapore and we will enjoy their growth together as partners.”

DPM Gan added that this will be a fundamental shift in Singapore’s investment promotion strategy.

Acting Minister for Transport and Senior Minister of State for Finance Jeffrey Siow said risk-taking will also come with the strategy to deepen Singapore’s connectivity with the world.

“I think what we can do is more aggressively support our companies to go abroad and internationalise,” he said.

That will not be an easy task.

“Overseas markets will be harder. They are more protected. More countries are doing industrial policies, so it is much harder for our firms to be able to compete,” said Mr Siow.

“But I think there is scope for us to support them, to take more risk, invest in bigger projects.”

The benefits will be brought back to Singapore, including profits from overseas operations, creating good jobs locally and overseas, as well as having strategic influence in some industries that matter to the Republic, Mr Siow added.

DPM Gan said the new approach to secure economic growth and good jobs is needed because of the confluence of challenges Singapore faces.

“Geopolitical tensions, great power competition, as well as the rise of protectionism and nationalism, which have resulted in many companies and businesses in many industries rethinking their business models, reorganising and reconfiguring their supply chains. This has created a lot of uncertainty,” he said.

In addition, advances in technologies like artificial intelligence (AI) have also created challenges for firms that have to adapt and learn how to make use of the technology.

Meanwhile, companies will have to think about how to transition to a low-carbon future.

Singapore’s ageing population and a mature economy mean these challenges will be hard to overcome, DPM Gan said.

“What is even more important, and may not be so obvious to many people, is that the (economic) growth will be a lot more difficult to achieve going forward. And with the challenging external environment, growth will become even more difficult (to achieve).”

Also, with AI making it possible to do more with fewer people, we can no longer assume that growth will automatically generate jobs, he said.

“With automation, AI and productivity, as all of us hope to achieve, there will be higher value-adding industries and business activities. That means with higher value-add per worker, you will not need as many workers. So job creation will be another challenge.”

Mr Siow, however, emphasised what will help Singapore overcome the challenges.

“We are starting from a position of strength. We have a strong, diversified economy. We have resources, in particular, much more educated and skilled Singaporeans,” he said, adding that Singapore will continue to benefit from its established status as a trusted and connected global hub.

“Some of the characteristics that the Singapore economy is well known for – trustedness, connectivity – are, in fact, even more important in this changed economy. So, we should be confident that with change lies opportunity.”