Ladies and gentlemen,
1 A very good afternoon to all of you.
2 Based on advance estimates released last week, Singapore’s economy grew by 0.7% in 2019, slower than the 3.1% recorded in 2018. MTI is cautiously optimistic that Singapore’s GDP growth would pick up modestly in 2020 on the back of a slight uptick in global economic growth and a gradual recovery in the global electronics cycle.
3 While the announcement of the Phase 1 trade agreement between the US and China is much-welcomed news for the global trading system, uncertainties remain in the external environment. The recent developments between the US and Iran, for example, may significantly affect the global economy if tensions escalate.
4 However, it is not all doom and gloom and opportunities remain for our SMEs to grow because we are located in the heart of a fast-growing region. Amidst a sluggish global economic growth outlook, Asia remains a bright spot. The region is estimated to grow at 5.1 per cent, far outpacing other advanced economies, with the digital economy in Southeast Asia alone estimated to exceed US$300 billion by 2025.
Transform and build capabilities to seize new growth opportunities
5 Whether in good times or tough times, it is important for SMEs to press on with enterprise transformation and build stronger capabilities in areas such as improving productivity, upskilling your workers, adopting technology solutions and expanding into overseas markets.
6 A few days ago, the Straits Times reported on a survey of SMEs by UOB which indicated that their top priority this year is improving productivity. It shows that many of our SMEs are aware of the importance of such efforts. The government will help you and support you on this journey.
7 A few months ago, I visited food manufacturer Foodgnostic, which runs Cat & the Fiddle that produces cheesecakes, and Old Seng Choong, a baked goods shop specialising in cookies.
a. Traditionally, the making of baked cheesecake is a highly manual process. Foodgnostic shared with me how they worked with Enterprise Singapore to automate some of their processes and scale up production. Today, they produce about 2,000 cakes every day. If they had stuck with the traditional way of making cakes, it would have been impossible to produce that kind of volume. A team of six used to spend an entire day just slicing cakes. By using machines, Foodgnostic also reduced the time taken to crack thousands of eggs by more than 80 per cent.
b. Besides raising productivity, Foodgnostic is also actively pursuing internationalisation. They have expanded into China and intend to establish a presence in Southeast Asia soon. I encourage our SMEs to capitalise on the growth opportunities in the region.
c. In the food business, as in many other sectors, Singapore has a strong brand name which stands for quality and trust. Businesses can benefit from the strong Singapore brand when you venture abroad. But please remember to ensure that your actions overseas will uphold and strengthen our brand, and not diminish our standing. Reputation and trust take a long time to build up, and we have our forefathers to thank for this, but we know these intangible assets can also be destroyed quickly if we are not careful.
d. Foodgnostic also realised early on that in order to maintain their competitive edge, they will have to distinguish themselves clearly from the competition. They have done so by creating a wide range of unique local-flavoured baked goods such as Milo Dinosaur cheesecake and hae bee hiam cookies. These products not only appeal to the local audience but also tourists who are always on the look out for uniquely Singapore products. This has in turn strengthened their internationalisation efforts as they have become a brand that foreign customers are familiar with.
8 I hope that Foodgnostic’s example will show our SMEs that this process of transformation and capability building is not just for big companies. Our SMEs can also take steps to transform. The sooner you start, the quicker you can begin to seize new growth opportunities, not just in 2020 but for the years ahead.
9 The Government will walk this journey with you. For those of you who are unsure of where to start and who to seek advice from,
a. Our SME Centres, which are done in collaboration with the key Trade Associations and Chambers, are available islandwide with business advisors who will be able to diagnose your business needs and recommend ways to transform your businesses.
b. NTUC’s U-SME also provides several advisory services and runs a range of leadership programmes to help business leaders become future-ready. It is very good that our Unions are part of this tripartite effort to help businesses transform and improve productivity. Our union leaders understand that it is when businesses do well that workers can enjoy better jobs and better pay. So it is in our common interests to build a pro-enterprise, pro-worker economy.
