Parliament Sitting on 22 Jan 07: Question No. 8 for Oral Answer: Mdm Ho Geok Choo: SMEs

Question No 8 of Notice Paper No. 2 of 2006 For Oral Answer

Name and Constituency of Member of Parliament
Madam Ho Geok Choo (MP for West Coast GRC)

Question:
To ask the Minister for Trade and Industry.

(a) what is the increase in the number of small and medium enterprises (SMEs) in the last 5 years and which industries do they belong to;

(b) what contributions do they make to the Singapore economy; and

(c) what are some of the more pressing needs of these SMEs and how are they being helped.

Answer:
Between 2000 and 2004, the number of small and medium enterprises (or SMEs) increased by about 13,000.Today, we have some 133,000 SMEs in Singapore, which make up 99% of all our enterprises. About 94% of our SMEs belong to the service and commerce industries, while the rest are in manufacturing[1]. SMEs contribute some 42% of our GDP and employ 56% of our workforce.

Capability Upgrading

The Member also asked what the pressing needs of our SMEs are, and what we are doing to help them. A key concern facing our SMEs is the increase in global competition, especially from lower-cost competitors offering higher value-added activities. In this respect, we have various programmes, at both the industry and enterprise level, to help our SMEs upgrade their capabilities and move up the value-chain.

At the industry level, we have the Local Enterprise and Association Development, or LEAD programme, which supports industry development efforts by able and willing industry associations. At the enterprise level, we have introduced the Capability Development Programme, which covers areas such as process improvement, strategic alliances, and certification of products and processes to international standards.

Companies can also leverage on the Technology Innovation Programme to strengthen their technology innovation capability and capacity. The programme provides SMEs with the expertise, infrastructure as well as the financial support for their research and other innovation related projects.

Financing

Access to financing is another key concern for SMEs. In 2005, we extended some $800 million worth of loans to more than 3,600 SMEs through schemes such as the Local Enterprise Finance Scheme (LEFS), and Micro Loan Programme. The Internationalization Finance Scheme was launched this year, making available $500 million worth of loans for overseas expansion purposes. To complement loans, the government has also made available equity financing, matching government funds with private sector investments under the Start-up Enterprise Development Scheme, or SEEDS, for innovative start-ups. The Business Angel Scheme was introduced last year to spur the level of business angel investments in Singapore.

We are pleased that the private sector has recognized that not all SMEs are high-risk, and have introduced loans and services to cater particularly to the SME market. Several banks are even offering unsecured financing products to SMEs, in the form of installment loans and revolving credit lines.

Accessing Overseas Markets

The third key concern for SMEs is access to overseas market opportunities. To build connections, SMEs can participate in outgoing missions and fairs organized by IE Singapore, as well as IE Singapore’s networking platforms, namely Network China, Network Indonesia and Network India. Companies can also tap on the International Marketing Activities Programme which supports the activities organized by trade associations and chambers.

To promote our enterprises to the world, we recently launched the Buy Singapore portal. This initiative is a national e-channel that leverages on the established Singapore Brand to acquire and disseminate foreign business leads to our companies.

The Government has put in place quite a comprehensive package of assistance for SMEs. I assure Members that we will continue to improve and adapt our assistance as the needs of SMEs evolve.

[1] 52% of SMEs belong to the services sector comprising business services, financial services, transport and communications and other service industries. Another 42% of our SMEs reside in the commerce sector, made up of wholesale and retail, hotel and restaurant industries. The remaining 6% are manufacturing firms.