Speech by Minister S Iswaran at the CFE-SBF Engagement with Business and Industry Leaders

OPENING REMARKS BY MR S ISWARAN, MINISTER FOR TRADE AND INDUSTRY (INDUSTRY) AND CO-CHAIR OF THE COMMITTEE ON THE FUTURE ECONOMY, AT CFE-SBF ENGAGEMENT WITH BUSINESS AND INDUSTRY LEADERS ON FRIDAY, 11 NOVEMBER AT 9.05AM

Mr Teo Siong Seng, Chairman of the Singapore Business Federation,

Members of the Singapore Business Federation,

Ladies and Gentlemen,

Good morning.

1.       Thank you for joining us this morning at this engagement organised by the Singapore Business Federation with the Committee on the Future Economy. I am glad to see many business and industry leaders gathered today.  Many of you have been actively involved with the CFE and our economic agencies.  I would like to thank you for your feedback and suggestions, and for your commitment to secure Singapore’s economic future.

2.       Developments in external markets and changes in technology are affecting our business environment at a much greater pace and scale than ever before.  The impact had been varied across sectors, but it is clear that the business landscape is undergoing a significant change, in some cases even unprecedented.

3.       We recognise that these changes pose challenges to some of our industries and businesses.  Some of the challenges that we face are more immediate due to a cyclical downturn around the world and its impact on external demand.  But it is worth noting that unlike the GFC of 2008, we are not in a crisis.  There remain bright spots in sectors like ICT and healthcare.  And, we continue to attract new investments, which in turn are creating new opportunities. 

4.       The more difficult challenge stems from the disruptive technologies and structural changes that we are already witnessing. This has profound long term implications for our economy because it will change industries and jobs permanently; on the upside, it will also create new opportunities.  So, even as we deal with the immediate challenges, our key task is to prepare for the future economy that is already upon us.  Otherwise, we might win the proverbial battle but lose the war. 

Transforming SMEs for Our Next Phase of Economic Development

5.       In order to sustain our competitiveness and growth, we have embarked on a national effort to transform our industries for the next phase of economic development.  And our local enterprises, especially the SMEs, are the central focus of this effort.  The Government has been committing resources and working with industry partners to build up our local companies.  We want to strengthen their productivity and competitiveness, deepen their innovation capacity, and enhance their scale and international footprint.   

6.       Why this focus on our local enterprises?  SMEs are, and must remain, the strong core of our economy.  They make up 99% of our companies, contribute 50% of our GDP, and employ 70% of our workforce.  As in other advanced and industrialized countries like Japan, Korea and Germany, SMEs play an important role in value creation by anchoring our key economic clusters and good job opportunities in Singapore. 

7.       We therefore want our SMEs to be productive, innovative, international businesses that can continuously adapt to the new economic environment and seize new opportunities.  We have various schemes and programmes which SMEs can take advantage of to build up their capabilities, embrace new technologies and business models, develop new products and services, and expand overseas. 

Upgrading SMEs through Industry Transformation Maps

8.       Going beyond assistance to individual companies, we are now developing Industry Transformation Maps (ITMs) to upgrade the capabilities of SMEs in a broad range of industries.  What is an ITM?  It is an industry plan, drawn up jointly with our tripartite partners, including TACs, to create value and drive growth across 23 industries which account for 80% of our GDP.

9.       Each ITM comprises a growth and competitiveness plan, integrating four pillars – productivity, jobs & skills, innovation and internationalisation – which will help our businesses and people to respond to the emerging challenges and opportunities.   

10.     To date, we have launched three ITMs: for Food Services, Retail and Precision Engineering.  How can these ITMs help our SMEs?

11.     The Precision Engineering (PE) sector is a good example of how ITMs can help transform our enterprises.  The PE ITM has identified new growth areas in the sector, such as in robotics and additive manufacturing.  To seize these opportunities, PE companies can tap on initiatives such as the $450 million National Robotics Programme and the National Additive Manufacturing Innovation Cluster.  Through the strategies outlined in the PE ITM, the industry’s Value Added is expected to grow from S$8.8 billion in 2014 to S$14 billion by 2020, and create 3,000 new PMET jobs.

