Focusing on innovation can help SMEs get ahead

As Singapore's economy matures, slower growth will be a reality.

I agree that a fundamental survival skill for small and medium-sized enterprises (SMEs) is their ability to quickly step up to fill the shoes of multinational corporations (MNCs) that are offshoring their businesses out of Singapore (Help SMEs to renew economic growth, by Mr Liu Fook Thim; May 17).

The present shorter cycles between economic growth and downturns are limiting new opportunities for expansion and causing companies to focus more on cost management.

Economic slowdown is not always a bad thing as it may be a springboard to innovation and growth in the longer term.

In order to compete successfully in the region, Singapore must transform to maintain our key competitive advantage (Adopting tech solutions pays off for SMEs; May 16).

For SMEs to create real value, they must generate new products and services. This will pave the way for local enterprises to grow through collaboration with MNCs to meet global demands, and not just the needs of the domestic market.

Without the financial muscle and economies of scale that multinationals possess, SMEs face far more stringent credit guidelines from banks to fuel their expansion.

The Economic Development Board and Enterprise Singapore can help develop local private sector businesses to contribute to supply chains, thus giving us a competitive advantage in the global market. This will involve introducing schemes that will help local businesses tap opportunities for expansion.

Our Government must face up to the reality that high costs make Singapore a less inviting option for many overseas firms. The exodus of huge foreign companies is an ongoing process.

Recognising that SMEs have to take a giant step up to fill the void, the Government should give tax incentives and grants to help businesses strengthen their capabilities, navigate through the muddy waters of restructuring, develop their workers and even finance expansion beyond our shores.

While MNCs and government-linked companies have reason to be optimistic about future growth, owing to greater support from the powers that be, the same cannot be said for smaller local companies. Only by focusing on innovation while preserving a level playing field of support can SMEs get up to speed.

We can become the preferred destination for start-ups and modest enterprises to develop their ideas, revolutionise growth areas and adopt new technologies to become core contributors to our future economy.

Edmund Khoo Kim Hock

A version of this article appeared in the print edition of The Straits Times on May 24, 2018, with the headline 'Focusing on innovation can help SMEs get ahead'. Print Edition | Subscribe