“Anchor Locally, Compete Globally”
1. Mr Chairman, I shall speak about two ways through which we will help our enterprises emerge stronger from the crisis - first, by anchoring strong local enterprises; second, by helping our enterprises go global.
Building a Strong Crop of Singapore Enterprises to be able to Compete Globally
2. Mr Liang Eng Hwa, Ms Foo Mee Har, and Mr Shawn Huang asked how we intend to support businesses and nurture them into local champions. We will do so by pressing on with industry transformation at both the sector level, and contemporaneously at the ecosystem level.
3. Our overriding priority over the past one year has been to weather the COVID-19 storm. However, we cannot hunker down forever; we must keep our eyes focused on the future and press on with industry transformation to emerge stronger.
4. Fortunately, we are not starting from scratch. We had earlier embarked on transformation through our 23 Industry Transformation Maps (ITMs). We are refreshing them to make sure they are still relevant in light of COVID-19, and that we are able to unlock new opportunities that have arisen globally over the last 12 months or so.
5. Mr Liang Eng Hwa asked how we will turn up the pace of transformation. We will do this by strengthening our industrial ecosystem and accelerating Industry 4.0 (i4.0) adoption.
6. One example is the manufacturing industry. This is fundamentally changing with digitalisation, robotics, and new technologies like additive manufacturing. The industry needs to transform to achieve our Manufacturing 2030 vision, and we are taking decisive steps to do so.
7. The Smart Industry Readiness Index (SIRI) launched in 2017 helps manufacturing firms take specific, measurable steps towards transformation. We are working with the World Economic Forum (WEF) to make SIRI a global benchmark to facilitate our SIRI-assessed firms to compete globally.
8. The JTC-Singapore Business Federation (SBF) Industry Transformation initiative, which was launched last year, will further help local manufacturing companies in their i4.0 transformation by providing access to resources like curated training workshops and capability-building initiatives.
9. We will also create new peaks of manufacturing excellence by bringing together related companies to collaborate, to experiment and to succeed together. Just as Jurong Island and the Seletar Aerospace Park catalysed our chemicals and aerospace industries respectively, so too will the Jurong Innovation District (JID) be the catalyst for our i4.0 ambitions. The JID will house the Advanced Remanufacturing and Technology Centre (ARTC) and factories of the future, and it will serve as the focal point to develop and test-bed new technologies like 5G and autonomous vehicles to serve global markets.
10. i4.0 is most commonly associated with the manufacturing sector, but actually, the spirit behind it – one of being forward-looking, making the most of technology, finding ways to do things more efficiently and smartly – must be a pervasive culture for all of us. It has to apply aggressively across all industries. And I am happy that many of our companies have imbibed this spirit.
Ecosystem-Level strategies to Help our Companies Pursue the Next Bound of Growth
11. Besides sector-level transformation, we will also do more at the ecosystem level to nurture all businesses, regardless of size and sector, to pursue the next bound of growth.
Pressing on with Building Enterprise Capabilities
12. In 2020, we enhanced co-funding schemes such as the Enterprise Development Grant (EDG) and Productivity Solutions Grant (PSG) to help companies transform their capabilities. Over 15,000 companies embarked on transformation projects with ESG’s support in 2020. In spite of the crisis, this is 50% higher than in 2019.
13. We will also continue strengthening enterprise leadership capabilities through schemes like the Enterprise Leadership for Transformation (ELT) and Scale-up SG programmes. In particular, through Scale-up SG, we aim to groom another 50 future local champions over the next two years.
14. Mr Chairman, we will continue with this suite of support to strengthen enterprise capabilities, and DPM has spoken about the various scheme enhancements we will make to encourage more companies to come onboard. But let me emphasise three key areas that will form the next bound of growth for our businesses to be able to compete globally – a Team Singapore Approach; Access to Financing; and Innovation.
A Team Singapore Approach to Capture Opportunities
15. Ms Foo Mee Har and Mr Edward Chia asked how our companies can adopt a collaborative mindset such that the entire value chain is uplifted, and everyone benefits.
16. Indeed, we must embrace this Team Singapore approach, because our competition is not with one another here, but with the world. Individually, even our largest companies are modest by international standards. But collectively, we can win as Team Singapore.
17. We are doing much more to develop our winning game plan. The Government is partnering the private sector on the Alliances for Action (AfAs), and they bring together a diverse range of industry and public sector stakeholders to quickly seize opportunities in sectors such as tourism, logistics, and others.
18. For example, the AfA on Smart Commerce has brought together industry players to pioneer new operating models, to digitalise, and to diversify revenue streams. The AfA had launched an Online-Offline 11 November (“11.11”) Campaign, incorporating gamification elements to provide retailers with more marketing opportunities, and deliver consumers a whole new experience.
19. Another example is how various industry stakeholders collaborated to create opportunities in the Meetings, Incentives, Conventions and Exhibitions (MICE) sector. The Safe and Innovative Visitor Experience AfA developed a prototype for hosting exhibitions safely amidst the COVID-19 pandemic, and tested it in November last year at the TravelRevive tradeshow. This attracted close to 1,000 attendees, comprising 65 foreign visitors from 14 different countries, and it showed that Singapore remained open for business, successfully and safely.
