As an intellectual capital practitioner keen to support the rise of small innovative enterprises (SIEs), I believe the 2015 Budget strikes a right strategic balance that will bolster overall industry performance.
The $600 million enhanced Capability Development Grant to support innovative small and medium-sized enterprises will boost SME industry performance and help accelerate higher economic value creation by SMEs.
The new $500 million venture debt-risk sharing programme will strengthen the entrepreneurial finance ecosystem which SIEs can benefit from.
The enhanced $240 million tax incentives and stronger grant schemes will help SMEs to internationalise, embark on mergers and acquisitions to enable them to scale their businesses overseas and generate more income for the Singapore economy.
These new measures will certainly accelerate the shift of the Singapore economy into the next frontier, where innovation and our ability to deepen the monetisation of our external economy will boost our competitive advantage.
If one were to look at the components of the Singapore economy, it is clear that boosting SME performance is an integral part of pushing the economy to the next frontier.
Today, SMEs employ 80 per cent of the workforce but contribute only 25 per cent to Singapore's gross domestic product (GDP). So, there is still a lot of room to boost value creation by SMEs and help them move up the economic value chain.
When there are more grants to strengthen SME capabilities, help them internationalise and provide alternative venture debt financing sources, there will be greater opportunities for SMEs, especially the technology-driven innovative enterprises, to rise.
DBS chief executive officer Piyush Gupta recently commented that most of Singapore's growth has been government-linked, Temasek-linked and state-sponsored. He added that "the future of Singapore has to be a lot more entrepreneurial than our past has been, and DBS is playing its part to create a robust ecosystem for tech entrepreneurship".
The Singapore Government has been promoting technopreneurship for well over two decades and has allocated over $16.1 billion for research, innovation and enterprise development. This R&D spending has just been topped up by another $1 billion in the recent Budget.
But let us not forget the rule of the marketplace - it is not about how much you allocate that ultimately matters, but how well you spend whatever amount you have to generate sustainable income.
As Facebook co-founder Eduardo Saverin, who lives in Singapore, said recently, it is the smart money and knowledge capital that connects to expertise, customers and markets that will grow start-ups.
So, higher financial investment allocation does not equate to stellar market performance. There is absolutely no co-relationship. It is the yield per dollar invested that matters more. That is how a market- based economy works.
While the Singapore Government can continue to provide the right support, among others, through higher dollar investments, it cannot, however, guarantee market performance of the industry. As Harvard Business School guru Michael Porter once commented, it is enterprise that makes a nation competitive, not governments.
Here lies the challenge for our SMEs, especially the SIEs - it is the quality and higher yield challenge to make that leap from a 25 per cent contribution to the GDP today, to say, 50 per cent in the coming decade.
Based on my own industry observation, the SME sector has made progress but there is room for improvement.
It is now up to the SMEs, especially the SIEs, to take the value-creating game to the next level through innovation and by deepening our external economy. Only then can Singapore taxpayers get their returns on investments.
The writer is an intellectual capital practitioner, lawyer and author who lectures on the law of investments and financial markets at RMIT University.