Speech at SCCCI 13th Annual SMEs Conference “The New Business Agenda: What Really Matters”
Mr Gan Kim Yong, Minister of Manpower, Suntec Convention Centre, Suntec Ballroom, Level 2
Mr Teo Siong Seng, President of Singapore Chinese Chamber of Commerce & Industry
SCCCI Members and Distinguished Guests
Ladies and Gentlemen
- I am delighted to join you this morning for the SCCCI 13th Annual SMEs Conference. I applaud SCCCI’s efforts in organising this annual event, which brings together industry experts, academics and business leaders in Singapore and the region to share insights, network and discuss issues and challenges facing our small- and medium-sized enterprises (SMEs).
Opportunities and Challenge for the Next Decade
- The theme for this year’s conference, ‘The New Business Agenda: What Really Matters’ is timely and relevant. While Singapore’s economic outlook this year remains positive, with the economy on target to achieve a 4-6% annual growth, several global events continue to cast uncertainties on the world economy. Fortunately for us, economic growth in Asia remains strong. Developing Asia showed strong resilience through the 2009 global recession, underpinned by recovery and rapid expansion of the region’s two emerging economic giants – China and India, which will remain the key drivers for regional and global growth.
- China - the world’s second largest economy and Singapore’s second largest trading partner - is expected to grow 9%1 this year, riding on the momentum of its strong rebound from the global financial crisis. In 2010, bilateral trade between Singapore and China reached S$95.3 billion2 - a 26% increase from 2009. Similarly, IMF expects India economy to grow 8.2% this year3. Nestled strategically within booming Asia, the continued rise of these Asian giants will further strengthen Singapore’s strategic role and boost our trade and enterprise development.
- Growth itself however, presents a unique set of challenges. Controlling inflationary pressure is a major challenge that governments in many Asian economies are grappling with. Labour shortages, capacity constraints, along with rising commodity and food prices are threatening to push inflation beyond acceptable levels. We are not immune to these cost pressures but we must continue to do what is necessary to remain nimble, competitive and relevant so that we can stay ahead of global competition. At the same time, we have to moderate inflation and minimise its impact on our businesses and people.
- This means we need to constantly review our businesses operations, innovate and further improve our business models. We must steer our economy towards productivity-driven growth, step up our efforts in innovation, improve the skills of our workforce and reduce our reliance on low-skilled foreign labour for more sustainable and inclusive growth. To achieve that, all of us - the Government, enterprises, business chambers, industry associations and workers - need to work together to move our industries up the economic value chain and press on with our efforts to upgrade the skills of our workforce. Only then can our companies remain competitive and profitable. Only then can we raise the standard of living for our people through better jobs and higher incomes.
Role of SMEs in Singapore’s Economy
- The need to constantly innovate and improve is particularly important for SMEs as they play a critical role in our economy. Today, SMEs in Singapore employ seven out of every 10 workers, contribute 60% of national GDP4 and generate about 49% of total value–add5. After the financial crisis, how should SMEs ride on this growth momentum to grow their business and accelerate their pace of internationalization? How can the workforce work smarter and more efficiently? How do local businesses deliver greater value-add to a global marketplace and strive to distinguish themselves? That is the agenda we should also think about today.
- Productivity and innovation are vital to the survival and profitability of SMEs in sharpening their competitive advantage. We must recognize that productivity is a long term journey and we must never stop seeking better ways of doing things, re-examining our work processes for higher efficiency, creating a culture of innovation for higher value-added products and services as we continue to acquire new skills and disciplines.
- So how can business chambers and industry associations like SCCCI and ASME play a key role in this journey?
Efforts by SCCCI to Facilitate Productivity and Innovation Drive
- First, leverage on industry networks to deepen collaborations and stakeholder partnerships to help enterprises embark on the productivity journey. SCCCI, with its wide membership of 4,000 members and 138 trade association members, provides an extensive network and common industry-wide platforms for its members to tap on to gain productivity improvements. SMEs will find this useful because on their own, each will be constrained by their own limited know-how and resources.
- Business chambers can partner other industry associations, both local and overseas, to learn from their experiences. I am heartened to learn that in May last year, SCCCI organised a focused "Innovation & Productivity Mission to Taiwan" for SMEs to study the productivity and innovation capabilities of Taiwan's high-tech industry and find out how we can strengthen our local workforce through strategic investment in technology and innovation.
