Speech by Minister Gan Kim Yong at Enterprise Singapore's Year-in-Review 2021

Colleagues and friends

Members from the Trade Associations and Chambers (TACs)

Members of the media

1. Good afternoon. Thank you for joining me this afternoon at the Enterprise Singapore (ESG) 2021 Year-in-Review.

2021 Economic Update

2. 2021 was a very challenging year, full of ups and downs for all of us. Earlier in the year, we saw the emergence of the Delta variant which led to a surge in the number of COVID-19 cases. We pushed ahead with our vaccination programme and brought the infections under control. But the wave of infections and the restrictions we had to impose were difficult for our businesses and the economy, and our original full-year growth projection of 4 to 6% began to look somewhat uncertain.

3. Thankfully, as the year progressed, the outlook improved as our vaccination drive picked up pace. Even as the Omicron variant appeared towards the end of the year, we avoided another round of tightening, although we had to adjust our speed of opening up. Global markets also began to gradually re-open and we saw signs of broader economic recovery. Major economies like the US, China and India registered positive growth in 2021, along with most ASEAN economies.

4. Riding on the global recovery, the Singapore economy delivered a strong growth last year. MTI’s advance estimates project that our economy grew by 7.2%, a sharp rebound from the 5.4% contraction in 2020. This was in part supported by a very good recovery in non-oil domestic exports (NODX), which grew by nearly 10% year-on-year in the first three quarters of 2021, the fastest in a decade. In particular, our manufacturing, information & communications, and finance & insurance sectors saw strong growth in 2021, supported by robust demand for semiconductors, IT and digital solutions, as well as fund management activities. Many of our enterprises that are globally competitive and plugged into the global value chain did well. This trend is likely to continue into 2022.

5. However, the recovery has not been even across our economy. Travel and hospitality-related sectors, such as aerospace and accommodation, as well as consumer-facing sectors, such as F&B and retail trade, continued to face challenges. ESG has leaned forward strongly to support these enterprises. ESG’s Temporary Bridging Loan Programme and Enterprise Financing Scheme-Trade Loan have been important lifelines, and $8.6 billion worth of loans were disbursed to 12,600 enterprises last year. ESG also moved quickly to re-introduce the Food Delivery and E-Commerce Booster Packages to help our F&B and retail businesses diversify their revenue channels when we had to move into Heightened Alert last year. The package has helped more than 10,000 businesses to-date.

6. Despite these challenges, I am very encouraged to see that many enterprises have taken the step to transform amidst the downturn to position themselves for the future. ESG supported over 22,000 enterprises on productivity, innovation and internationalisation projects last year, a 44% increase compared to 2020. These efforts are projected to help create $17.9 billion in value-add and 23,300 skilled jobs. CEO Cheong Boon will speak more about ESG’s good work in 2021 later.

Capturing Growth in 2022

7. Looking ahead, what does 2022 have in store for us? No doubt there are significant headwinds. We are facing cost pressures from higher energy and commodity prices, as well as supply chain bottlenecks. Geopolitical tensions have caused major uncertainties and potentially, further technological bifurcation. Despite our best hopes, COVID-19’s global trajectory continues to remain uncertain, with the Omicron variant causing some uncertainty in countries’ economic recovery plans.

8. But overall, I think we have reasons to be confident. Our vaccination rates are high, and are still rising, while COVID-19 death rates have fallen. Societies are more resilient than before and the arrival of anti-viral drugs gives us hope that we can avoid another massive downturn and lockdown, and progressively roll back travel restrictions. We also expect to see strong global economic recovery in our major economic partners, including those in our region.

9. While we will need to continue to help businesses adjust to COVID-19, it is timely to also help them go on the offensive and seize opportunities locally and abroad. We are at a strategic turning point. Over the last two years, our Singapore enterprises have shown themselves to be adaptable and resilient. We now have to prepare ourselves so that when the world economy reopens fully and recovers quickly, we are the first out of the gate to seize these opportunities. Chairman Peter Ong will elaborate more about our strategies and plans for 2022, but let me outline three broad shifts that we will make.

