Oral reply to PQ on the net formation of businesses

Question

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry (a) what is the expected outlook for the net formation (formation minus cessation) of businesses by sector in 2019; (b) which sectors are seeing declining net formation trends and what are the likely causes for the declines; (c) what efforts are being introduced to ensure net formation remains healthy over the coming years; and (d) whether there will be a continued level of "healthy" cessation of businesses.

Oral Answer (to be attributed to Senior Minister of State for Trade and Industry Mr Chee Hong Tat)

1. In the first nine months of 2019, the total net formation of business entities in the economy was around 9,900. This is about a quarter lower than the average of around 13,800 recorded over the same period between 2014 and 2018. 

2. Most sectors saw a fall in the net formation of business entities during this period, including the transportation & storage, business services and construction sectors. Heightened economic uncertainties in the global economy and the resulting slowdown in the Singapore economy are likely to be factors contributing to this trend.  MTI expects the net formation of businesses to remain subdued for the rest of 2019.

3. MTI has several strategies to develop a vibrant ecosystem for businesses. First, we are looking at ways to grow our economy and enable companies to seize new opportunities, both locally and overseas. This includes transforming our industries, developing new sectors such as agri-tech and precision medicine, and supporting our companies to tap on external growth opportunities.

4. Second, we are fostering a pro-enterprise environment by lowering the barriers to entry and exit for businesses. For instance, MTI launched the GoBusiness Licensing portal for food services on 31 October, which reduces the number of regulatory touch-points for businesses from fourteen to one, and the number of data fields required from more than 800 to below 100.  Businesses can also benefit from lower licence fees and quicker processing time.  We will extend this to other sectors, such as retail and environmental services, so that more businesses can benefit from the rules review and process re-engineering.

5. Third, we will continue to develop a vibrant startup ecosystem. We established Startup SG in 2017 to provide startups with access to a wide range of local financial and non-financial support. These include Startup SG Founder, which provides mentorship and startup capital grants to first-time entrepreneurs with innovative business ideas, and Startup SG Network, which connects startup ecosystem players.

6. Sir, government measures are important, but they are not sufficient. To succeed in our goal of building a vibrant business ecosystem, we need a collective effort from business owners, workers and government to work in partnership to transform our economy and enterprises together. Thank you.