- As the adoption of technology is one way to improve productivity, the Technology Committee of the SCCCI will also be working with A*STAR on new innovations that can be rolled out for adoption by our SMEs and other local enterprises. I look forward to more innovation initiatives from this collaboration.
- Similar efforts have been put forth by other business associations as well. For example, the Association of Singapore Marine Industries (ASMI) is promoting the use of a Manpower Optimisation and Tracking System among shipyards and contractors, which significantly reduces invoicing and billing time and allows real-time analysis of costing trends and manpower performances.
- The Singapore Food Manufacturers’ Association (SFMA) has also formed a Capability Building Committee to drive productivity initiatives for the food manufacturing industry. One of the initiatives is to develop a customised productivity indicator toolkit for the industry. Using the toolkit, companies will be able to identify key gaps in their operations and make productivity improvements in targeted areas. SFMA will also be holding productivity training workshops to equip companies with the skills and knowledge to implement such improvements.
- The Singapore Manufacturers’ Federation (SMa) on the other hand, has worked closely with the Singapore Workforce Development Agency (WDA) and Human Capital Singapore (HCS) to develop an umbrella productivity initiative called the Manufacturing Enterprise for Growth and Advancement (MEGA) Productivity Framework to help manufacturers, especially SMEs, jumpstart and sustain efforts in their productivity & innovation journey. MEGA is a suite of productivity programme to help companies identify productivity gaps, acquire knowledge and implement actionable plans to improve their productivity. MEGA which puts together the productivity initiatives of WDA, SMa and HCS into an integrated suite of programmes, was launched in November last year.
- I urge SCCCI to further explore potential collaborations with your members and external partners, so that our SMEs can reap the fruits of productivity gains from the closer partnership forged with one another.
Resources for Productivity Improvements
- Second, business chambers can also assist its SME members to tap on the available resources to improve productivity. SCCCI can aggregate common needs and highlight to the relevant agencies where more assistance should be provided.
- This year, SCCCI will be doubling their efforts in taking the productivity drive to its members. I understand SCCCI will continue to work with IRAS to conduct a series of clinical sessions on productivity to address industry specific issues and challenges. SCCCI will be inviting representatives from specific industry clusters to come together and brainstorm on ideas to implement productivity improvements within their industries.
- Last year, SPRING rolled out several initiatives to help SMEs raise their productivity. These include the Productivity@Work portal6 and the Productivity Management Programme (PMP) which helps companies identify productivity issues and draw up an actionable improvement plan through workshops and clinics.
- I strongly urge members to find out more and tap on the services offered by the EDC to improve the productivity of your company.
Maintain Training Efforts
- Third, it is important that our workers possess the right skills so that we can attract good investments and create new jobs. Skills upgrading also help our workers become more productive through deepening and sharpening their skills sets.
- As business activities move up the value chain, it is even more imperative for companies and workers to keep up with their training efforts to remain relevant. Beyond immediate business needs, companies that invest in capability development will reap the rewards of a higher skilled and more motivated workforce.
- Industry chambers can work closely with companies, business associations, and relevant Government agencies such as the WDA and training providers to identify training gaps and find innovative solutions to overcome any training constraints.
- To achieve our national productivity growth target of 2 to 3% per year over the next decade, the Government has committed S$5.5 billion for this purpose over the next five years. The Government will continue to provide support by creating a conducive training environment. For example, the recently announced Skills Training for Excellence Programme (STEP) aims to deepen and broaden PMETs’ skills, update their industry knowledge, and develop a talent pool and leadership core for industries. We will also make diploma CET courses more ‘compact’ and modular to better cater to the training needs of working adults.
- All of you – as Singapore SME leaders - have a key role to play in spurring Singapore’s next phase of economic growth.
- I would like to encourage SMEs to look forward, constantly re-examine and re-invent your operations, come onboard and participate actively in our national productivity journey, so that you will be ready to ride on the opportunities of a rising Asia in the coming decades. On this note, I wish all of you a fruitful conference.
1 China's 2011 economic growth rate to hit 9% - World Bank
2 Research & Statistics Unit, IE Singapore
3 IMF projects India’s GDP growth at 8.2% in 2011 and 7.8% in 2012
4 Source – SPRING’s Performance Indicators (Website updated as at May 2011)
5 Source – Singapore Department of Statistics 2009.
6 Productivity@Work, launched by SPRING Singapore, is a one-stop portal on productivity which can be accessed through the EnterpriseOne website (www.enterpriseone.gov.sg). It contains easy-to-understand productivity concepts, simple tools and other useful resources on productivity that businesses can tap on for self-help.