Too many grants for firms not good

The central business disctrict in Singapore.
The central business disctrict in Singapore. PHOTO: ST FILE

Subsidies and grants may not be the solution for Singapore to become a stronger player in the world market, and can end up distorting the economy instead.

Mr Lim Soon Hock, founder of corporate advisory firm Plan-B ICAG, said in an interview that too generous subsidies and grants from the Government are not viable for the long term as businesses should not be dependent on the Government and should find their own source of funding.

If a business cannot overcome the first barrier to execute its innovation, then how will it be able to grow in the future? Upon receiving help from the Government, most new entrepreneurs have the tendency to think of ways to expand, but not many think about strengthening the business first because they would rather use the capital to their advantage.

This could be an economic moral hazard, meaning economic entities take greater risk than what they can bear because they don't have to think about the cost since, technically, it's taxpayers' money. They end up taking up space and resources that could have been allocated for better use.

The Government should have stricter controls over subsidies and grants to provide for fair competition. This would encourage entrepreneurs to plan, develop and grow carefully from the start and benefit the economy in the long term.

Jasmine Loh Tam Nhu, 18,


A version of this article appeared in the print edition of The Straits Times on May 06, 2019, with the headline 'Too many grants for firms not good '. Print Edition | Subscribe