Speech by Ms Sim Ann, Senior Minister of State for Trade and Industry, During the Committee Of Supply Debate Under Head V

SPEECH BY MS SIM ANN, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY, DURING THE COMMITTEE OF SUPPLY DEBATE UNDER HEAD V (MINISTRY OF TRADE AND INDUSTRY) ON FRIDAY, 3 MARCH 2017

 “Supporting Our SMEs to Seize New Growth Opportunities in the Future Economy”

 SMES ARE IMPORTANT TO OUR ECONOMY AND WE ARE COMMITTED TO SUPPORTING THEM

1.            Sir, SMEs are the heart of our economy.  They are the base from which many successful brands have emerged, and we hope and believe more great Singapore companies will grow.

2.            The concerns of SMEs are also the Government’s concerns.  Supporting SMEs is very much at the front and centre of the CFE Report, as well as this year’s Budget.  It will also be a key focus of the MTI family in the months and years ahead.

3.            The feedback from SMEs falls into three main categories. First, the need for assistance to cope with challenges, both immediate and in the longer term. Second, where to go and who to approach for assistance. Third, how to transform themselves.

4.            The MTI family’s response is clear – we want to help SMEs succeed. We provide ass​istance. We are making it easier for SMEs to receive assistance. And we are doing more to help SMEs implement step-by-step plans, if they wish to transform. 

HOW SMES CAN BENEFIT FROM OUR BROADER INDUSTRY TRANSFORMATION EFFORTS

5.         For the first category, in terms of help to cope with challenges, several Ministers have already spoken about them. Hence, I shall address the question of whether we can make it easier for SMEs to benefit from our support schemes.

6.           We can do so in several ways.

7.           First, by changing the way Government agencies work with each other to support SMEs. Our economic agencies are largely organised based on function, and (with a few exceptions) not by industry type.

8.         But SMEs have told us that if they knew that there was one specific agency in charge of their industry, they would feel more assured that the needs of the entire industry are considered holistically. We hear our SMEs.

9.           This is why we have organised our industry strategies into Industry Transformation Maps (ITMs).  Now, we have one lead agency for each industry. We have started rolling the ITMs out. Eventually, we will have 23 ITMs covering more than 80% of our economy.

10.         SMEs can think of each ITM as a guide to the key shifts in the industry. It lays out practical steps they can take to transform their businesses. There are four major themes – to improve productivity, innovate, internationalise, as well as develop the skills of our workers.

11.         To address Ms K Thanaletchimi’s question, we have indicators to track the progress of ITMs.

12.         At the national level, we track indicators such as value-add and value-added per actual hour worked. At the sector level, each ITM is tailored to the specific needs of that sector. We have sector-specific indicators to track progress in productivity, innovation, internationalisation, and in developing the skills of our workers.

13.         Let me now explain how our SMEs can benefit from the ITMs.

Food Services ITM

14.         The Food Services ITM helps SMEs address a key challenge – their heavy reliance on manpower. This is made more acute by an ageing workforce and the fact that many prefer to work in other sectors. As part of the ITM, food services SMEs will be supported in their adoption of technology, as well as the development of productive and innovative business formats.

15.         Example - Omakase Burger, a gourmet burger restaurant chain that specialises in “smashed burgers”. As some foodies might know, an artisan burger is especially juicy and delicious because the meat patties are shaped by hand, and not compressed by machine.

16.         So, a key challenge for Omakase was that a lot of the food processing was manual. Whether the business can grow depends crucially on how many skilled chefs it can hire – and as many of us know, this is one of the biggest bottlenecks in the F&B industry.

17.         Is there no machine that can replicate the taste and texture of a hand-shaped burger patty?  It turns out there is – one that uses vacuum suction technology instead of straightforward compression. But it is costly.

18.         With the support of SPRING’s Capability Development Grant (CDG), the company was able to automate its processing kitchen in 2016. They purchased this special machine. Now, Omakase can make more of the same delicious burgers and think of expanding operations and growing its top line, without having to find more chefs.

Retail ITM

19.         Ms K Thanaletchimi also asked how we can improve productivity in our retail sector. This is addressed in the Retail ITM which sets out to drive greater productivity through technology and shared platforms.

20.         Example - SPRING has worked with retailers to get them to use self-checkout counters. In 2016, more than 110 self-checkouts were installed in supermarkets. This has allowed a 20% reduction in the demand for cashiers. The former cashiers were redeployed to new stores or reassigned to other duties. Our target is for 50% of large retailers to adopt these established technologies by 2020.

21.         E-commerce and omni-channel sales will also help retailers to better meet customers’ needs, and allow them to do more with a lean workforce. The Retail ITM encourages and supports SMEs – and their workers – to take advantage of these strategies.

22.         SPRING is working with Workforce SG to support master classes on omni-channel retailing and digital marketing. To date, 38 companies have benefited from these classes, and we encourage more to join in.

