Mr Teo Ser Luck at the 26th Annual Singapore 1000 and Singapore SME 1000 Awards

SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE 26TH ANNUAL ‘SINGAPORE 1000 & SINGAPORE SME 1000 INCORPORATING THE SINGAPORE INTERNATIONAL 100’ AWARDS DINNER ON 1 FEBRUARY 2013, 7.40PM AT ISLAND BALLROOM, SHANGRI-LA HOTEL

Mr Ken Sansom, Chairman, DP Information Group;

Mr Max Loh, Country Managing Partner, Ernst & Young;

Award Recipients;

Ladies and Gentlemen;

Good evening.

It is my great pleasure to join you this evening as we celebrate the achievements of the biggest, best and most dynamic companies in Singapore.

The theme for this year’s awards dinner is “Giants”. This is a very apt description of the companies present in this ballroom tonight, as we are here to recognise the ‘giants’ of Singapore’s enterprises – not necessarily in size, but in performance and achievements. DP Information Group’s data showed that the combined sales for the Singapore 1000 companies rose from S$1.98 trillion in 2012 to S$2.42 trillion in 2013 – an impressive increase of 22.2 percent.

I note that the larger Singapore companies are seeing higher returns from internationalisation, with overseas sales hitting S$207 billion in 2013. This was higher than the past two years. This is a good sign as internationalisation will no doubt be a critical enabler for sustainable growth in the long term.

I am also pleased to note that there is a new award this year, recognising SMEs which have surpassed S$100 million in revenue. Our top 1000 SMEs generated S$29.4 billion in combined sales, up by 11.8 percent from last year. Their combined profit of S$3.6 billion registered an outstanding performance of 38.5 percent, when compared to the 2012 rankings. It is inspiring to know that in the midst of challenging economic conditions, a number of SMEs have achieved growth and joined the big boys’ league.

The Challenges and the Opportunities

Having spoken to many of you over the past year, I know that the last 12 months have not been easy. The global economic situation is still uncertain and challenging. Weak market sentiments, amidst fears of a US fiscal cliff or an EU debt crisis, are still affecting many of our businesses. Many of you have also shared with me about the domestic challenges – the rising business cost, and the domestic manpower and infrastructural constraints. Yet many of you still found the opportunities for growth in Asia and other parts of the world. You have managed to sharpen your competitive edge, overcome the challenges and exploit these opportunities successfully. That is definitely worth celebrating. And as we celebrate your successes this evening, I also hope that many more SMEs will be inspired to follow in your footsteps.

Completion of SME Review

The topic of SMEs is always close to my heart. SMEs form the backbone of our economy, since they make up 99% of enterprises, employ 70% of the workforce and contribute more than 50% of Singapore’s GDP. The 2009 financial crisis also showed how SMEs add resilience to our economy – the value-added from the SME sector grew at 6.9%, despite an overall 1% GDP contraction in that year. Thus, a vibrant and thriving SME sector is important; it makes our economy more resilient to shocks and provides a variety of meaningful jobs for Singaporeans.

In 2010, the Government accepted the Economic Strategies Committee’s (ESC) report, which outlined the blueprint for sustainable and inclusive growth, through capability and skills upgrading, innovation and productivity. Since then, government agencies have put in place structures and programmes to enhance this growth. For example, the National Productivity and Continuing Education Council (NPCEC) was set up in April 2010 to steer the nation towards higher productivity achievements, and to achieve ESC’s target of 2-3% growth in productivity per annum over the next decade. These programmes are important in helping our businesses weather the economic uncertainty following the last financial crisis.

However, many would also agree with me that the operating environment for our SMEs has continued to change in recent years.  New challenges have emerged, such as the more pressing need to operate within tight manpower constraints, cope with rising business costs, and at the same time, improve productivity and expand overseas.

Therefore, in April last year, we launched a review of the SME sector in Singapore and our existing development strategies. The Government worked closely with the SME Committee (SMEC) and the Trade Association and Chambers to undertake this review. The objective was to review our existing SME strategies and propose new measures to help SMEs cope in the new operating environment.

