Budget debate: Give local businesses preferential treatment in govt procurements, urges PSP's Hazel Poa

The NCMP said the government can do more to help Singapore's SMEs grow large enough to compete globally. ST PHOTO: LIM YAOHUI

SINGAPORE - Local small and medium-sized enterprises should be given preferential treatment in government procurements, to help them grow and compete globally, said Non-Constituency MP Hazel Poa on Wednesday (Feb 24).

Speaking during the debate on the national Budget announced on Feb 16, the Progress Singapore Party (PSP) NCMP also called for an increase of the wage component in the gross domestic product (GDP), and reiterated the call made by earlier opposition MPs for the Government to reveal how much there is in the nation's financial reserves.

Ms Poa said the Government should do a study on the effectiveness of each of the support measures rolled out during the pandemic to help it make better allocations in future, such as in deciding whether to give it to companies, families or individuals in need.

Noting that the Government last year committed nearly $100 billion through various packages to tide the country over the Covid-19 crisis, Ms Poa pointed to the Monetary Authority of Singapore's estimate that such efforts supported GDP growth by only 5.5 per cent, or about $28 billion.

She asked: "Did Singapore get a bang for its buck?"

Ms Poa also called inadequate the recently announced $900 million allocated to help Singapore households ride out the Covid-19 crisis this year.

"With more business closures and unemployment expected to increase after March, when many of the support measures start to taper off, more households will likely suffer financial stress.

"I hope the Government will consider increasing its support for the many who will likely need it," she said.

While the Budget has addressed the capital needs of Singapore businesses, the NCMP said the Government can do more to help Singapore's SMEs grow large enough to compete globally.

She cited the example of Israel, which in 1995 approved the "Preference for Israeli Products" regulation stipulating that a 15 per cent price differential preference be awarded to Israeli manufacturers for certain items, and for products with 35 per cent Israeli content and with a value not exceeding $500,000.

Israeli manufacturers in "National Priority Zones" also receive an additional five to 15 per cent price advantage.

"A 'Mandatory Industrial Cooperation' regulation also required foreign suppliers that had won government or public tenders to engage in an offset procurement in Israel to the extent of 20 per cent to 50 per cent of the contract value by local subcontracting, procurement of Israeli goods and services, cooperation in R&D (research and development), and investment or assistance for an Israeli industrialist or exporter abroad," she said.

Ms Poa said these regulations have not impacted Israel's competitiveness to a degree that it is no longer globally competitive, and that the PSP urges the Singapore government to "consider similar preferential treatment for local businesses in government procurements".

In her speech, the NCMP also noted that wages formed about 43.6 per cent of the GDP here last year.

This is lower than in Germany, where the component was 54 per cent, and in the UK where the wage component was 53 per cent.

"If we want to ensure that our people enjoy the benefits of this economic growth, we should set an initial target of having the wage component form at least 50 per cent of GDP.

"This should be an important KPI (key performance indicator) for the Government moving forward," said Ms Poa.

Ms Poa also asked if President Halimah Yacob was aware of the exact size of the nation's financial reserves when she made the decision to allow a second consecutive year of drawdown.

MPs are being asked to vote on a Budget that would require a draw on the reserves without knowing its actual size, she said.

"Without knowing our nation's financial position, it would be difficult to make sound and prudent decisions, and certainly not informed ones," said Ms Poa.

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