Help SMEs to renew economic growth

Over 50 years and within one generation, Singapore catapulted from Third World to First.

This was due to an inspiring strategy to, first, leapfrog the region and connect directly to the developed world, and second, to transform Singapore into a First World oasis in a Third World region.

The Government followed on with policies and structures to support the new strategy.

This included setting up the Economic Development Board (EDB) as well as launching tax-free pioneer status policies to attract multinational companies to invest in Singapore.

Today, economic growth resulting from this bold strategy has petered out. Big multinational companies have moved their operations out of Singapore.

The Government has decided that local small and medium-sized enterprises (SMEs) are needed to fill the gap as well as internationalise.

These are great ideas, but local SMEs are ill-prepared.

The first bold move for the fourth-generation leaders to consider is to ensure there is only one economy going forward that is powered by our SMEs.

This means merging EDB with Enterprise Singapore so that a single agency can ensure that foreign investments are welcome only if they take our SMEs to the next level.

All policies that benefit multinational companies must also be offered to our SMEs to strengthen their positions.

For example, the billions that the National Research Foundation pumps into research must directly benefit our SMEs, which are not currently on their radar.

The next bold move is to direct all government enterprises that have become regional behemoths to include local SMEs in their regional plans and adopt SME solutions surfaced by the industry transformation maps (ITMs).

Finally, the Government must ensure that "selling out" is not an option for government-linked companies facing market challenges.

For example, instead of learning how to disrupt our own shipping line, the soft option to sell Neptune Orient Lines was taken.

That was a mistake, given that one key strategy of the Sea Transport ITM is to build up a well-connected international maritime centre.

Liu Fook Thim

A version of this article appeared in the print edition of The Straits Times on May 17, 2018, with the headline 'Help SMEs to renew economic growth'. Print Edition | Subscribe