Mr Lee Yi Shyan at the Start-up Conference

KEYNOTE ADDRESS BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND MANPOWER AT THE START-UP CONFERENCE ON 15 APRIL 2009, 9.00AM, AT NTUC AUDITORIUM

Ladies and gentlemen,

Good morning.

Introduction

It is my pleasure to join you at the third Start-up Conference.

Start-ups are an important part of the business community. A study by the Cleveland-based Kauffman Foundation for Entrepreneurship shows that out of the 600,000 new firms formed every year in the US, about 1,000 of them would grow to become high-growth companies. These high-growth companies in aggregate contribute to one third of US’ GDP growth. In today’s environment where GDP of major economies and industrial output are shrinking, 1/3 of any positive growth would be very valuable and significant.

While cost containment and reining in any business expansion plans occupy the minds of most business owners now, seeing the recession as an unique opportunity to start up new business may be a contrarian strategy with surprising rewards. I read with great interest the story of how Ms Zhang An Qi founded her business in last Sunday’s Zaobao. An Qi was working in an advertising agency, but later felt that she would rather work for herself. With just 10 graphic T-shirt designs and the assistance and mentoring of a Thai supplier, An Qi launched her first brand Pure Milk at a pushcart in Far East Plaza. The success of her T-shirt brand attracted the attention of the manager of Parco Bugis Junction, Mr Shuichi Hidaka. After observing her business for one afternoon, Mr Hidaka invited her to set up a store in Parco Bugis Junction. This subsequently led to An Qi’s second and third brands – Little Match Girl and Moon River – all within a short span of 7 years.

I would like to bring to your attention that An Qi started her business during SARS period when consumers’ interests were probably at its lowest point in decades. Yet, her entrepreneurial undertaking had defied conventional wisdom – that recession is a bad time to start a new business.

An Qi believed that her business grew in spite of the recession because of two reasons: Firstly, the downturn presented a unique opportunity that was not available during the good times. For example, during SARS in 2003, otherwise expensive retail space became available to small or even micro businesses. Secondly, consumers became more value-conscious in recession and wanted to maximize their shopping dollars on unique designs rather than mass-market products. By focusing on the design of her fashion in limited quantity, An Qi’s products met with a strong following. As her business grew from one pushcart to more outlets, she created two more popular brands - “Little Match Girl” and “Moon River”, all within 7 years.

In An Qi’s pursuit of success, she readily acknowledged the importance of people who supported her. First, there was the Thai supplier who was willing to accept her production order of just 100 pieces because she reminded him of the difficulties he faced when he was starting his own business. Hence, he extended a helping hand. Secondly, there was Mr Shuichi Hidaka, Parco’s manager who gave her the chance to sell her merchandise at the Parco Bugis Junction mall.

Sharing the same belief that a strong and supportive entrepreneur community can be nurturing to young start-ups, ACE (Action Community for Entrepreneurship) has been promoting and supporting entrepreneurship groupings and their business networking events to connect young entrepreneurs with more experienced mentors. ACE’s events such as the Blue Sky Festival and regular Blue Sky Exchanges are also inclusive platforms to promote the kind of mutual help that An Qi has benefited from.

In our effort to enhance our business environment and availability of business information, the Government has rolled out initiatives such as the Enterprise ONE portal (virtual resource) and the Enterprise Development Centers (physical centers) at the various business chambers and associations to provide information and business advice to help new and growing start-ups. With these resources, start-ups and SMEs can obtain a list of comprehensive help and support programmes from the various agencies to meet their different needs for growth.

For instance, we have a YES! Start-ups programme that targets young enterprises while they are in schools. Our SEEDS programme co-invests with new start-ups. The Technology Enterprise Commercialization Scheme (TECS) provides funding for start-ups to create their first prototypes and commercialize their technologies.

Besides start-up and equity funding, small businesses also require financing to sustain their operations. Towards this end, the Government has introduced several key measures in 2009 Budget to enhance the availability of finance to businesses.

I am pleased to note that our Risk Sharing initiatives are working well and SME financing is healthy. According to SPRING Singapore, Government-backed loans continue to rise, reaching a monthly record high in March with 1,415 approved loans at a total value of more than $760 million. SMEs are the main beneficiaries, accounting for 90% of these loans. Close to 70% of the loans have in fact, gone to small businesses with less than $5 million in annual sales turnover.

Conclusion

As Winston Churchill once said, “An optimist sees an opportunity in every calamity; a pessimist sees a calamity in every opportunity.” So let us take this time to review our business model, in response to the unique opportunities presented by the circumstances and the changing customers needs. I believe there are many Zhang An Qis among you, many “Little Match Girl” and “Moon River” brands waiting to be created. My best wishes to you.

Thank you!