Many of the measures announced in this year’s Budget to help SMEs are a result of the findings and recommendations of the SME Review, which was commissioned by Minister of State for Trade and Industry Mr Teo Ser Luck. SPRINGnews speaks to SPRING’s Deputy Chief Executive, Mr Tan Kai Hoe, on his experience of being part of the SME Review team.
Why was the SME Review done?
What did it hope to achieve?
SMEs are a key pillar of our economy. They add vibrancy and resilience, and create meaningful jobs for Singaporeans. In recent years, rapid changes in the economic landscape – both local and global – have brought new challenges for our SMEs. So it is timely to take stock of our SME development strategies to see what adjustments are needed to help our SMEs overcome the challenges, upgrade their capabilities and grow into globally competitive companies.
What are some of the key findings and recommendations?
The findings validated that the broad direction we have been pursuing these past few years was correct, and that we should press on and redouble our efforts to help SMEs upgrade their capabilities, improve productivity and build innovation. Yet it also highlighted certain areas where we can do better. A key area where the review has taken ground feedback onboard is the need to improve our service delivery touchpoints and simplify our grant scheme and process design, in order to better serve the diverse needs of SMEs.
The majority of SMEs in Singapore are micro enterprises with less than $1 million annual sales. They have told us they find the many government assistance schemes confusing and difficult to access. To better address the needs of this group, one key recommendation is to simplify the assistance schemes and make them more accessible. We will expand the five Enterprise Development Centres (EDCs) and rename them as SME Centres. The SME Centres will have more resources to enhance their service offerings and extend their outreach, especially to the micro enterprises. These one-stop centres will help SMEs better understand and tap the assistance provided by various government agencies.
While the micro enterprises don’t know or don’t understand what help is available, those which are slightly bigger face a different set of challenges. Typically, these are companies with annual sales of $1-10 million and serve larger manufacturers or the domestic market. They tend to be more reliant on manpower and have many productivity challenges. For this group, assistance will be focused on capability development and productivity enhancement to increase their resilience.
Larger enterprises, which have annual turnover of $10-100 million, make up only one in 20 SMEs but contribute the most to employment and value-add. Most have grown to a certain size and the challenges they face have more to do with increasing market share and expanding overseas. For this group, we will provide more targeted assistance, and IE Singapore and SPRING will be working closely to help them navigate overseas markets.
In doing the review, the team looked at SME development policies and models of other countries. What are some interesting learning points or observations?
The team visited Taiwan, the Netherlands, UK, Japan and Korea to study the SME development models in these countries and to learn about the support available for SMEs there. While each economy is unique, we found similarities in their models and came away with insights to help us fine-tune our SME development strategy.
For instance, Taiwan has a network of one-stop SME Centres which reach out to small and micro-enterprises. Interestingly, these SME Centres, which are funded by the Small & Medium Enterprise Agency (Taiwan’s equivalent of SPRING) are operating in the banks! This makes it very convenient for business owners, who are also customers of the banks, to access their services. Similarly, Japan’s SME Agency also operates a network of SME Centres in different prefectures to reach out to smaller businesses. Seeing the success of these models, the team felt that this is a viable approach to adopt in Singapore.
We also observed collaborative efforts between the public and private sectors to support the development of SMEs in these countries. This is also the current approach in Singapore, where we have key partners in the private sector. In Taiwan, private sector organisations such as the Taiwan External Trade Development Council (TAITRA) help Taiwanese businesses cope with challenges in foreign markets. In Japan, Korea and the UK, a wide range of assistance for SMEs is either delivered through partners or outsourced to the private sector.
What really stood out was the importance these economies placed on the value of innovation. Japan, Korea and Taiwan are well-known not just for their electronic products, but also their technological expertise in areas such as infocomm and medical technology. This didn’t happen overnight but is the result of their governments having identified technological and design innovation as key engines of growth several years ago. Their R&D institutions regularly generate market-ready technologies, which have a direct impact on enterprise development.
In Singapore, we generate a lot of intellectual property but not many are eventually commercialised. We will continue to support start-ups, particularly those in the technology sector, and encourage SMEs to adopt technological and design innovation to drive business growth.
How has leading the SME Review changed your understanding of the SME sector and how best to support it?
SME development is not a one-time exercise. Each time we do such a review to take stock, I am sure we gain a deeper, more contextualised understanding of the local SME landscape. This review is no exception. It has given me, and I am sure also the rest of the team, greater insight into the different needs of different segments and clusters. It also highlighted how much the global and local environment has changed in the last few years. I think we will need to regularly re-examine our SME development strategy to ensure that our policies and initiatives can keep up with, if not anticipate, the changing needs of our SMEs.
This particular review also highlighted to me the importance of multi-agency collaboration and stakeholder participation. In this review, we carried out many rounds of consultations with key stakeholders – enterprises, industry associations and partners. It is important to keep our ears on the ground to ensure that the initiatives we develop are well-received and effective.
Now that the review is completed,what are the next steps?
Many of the recommendations have been announced in the 2013 Budget, and we will need to implement these measures over the next few years. This will require mobilisation of internal and external resources to roll out the plans, as well as constant monitoring and validation to ensure that we are achieving the desired outcomes.
Reproduced with permission from SPRINGnews April 2013 Issue. Published by SPRING Singapore.