The review team held focus groups and open discussions with SMEs to better understand the challenges that our SMEs are facing. The team took in feedback on how the Government can improve its assistance for SMEs. I would also like to take this opportunity to acknowledge the suggestions and recommendations put forth by our partners, such as the SMEC, SBF, SCCCI, ASME, ICPAS and KPMG, for Budget 2013. These are important in reflecting the sentiments on the ground, and we have considered them as part of the review.

The specific recommendations and initiatives are being finalised, and should be in time for announcement in the upcoming Budget. Meanwhile, let me share the broad strategies with you.

Recognising the important role of the SME sector, the review focused on developing strategies which will invigorate and transform this sector, so as to achieve two key outcomes:

(i)               A productive, competitive and vibrant SME sector; and

(ii)              A source of meaningful jobs for Singaporeans.

To achieve these outcomes, the Government will focus on helping SMEs along three broad thrusts:

(i)               To drive productivity, innovation and capability upgrading

(ii)              To tap on opportunities for growth; and

(iii)            To create a conducive business environment for SMEs

(I)      Productivity, Innovation & Capability Upgrading

First, the Government will continue to support SMEs in the area of productivity, innovation and capability upgrading, to help them transform their business and become more competitive. This is the only long-term solution for our businesses, and the only way that they can continue to grow. Productivity-led growth will thus be a key area of focus. With our labour constraints, another key aspect of capability-building will be working with the polytechnics, ITEs and industry associations on strengthening our SMEs’ ability to attract and retain talent.

(II)        Opportunities for Growth

To help SMEs capitalise on global opportunities in the region, IE and SPRING will also be stepping up their efforts to help SMEs accelerate their pace of internationalisation. Cross-border knowledge about markets, suppliers and technologies are thus vital in driving international growth and competitiveness. Our priority is on improving coordination and channelling more resources to relevant government agencies to help SMEs capitalise on such knowledge transfers and facilitate inter-company partnerships, so that they can access overseas market opportunities and become regional leaders. We will also find more ways to encourage partnerships between the larger corporations and our SMEs.

(III)      A Conducive Business Environment for SMEs

Finally, the review will address the need to further enhance the business environment to make it more conducive for entrepreneurship and enterprise development. This entails making our schemes simpler and more accessible to all groups of SMEs – whether big or small. The Government will also enhance our various outreach channels like the Enterprise Development Centres and industry associations to reach out to more micro and smaller SMEs for better and easier access to the various government assistance schemes.

In terms of access to financing, the Government will continue to keep a close watch on the situation. So far, bank lending to SMEs, including government-backed financing such as micro-loans, the Local Enterprise Finance Scheme (LEFS) and Loan Insurance Scheme (LIS), have remained healthy.

To ensure continual renewal and vibrancy of the SME sector, we have also been building up and enhancing the support infrastructure for entrepreneurship and new enterprises. For example, the Action Community for Entrepreneurship (ACE), which I am also chairing, has actively provided funding, mentorship and networks for many start-ups. We have also enhanced entrepreneurship education in schools, as well as looked at ways to improve the ecosystem for R&D to be converted to commercial products and services. These efforts will continue over the next year.

Conclusion

While the Government can support the growth of our local SMEs, we cannot supplant the passion, drive and vision of entrepreneurs like all of you here tonight. The future of the SME sector will be shaped by your vision, drive and ideas. The Government will, however, proactively work with SMEs and their industry associations, to help them address the issues that they are facing and also, help them exploit growth opportunities. 

As we applaud the outstanding achievements of the award recipients tonight, it is important to also recognise the achievements of all the ranked companies of the Singapore 1000, SME 1000 and Singapore International 100. I would also like to take this opportunity to acknowledge the efforts of DP Information Group and other supporting organisations and sponsors, for completing yet another successful series of rankings and this evening’s awards ceremony.

Finally, my congratulations to all the award winning companies tonight and I wish all of you a wonderful evening ahead. 

Thank you.