12.     The ITMs will also propose ways to deepen partnerships between government and industry, and among industry players to develop transformative solutions.  This will help SMEs in the PE sector to ride the “Industry 4.0” wave sweeping global manufacturing.  The Government is supporting innovative companies like Pixel Automation, an SME which has created modular manufacturing “cells” that allow manufacturers to produce different products by switching out machine parts, rather than getting new machines.  This is a game-changer at a time where speed and customisation are highly valued, and Pixel Automation’s solution not only has market potential in itself, but can also help other local manufacturers become more competitive.

Transforming Businesses, Eco-systems and Capabilities for the Future Economy

13.     As we enter the next phase of development, an important source of value will lie in our ability to develop our own novel solutions that can be exported to the world.  And cultivating innovative, competitive enterprises is key to this aspiration.

14.     To achieve this, companies, including SMEs, will need to leverage data and technology to drive innovation and value-creation.  Given the nature of innovation, this will have to go beyond the efforts within each company and sector.  We will also need to build up a strong ecosystem, one that enables our companies to collaborate on new ideas, and take their solutions beyond our shores.

15.     The Committee on the Future Economy is looking into three aspects to support innovation and value creation. 

16.     First, how to make innovation a more pervasive part of our business culture, and build up our corporate capacity to adopt new technologies and business models.  This will not only position them for growth, but also help to overcome our land, labour and market size constraints.

17.     Second, to strengthen our innovation ecosystems through stronger linkages between the private sector and public sector research capabilities; and within the private sector across different industries, and among companies at different stages of development, from large multinationals and local enterprises, to SMEs and start-ups.  By making collaboration and the cross-pollination of new ideas easy and the norm, we can create more value from our innovations, and see more success in bringing new products and services to markets around the world.

18.     Third, how to enable our companies to benefit from Singapore’s brand and corporate landscape to access regional and global opportunities.  Our businesses must be able to make full use of the Singapore brand, and to leverage the presence of vanguard LLEs and MNCs to scale up and internationalise.

19.     Through these changes, we want to create the enabling conditions for our home-grown SMEs to be an important source of new ideas in an innovation-based economy.  Just as Singapore’s small size can be turned into a source of nimbleness and strength, our SMEs can be quick to seize new business opportunities if they are able to successfully transform and overcome constraints.

20.     In time, we will have more examples like Wong Fong Engineering.  Wong Fong started out as a small, family-run engineering company, and they are now collaborating with the Williams F1 team to build Singapore’s first supercar, which will be launched next year.

Collaborating for Future Growth

21.     Our TACs will continue to be our important partners in this journey.  TACs can play a catalytic role in identifying and implementing innovative projects which enable your members to enhance productivity and competitiveness, and help aggregate demand to enable our SMEs to access technological advances with scale.

22.     SBF has been a key contributor to the development of our business community, working in close partnership with industry and the Government.  Among other initiatives, SBF’s SME Committee has been representing the views of SMEs across sectors, and helping our SMEs understand Government procurement and regulation, and leverage shared services.

23.     I would also like to acknowledge the contributions of your Chairman, Mr Teo Siong Seng to the CFE, especially in helming the discussions in the Subcommittee on Corporate Capabilities and Innovation.  

24.     The CFE is looking into the specific strategies and formulating ideas and recommendations for the way forward.  To be successful, we need to build a strong consensus on the path ahead.  Our track record of tripartite collaboration should stand us in good stead as we strengthen our innovative capacity to develop solutions for the world.

25.     I believe that we approach the challenges of the future economy from a position of strength. We are small and nimble, and can draw on the capabilities of the strong corporate eco-system that we have built up over the years, as well as our substantial investments in innovation and R&D.  I am therefore confident that we can achieve the goal of keeping our economy vibrant and resilient, and bring about sustainable growth that creates opportunities for all.

26.     I look forward to hearing your ideas in today’s engagement, and I wish you a fruitful and meaningful morning. Thank you.