I cannot agree more with Mr Liu Fook Thim that Singapore must restructure traditional industries rather than venture into new areas which we have no expertise in (Re-engineer established industries to help PMETs, Feb 19).

As high costs make us a less inviting option for many overseas firms, it is time to reposition our economy. Small and medium-sized enterprises (SMEs) must quickly step up to fill the shoes of multinational corporations (MNCs) that are offshoring their businesses out of Singapore.

As SMEs have to take a giant step up to fill the void, tax incentives and grants will help businesses strengthen their capabilities, restructure, develop their workers and provide them with the finances to expand overseas.

SMEs lack the financial muscle and economies of scale that MNCs possess. Hence, they face far more stringent credit guidelines from banks to fuel their expansion.

The Economic Development Board and Enterprise Singapore can assist by developing local private-sector businesses to contribute to supply chains.

This can involve introducing schemes that help local businesses tap opportunities for expansion to give them a competitive advantage in the global market.

In order for local enterprises to create genuine value, they must generate new products and services in established industries.

This will pave the way for such businesses to grow through collaboration with MNCs to meet global demands, and not just the needs of the domestic market.

The authorities must also ensure a level playing field of support for small businesses by offering them the same incentives as MNCs to get up to speed.

While it may sound like a good idea for SMEs to cooperate by leveraging one another's core competencies, the reality is that business rivals will never risk sharing any knowledge that gives their competitors a leg-up.

Establishing more protocols in order to facilitate collaboration may have the unintended effect of restricting the way SMEs operate when collaborating.

While huge foreign companies move out of Singapore, we can make Singapore the preferred destination for foreign firms to shift their higher-value R&D here to develop their ideas, revolutionise growth areas and adopt new technologies.

Local R&D firms will also benefit from partnering with these foreign counterparts. The transfer of knowledge may help us become a dominant force in some of the established industries we once excelled in.

Edmund Khoo Kim Hock