10. First, we will redouble our efforts to tap on global demand.

11. The last two years have been challenging for our enterprises’ internationalisation efforts, as travel restrictions made it very difficult for them to travel around and venture abroad. We need to urgently recover the lost ground. In my conversations with Singapore companies big and small over the last few months, they tell me that they are raring to get back into the global market and resume their international expansion. ESG will intensify our efforts to partner businesses to break into new markets. The Government will also continue to grow our network of Free Trade Agreements (FTAs), which are key enablers to grant our enterprises market access and fresh opportunities abroad.

12. In addition, intensifying innovation and start-ups will be key. Our success in internationalisation is determined by our firms’ ability to commercialise new technology and create world-leading products and services. 2021 was an encouraging year in this regard. In the first nine months alone, Singapore-based start-ups raised $11.2 billion, more than doubling the $5.5 billion raised in the whole of 2020[1]. I would like to see more companies capitalise on Singapore’s vibrant ecosystem to undertake R&D and innovation activities, and start new businesses.

13. Second, we will strengthen our position to compete globally in new areas.

14. This means driving growth in new and emerging sectors such as the digital economy and green economy. Digitalisation has picked up pace across all sectors. There are limitless opportunities out there for our enterprises, ranging from digitally enabled services such as digital health and education technologies, to Industry 4.0 technologies and other frontier areas in artificial intelligence and immersive technology.

15. The green economy too holds tremendous opportunities for our enterprises and has the potential to reshape our future. This is a window of opportunity for our companies to ride the wave of sustainability and decarbonisation globally, and emerge as a world leader at the frontier of innovation in this space. There is great demand for clean energy, low-carbon mobility and sustainable infrastructure right now, not to mention related professional services such as green financing and carbon trading. Our enterprises can also lead the way by pioneering and capturing value from green enterprise solutions to lower their carbon footprint.

16. Third, we will invest more resources into grooming a new generation of Singapore-based, globally competitive enterprises.

17. As a global business hub, Singapore’s growth has benefitted greatly from Foreign Direct Investments (FDI), which has been an important source of economic activity, jobs, and knowledge transfer. While this will continue to be an important part of our economic strategy, I think there is room for us to invest more resources into growing our own crop of locally grown and globally competitive enterprises. Over the last few years, we have seen a new generation of local enterprises making a name for themselves internationally. We must continue to groom more local enterprises with high potential, to go global and become leaders in their respective fields, leveraging on our competitive strengths.

18. This is not actually a new strategy, and is in fact one of the key reasons why ESG was set up through the merger of IE Singapore and SPRING Singapore. Going forward, ESG will further sharpen its focus, and provide even stronger support for the growing entrepreneurial spirit we see here in Singapore.

Conclusion

19. Before I end, let me thank all ESG officers for their dedication, commitment to excellence, and willingness to go above and beyond the call of duty even in the toughest of times. You have worked tirelessly in the fight against COVID-19 from the very beginning and took on many additional roles without hesitation. Besides helping our businesses cope with the shock from COVID-19 and assisting them to operate in a safe and sustainable manner, your efforts to secure essential healthcare and industrial supplies have helped to keep our supermarket shelves well-stocked. You also played a critical role in securing access to COVID-19 supplies such as ART kits, so that Singapore can remain open and maintain a semblance of normalcy through the ups and downs of the pandemic.

20. Because of your efforts, Singapore and our Singapore enterprises are in a stronger position for what lies ahead. I am confident that ESG will make the most of this strategic turning point we are at to help our businesses restructure and rebound, and build a new generation of successful, innovative, and competitive enterprises to fuel the next stage of Singapore’s economic story.

21. Thank you.

[1] Based on an Enterprise Singapore-DealStreetAsia joint venture funding report, published in November 2021.