20. A big part of our ecosystem strategy is strengthening the partnerships between large and small companies. Hence, I agree with Ms Janet Ang that LLEs can play an important role in uplifting our SMEs. ESG’s PACT programme encourages such mutually beneficial partnerships between companies. PACT has supported more than 280 partnerships and benefited more than 1,500 Singapore-based firms since 2010. The National Innovation Challenges (NIC), launched in 2020, also helps to catalyse cross-company partnerships to address sector-wide challenges. The NIC also helps smaller companies to build up their track record in the process.
21. In addition, our Trade Associations and Chambers (TACs) will also play an important part in fostering industry partnerships. MOS Low will speak more about this in her speech later.
Enabling Greater Access to Financing and Capital
22. Next, whether our businesses are planning to develop new products or expand overseas, having access to financing and capital is crucial for our enterprises’ growth ambitions. This could be in the areas of product development or international expansion.
23. The Government carefully monitors our financing ecosystem to ensure that all companies - from startups to SMEs to LLEs - can access the capital they need. We extended the Enterprise Financing Scheme-Venture Debt (EFS-VD) programme and raised the maximum supportable loan quantum from S$5 million to S$8 million. This will give high-growth enterprises greater access to financing.
24. Ms Foo Mee Har and Ms Janet Ang asked about how the new Local Enterprises Funding Platform (LEFP) can support our local companies. This is indeed a very major initiative. The Government provides financing support to grow local enterprises, particularly when there is a dearth of private capital. Most of these are in the form of grants or loans. Financing equity initiatives are typically targeted at startups and SMEs, where the risk can be higher or a longer runway for more patient capital is required. This is done through existing co-investment programmes such as those managed by Heliconia and EDBI.
25. However, there is an increasing need to support our larger companies with the ambition to become regional or even future global champions. And this is where the LEFP comes in to precisely meet this need. Drawing on the network and expertise of Temasek, the LEFP will actively seek out promising LLEs to invest in, focusing on sectors that are aligned with the engines of growth in our economy. This complements existing efforts by EDB and ESG to help our most promising firms to scale up, soar, and reach their full potential.
Supporting Enterprises to Innovate
26. We will spare no effort to support our enterprises to innovate. But we hope enterprises also do their part to invest in innovation. Businesses that leverage innovation are better placed to compete globally and capture value for our economy.
27. As DPM and Minister Lawrence Wong have mentioned in their speeches, RIE is a cornerstone of Singapore’s national strategy to develop as an innovation-led economy.
28. Associate Professor Jamus Lim spoke about increasing R&D spending. The Government is committed to investing about 1% of our GDP in research, innovation and enterprise over the next five years. This is similar to our commitment for RIE2020 and our earlier research plans.
29. Our investments in RIE is at a comparable level to other Small Advanced Economies (SAEs). Unlike what Associate Professor Jamus Lim alluded to earlier, we are by no means far behind. Compared to more mature advanced economies, our RIE ecosystem is still at a relatively early stage of development. Notwithstanding, in absolute terms, we have increased our investments in RIE significantly since our first National Technology Plan in 1991. For reference, Singapore’s Public Expenditure on R&D (PUBERD) was about 0.7% of GDP in 2018, compared to 1.1% for Denmark, 1% for Sweden and Switzerland (2017).
30. These are significant investments for a small country like us. It is not just about increasing public investments into R&D, but about making very judicious investments, spending the money wisely, and continuing to develop the capabilities that are needed for us to meet national strategic needs and to create new growth opportunities. In the past 20 to 30 years, we have made collectively - as a country - significant strides. But my exhortation to everyone who is in this House – we cannot rush this.
31. Mr. Leong Mun Wai asked about the returns to our RIE investments and commented about the foreign talent in our Research Scientists and Engineers (RSE) landscape. Our investments in RIE have benefited Singapore in many ways.
a. First, business Expenditure on R&D has increased by more than two-and-a-half times, from $1.5 billion in 1998 to approximately $5.6 billion in 2018. We hope to see the continued growth of private R&D spending. To his point about foreign talent in our RSE landscape, let me reassure members of the House that we have developed a strong core of Research Scientists and Engineering talent and will continue to grow our pipeline. In fact, the number of RSEs has almost tripled from about 12,700 to over 36,000, in the 20 years from 1998 to 2018. Of this, industry RSEs grew at a slightly faster rate, from about 6,500 to over 19,000 in the same period. About 70% of the 19,000 RSEs in 2018 are either Singapore Citizens or permanent residents.
b. In RIE2025, we will continue to push these initiatives and build up our scientific talent pipeline. We are increasing A*STAR scholarships by almost 25%, to encourage local undergraduates interested in taking up PhDs. Through the Singapore Teaching and Academic Research Talent Scheme and the Returning Singapore Scientist Scheme, we are strengthening the pool of Singaporean academic talent in our universities.
