This article was first published on Jan 8, 2015
The largest business association in Singapore wants the upcoming Budget to underwrite an agency that can take a coordinated approach to helping small and medium-sized enterprises (SMEs) become global players.
The Singapore Business Federation's (SBF) SME Committee also said the Government should implement a loan scheme to help SMEs with cash-flow issues amid ongoing economic restructuring.
More data about SMEs should be released as well in view of their significance to the economy.
The federation's SME Committee submitted 29 recommendations for the Budget, which will be presented on Monday, Feb 23.
SMEs, which contribute half of Singapore's gross domestic product and employ 70 per cent of its workforce, are grappling with perennial issues such as tightening manpower and rising business costs, said SME Committee chairman Lawrence Leow.
The federation's latest National Business Survey also showed that SMEs are less optimistic about their outlook than larger companies.
The idea of a single government agency for SMEs has been mooted before but is now more pertinent, given growing opportunities and emerging competition in the region, Mr Leow added.
The Government now administers SME development schemes across different agencies - including Spring Singapore, IE Singapore and A*Star - but a more "coordinated" strategy is needed.
"We have to come up with strategies to ensure that we stay relevant in the global arena... Broadly we have very good schemes (to help SMEs), but in terms of growing globally competitive companies, that is less clear," said Mr Leow.
The Economic Strategies Committee stressed the importance of doubling the number of globally competitive enterprises with revenue of more than $100 million.
"Despite these efforts, there have only been a handful of home-grown SMEs that have achieved global status," the SBF said yesterday.
While the Government's economic strategy has traditionally focused on drawing multinational firms to Singapore, it is now timely to make local enterprise development a top priority, said SBF chief executive Ho Meng Kit.
"This requires the Government to adopt a developmental mindset ...and to use less of a market- based approach," added Mr Ho.
Instead, policymakers should "pick winners" and make "strategic bets" by providing funding and resources to firms in sectors where Singapore has a competitive edge, he said.
The SBF also wants the Government to extend the Productivity and Innovation Credit bonus scheme and the Wage Credit Scheme for a few more years to help firms cope with restructuring and rising costs.
The committee also proposed a loan scheme - with a quantum of up to $3 million - to help SMEs with restructuring, and called for government-backed financing schemes to adopt interest rates "pegged at a more equitable rate compared to commercial banks".
Professional services firm EY, which also released its Budget wishlist yesterday, said more can be done to encourage Singapore firms to improve productivity and expand abroad.
Companies sometimes encounter difficulties in making claims for research and development (R&D) tax incentives, due to "protracted discussions on the technical eligibility of the projects" or "a lack of appreciation for the technical aspects of the R&D process", said Ms Tan Bin Eng, business incentives advisory partner at EY Solutions.
She suggested that a separate technical team with relevant background should help evaluate R&D claims, while the tax authorities process the claims. She also said tax incentives for firms expanding overseas can help cushion some of the risks associated with the costs of entry into new markets and enable faster expansion.