Innovate to sharpen competitive edge
10 Another priority for us at the Ministry of Trade and Industry is how can we help our SMEs to better utilise the findings from our research and development investments to become more competitive and innovative.
a. For instance, SMEs seeking to innovate can work with the 10 Centres of Innovation (COI), which are partnerships between selected polytechnics and research institutes. The COIs provide technical expertise and equipment to co-develop new and improved products and services with SMEs.
b. A*STAR also seconds research scientists and engineers to SMEs to support in-house research projects under the Technology for Enterprise Capability Upgrading (T-Up) Scheme.
i. Admaterials Technologies, a local materials testing firm, is a beneficiary of the T-Up scheme. Over a period of five years, a total of three researchers from A*STAR’s Institute of Chemical and Engineering Sciences (ICES) and Data Storage Institute (DSI) were seconded to the materials testing firm to help the company build new capabilities, allowing it to capture new business opportunities. During that period, Admaterials invested around S$300,000 annually in R&D and saw a four-fold increase in its revenue from approximately $3 million to $12 million.
11 Another example of a company that has seen its innovation efforts pay off is construction company Samwoh, which I visited last year. Samwoh’s focus on R&D and innovation is a key factor in its success today.
a. By investing in R&D, the company came up with new mixes, designs, and production and testing facilities.
i. One research project they worked on was to turn scrap tyres into asphalt premix which are in turn used to pave roads. This has multiple benefits. Using rubber in asphalt makes the roads more flexible, more durable and also reduces road noise. Furthermore, the recycling of scrap tyres will also reduce environmental harm as they are usually disposed in landfills or exported to other countries to be used as fuel.
b. More importantly, Samwoh has managed to successfully translate its R&D into commercial value.
i. Today, they are a market leader in the use of sustainable technologies for construction. Samwoh was the first to recycle concrete waste from demolition works into aggregates for reuse. Its current headquarters, the Samwoh Eco-Green Building, is the first building in Southeast Asia that is entirely constructed with recycled concrete aggregates.
ii. This year, Samwoh’s staff will be moving into its new headquarters, Smart Hub, which is slated to be Singapore’s first net positive energy industrial building, producing more energy than it actually uses.
12 As different business ideas emerge, the way public agencies look at rules and regulations will also need to evolve. On our part, the Government is committed to fostering a pro-enterprise environment and ensuring that we have sufficient regulatory agility to support companies who wish to try out new business ideas.
a. We do so through the Pro-Enterprise Panel (PEP) under the Ministry of Trade and Industry, which proactively seeks out feedback from businesses. The PEP seeks to:
i. Review and streamline our rules and regulations, so that we help businesses to reduce compliance costs; and
ii. Support new innovation by helping businesses test-bed ideas and provide more opportunities for local companies to demonstrate their capabilities.
13 Let me share with you an example of how we are reviewing regulations to give businesses greater confidence to invest in R&D and develop new business ideas.
14 Last year, I visited a company called Zenyum, a local start-up that develops invisible braces for dental patients.
a. Zenyum partnered with Structo, a homegrown startup that developed chair-side and industrial scale 3D printers that can print at a lower cost. By leveraging Structo’s technology, Zenyum was able to 3D-print clear aligners which are more than 60 per cent cheaper than the current market price.
b. During that visit, Zenyum asked if they could sell teeth whitening products directly to consumers. The PEP contacted the regulator Health Sciences Authority (HSA) to discuss this matter.
c. One way was for HSA to regulate and license Zenyum, as the current regulations stipulate that dental care products could only be supplied through registered dentists. But this would have increased the regulatory compliance cost for the company.
d. HSA studied this case through a pro-enterprise lens, and after reviewing Zenyum’s business model, decided that as long as Zenyum could ensure that its consumers had consulted a registered dentist, whose approval would have been required for the teeth whitening treatment, there was no need to impose further regulatory conditions on Zenyum. The company was happy with this outcome as it was already working with registered dentists as part of its business model.
e. In this way, the regulatory outcome of ensuring safety for consumers had been met, without imposing additional regulatory costs for the company.
f. I thank colleagues from HSA for their strong support and for being open to new ideas and suggestions. This is a good example of how regulations can be designed to be more pro-business while protecting public interests.
15 Achieving these win-win outcomes will require government agencies, companies and the Trade Associations and Chambers to work in close partnership.
16 I encourage companies with innovative ideas to step forward to work with the PEP and our public agencies, so that together, we can find innovative ways to reduce compliance costs while safeguarding public interests and meeting our regulatory objectives.
17 I wish all of you a very fruitful panel discussion and networking session ahead. Thank you.