23.         As Ms Foo Mee Har pointed out, there are potential synergies between different industries. We agree. That is why we are adopting a cluster approach for our ITM efforts.

24.         For instance, we will identify and develop common digital solutions and automation technologies that can be applied across industries. And we will work with SMEs to deploy them.

25.         Example - Within the Lifestyle cluster, there is Techmetics, a Robotics and IT solutions company. It provides common automation solutions to the Food Services and Hotels industries and has worked with SPRING and STB to deploy these solutions.

26.         In restaurants like Kinsa Sushi, guests can place their orders through Techmetics’ iPad ordering solution. Their food is then delivered by Techi, a robotic waiter. 

27.         The company also adapted Techi to meet the needs of hotels. For instance, Techi is at work in Park Avenue @ Rochester delivering room service. The robot is able to take the lift, travel to the guest’s doorstep and notify him through a phone call that his food has arrived. Techi helps the food services and hotels industries do more without having to find more staff. It also saves ageing workers from having to perform physically tedious and repetitive tasks.

28.         It also means that home-grown tech companies can showcase their solutions and hopefully garner greater success. We look forward to supporting more SMEs adopt such win-win solutions.

WHERE TO GO AND WHO TO APPROACH FOR ASSISTANCE

29.         We often hear that SMEs are not sure who to approach for help. Mr Saktiandi Supaat and Ms Cheryl Chan have raised similar concerns. 

30.         We didn’t just reorganise the delivery of assistance in the form of ITMs. As a first touch-point, we have our SME Centres that serve SMEs, including our heartland and micro enterprises. 

31.         As a first-stop, the SME Centres provide customised business advice and help SMEs better understand government initiatives. Last year, we also enhanced our SME Centres to provide business diagnosis and run capability workshops for SMEs.  In total, our Centres assisted about 30,600 enterprises in 2016.

32.         Complementing the SME Centres is our SME Portal, which serves as the first online touch-point for SMEs. The portal offers Government and commercial information useful to SMEs. It also lists services suitable for SMEs at various business stages.

33.         To improve our companies’ access to technology and digital solutions, we will add a one-stop Tech Depot to the SME Portal by the second quarter of 2017.

34.         This is a showcase of easily adoptable technology solutions. It will include A*STAR’s ready-to-go (RTG) technologies as well as IMDA’s pre-qualified Infocomm and Media (ICM) solutions.

35.         For SMEs looking to embark on a transformation journey, we are more than willing to meet you halfway by providing step-by-step, customised assistance. Let me elaborate.

Helping SMEs Enhance Technological Capabilities

36.         Mr Yee Chia Hsing asked how our SMEs can increase their competitiveness. We have taken steps to help SMEs enhance their technological capabilities. These include improving access to technology solutions and helping them identify and implement those that are best suited to their needs.

37.         First, for SMEs that require specific help to identify how technology can support them, A*STAR can help them develop an operation and technology roadmap (OTR).

38.         This involves a customised, step-by-step guide of what companies need to do to better leverage technology in their operations. Since 2003, A*STAR has developed over 240 technology roadmaps, with positive feedback.

39.         This year, we will partner the trade associations to expand our network of trained OTR facilitators. We aim to build capacity to support up to 400 companies over the next four years.

40.         Second, SMEs that wish to develop, prototype and test new products can tap on our new Tech Access initiative.  They will get access to A*STAR’s installed base of specialised equipment on advanced manufacturing.

41.         This will help them build capabilities in the use of advanced machine tools, new processes, prototyping and testing. They will also receive user training and advice from A*STAR to optimise the effectiveness of the equipment.

42.         As Mr Thomas Chua has noted, TACs are important partners to help us leverage R&D to uplift the capabilities of our SMEs.  A*STAR has worked with TACs such as the Singapore Precision Engineering and Technology Association (SPETA) and Singapore School Transport Association (SSTA) on specific projects. A*STAR will continue to engage TACs on specific R&D projects, and also help them tap on new initiatives like the Tech Access and Tech Depot.

Developing Capabilities

43.         We also want to strengthen our support for SME capability development. SPRING’s Capability Development Grant (CDG) is one of our key support schemes for this. It supports SMEs to take on upgrading projects across 10 key business areas, and in 2016, SMEs took up close to 2,400 CDG projects, totalling $125 million in grants.

44.         To make it easier for companies to do capability development, SPRING simplified the application process for grants below $30,000 in 2015. This has received a positive response and as a result, many more companies today have been able to benefit from the grant.

45.         We are constantly looking for ways to broaden and deepen our support for capability development. This year, we will strengthen our support in product development by extending the grant coverage to small batch production.

46.         Currently, most of our support efforts focus on helping companies develop products at the R&D and prototyping phase. However, for products to be commercially scalable, companies need to ensure that the product design and manufacturing process are optimised. This is tested through small batch production.