32. All of these returns extend beyond hard data. More and more companies are investing in Singapore because of the nexus to our R&D ecosystem, whether to create durable aircraft engines, or skincare tailored to Asian skin. They want to create intellectual property as a sustainable competitive edge, in an economy that is trusted, and Singapore fits the bill.
33. Our R&D investments also deliver benefits in a disruptive environment. During the pandemic, when the world was short of COVID-19 test kits, our biomedical sciences R&D capabilities built up over the past 20 years enabled us to develop and manufacture the Fortitude COVID-19 Diagnostic Test, which has since sold more than 5 million units in over 45 countries.
34. Professor Hoon Hian Teck said that spurring innovation and activities will enable Singapore companies to capture opportunities. Mr Shawn Huang has asked how we are helping our enterprises grow innovation capabilities.
35. As I said earlier on, we will continue to support our enterprises, including SMEs, to benefit from R&D and innovation, particularly in areas that have delivered outsized returns.
36. We will do so by providing financing for innovative startups.
37. ESG administers the Startup SG Equity programme to catalyse private sector investment into innovative Singapore-based tech startups.
38. Besides equity co-investment, the Section 13H and Fund Management Incentive (FMI) tax schemes also encourage fund managers to direct their capital towards Singapore-based businesses and startups. These schemes were enhanced in Budget 2020.
39. One of the challenges that startups face is the lack of talent who can bridge research and business. The newly established Innovation and Enterprise Fellowship programme will expand the local pool of deep-tech technical talent with experience in R&D translation, by connecting researchers with accelerators, startups, or investors for product development and technology commercialisation work.
40. Beyond startups, we are also doing more to help our SMEs with innovation and commercialisation of R&D.
41. First, talent and know-how are critical.
42. We will continue to support SMEs that lack access to research talent through the Technology for Enterprise Capability Upgrading (T-Up) programme. Under T-Up, A*STAR seconds research talent to SMEs to enhance their innovation capabilities. Since its inception in 2003, more than 900 A*STAR researchers have been seconded to over 800 SMEs.
43. Our Innovation Advisors programme also facilitates the “know-how”, by appointing experts from various fields to SMEs to impart relevant advice and networks.
Helping our Enterprises to Go Global
44. Mr Chairman, I have described our strategies to anchor strong local enterprises to emerge stronger from the crisis. But the ultimate ambition is to help our enterprises spread their wings and internationalise.
45. Mr Liang Eng Hwa asked whether the pandemic has put a dent on our internationalisation momentum, and Ms Jessica Tan asked how our businesses can be supported to internationalise. Indeed, the COVID-19 travel restrictions have made it harder for our businessmen to travel to foreign markets, and the conditions in several of our major export markets remain challenging. However, I am encouraged by our businesses’ continued willingness to pursue alternative means of accessing foreign markets. The Government will do more to support our companies to internationalise and seize opportunities globally.
46. First, we will expand the Global Innovation Alliance (GIA) network from 15 to 25 cities over the next five years to support enterprises’ ambitions to expand their global market outreach and seek innovation partnerships.
47. Cross-border innovation platforms such as the Co-Innovation Programme (CIP) under the GIA will support our enterprises in collaborating with overseas partners on innovation projects.
48. We will also enhance support to offset businesses’ internationalisation costs. In addition to the 6-month extension of support levels for the Market Readiness Assistance (MRA) grant, we will fold in Trade Credit Insurance support to help defray costs of such insurance. We have also expanded the scope of qualifying expenses in the Double Tax Deduction for Internationalisation (DTDi) scheme to include Virtual Trade Fairs, to account for new modes of internationalisation due to COVID-19.
49. Third, a key ingredient of international success is a strong talent pool. Through the Global Ready Talent (GRT) programme, students and young professionals can gain greater exposure and deeper in-market knowledge, and thereafter, become strong contributors to their employers’ global expansion efforts. Since its launch in 2019, GRT has supported more than a thousand Singapore enterprises in creating such opportunities for close to 6,000 students.
50. Ms Jessica Tan spoke about the importance of our Trade Associations and Chambers of Commerce (TACs) in supporting businesses to compete globally. This brings me to my last point on how TACs are supporting internationalisation. One example is how the Singapore Business Federation (SBF) partnered ESG to launch its GlobalConnect@SBF initiative. This initiative, through a team of market advisors providing targeted advisory services, has since supported more than 2,500 Singapore businesses, in spite of the challenging situation in 2020.
Long-term Vision of Success for Our Enterprises
51. Supported by all these efforts, our common vision of success is to have an ecosystem of resilient enterprises that are highly capable, open to collaboration, and equipped to compete globally. They will be nimble and innovative, able to withstand external disruptive shocks, and black swan events such as COVID-19.
52. Mr Chairman, opportunities favour the prepared and the bold. For budding entrepreneurs, I encourage you to take the first step to put your dreams into a business plan and develop a minimum viable product or solution, present them to us, and we will review and where feasible, we will do our best to help uplift you to soar. For existing enterprises, I urge you to seize the opportunities available and to dream big.
53. If you have the gumption to take the next step, the Government will ride this journey with you, to strengthen you and to enable you to spread your wings. We will be the wind beneath your wings. Thank you.