47.         We hope the expansion in grant coverage will help to co-share risks associated with this early stage of production and help our SMEs scale.

Strengthening Innovation through Lead Demand

48.         Beyond this, we will be taking steps to better drive innovation among our SMEs and startups. This will be with an enhanced Partnerships for Capability Transformation (PACT) through Government Lead Demand, also known as GOV-PACT. 

49.         Today, there are efforts by various Government agencies to work with companies to co-develop innovative solutions. Participating companies can also tap on SPRING’s CDG to fund parts of the cost involved in the development of new technologies.

50.         However, we recognise that SMEs and startups still face uncertainty of securing the procurement contract after investing time and resources at the development stages.

51.         To overcome these challenges, SPRING will be working with several government agencies, such as HDB and JTC, to drive procurement for innovation. We will help more SMEs and startups participate in Government projects. For example, the procurement process for projects under this scheme will be broken into stages.  An SME or startup will be eligible to move on to the next stage once the current stage proves successful. This will reduce the risk and investment for the SME.

52.         As one of the agencies pioneering this, JTC has already been working with companies to fund and test-bed innovative solutions. It has worked with vTrium Energy, a local SME, on the test-bedding of flexible solar films within its CleanTech Park and Seletar Aerospace Park. Through the field trials, vTrium was able to prove that their flexible panels work well on curved surfaces and vertical building facades, and in a tropical climate. 

53.         We hope that this initiative will give SMEs and startups the opportunity to engage the Government as a valuable reference customer and build their track record.

54.         Mr. Thomas Chua also mentioned about how SMEs can participate in the $700 million worth of construction projects that MOF is bringing forward. MND will be addressing this at their COS.

Anti-Competitive Activities

55.         We also want to ensure that we have healthy, competitive and efficient markets in Singapore. This is the goal of the Competition Commission of Singapore (CCS), and I thank Mr Pritam Singh for his question.

56.         The CCS administers the Competition Act, which allows it to issue an interim measures directive to businesses. This is provided there are reasonable grounds to suspect an infringement of the Competition Act and if there is urgency to act for the purpose of either protecting the public interest or preventing serious, irreparable damage to a business. To date, CCS has not issued any interim measures directive.

57.         We would like to clarify that, in the case of E M Services brought up by Mr Pritam Singh, CCS’ view was that threshold for interim measures directive, in other words, that third party contractors had suffered serious and irreparable damage as required under the Competition Act, had not been reached.

58.         I would also like to highlight that safety concerns of the public would have been considered by the Building and Construction Authority (BCA). With regard to public consultation, it is standard practice for CCS to seek feedback from industry stakeholders on the companies’ proposed commitments, as they are in the best position to assess if the commitments will address the competition issue.

59.         CCS will consider the feedback in deciding whether to accept the commitments.

GOVERNMENT CANNOT DO THIS ALONE: STRENGTHENING OUR PARTNERSHIP

60.         I have explained how the MTI family assists SMEs, how we are making it easier for them to obtain assistance, and how we are moving to help more SMEs in a customised, step-by-step manner to transform.

61.         However, given the sheer number of active SMEs in our economy, the Government alone cannot help all businesses transform. We need to strengthen our partnerships and collaboration to help more SMEs succeed.

62. Ms Foo Mee Har and Mr Liang Eng Hwa have asked about TACs. Our TACs are important enablers in the transformation of our industries. They have a good sense of what is happening among their members and have strong industry networks. This allows them to effectively reach out and help more SMEs.

63.         Over the past decade, through the Local Enterprise and Association Development (LEAD) programme, SPRING and IE have engaged about 40 TACs actively. They work on projects such as capability upgrading and internationalisation.  Altogether, close to 190 of these projects have been supported, with a committed grant of $190 million. 

64.         Example - the Singapore Food Manufacturers’ Association (SFMA), continues to build the international reputation of Singapore food products. It does so though activities such as helping SMEs find new channels for their products in overseas markets, as well as marketing quality food products as tourism gifts.

65.        Mr Saktiandi Supaat and Ms Cheryl Chan also asked about our plans to support heartland enterprises. We are working with the Federation of Merchants’ Associations, Singapore (FMAS) to deepen their internal capabilities and rejuvenate our heartlands. FMAS was recently awarded projects under our LEAD and LEAD+ programme to do so.

66.         One of the projects FMAS will be working on is to help our heartland enterprises better align their business models to meet new demands of consumers and explore partnerships within the community for capability upgrading. To start off, FMAS is conducting two pilot studies in Bedok and Ang Mo Kio to identify market needs and formulate precinct development plans. In total, this project could benefit more than 2,500 heartland enterprises.

67.         Ms Foo Mee Har may wish to note that during the last Budget, we introduced SPRING’s LEAD+ programme to raise the internal capabilities of TACs in four areas, namely leadership, management, processes and services. To date, 7 TACs have been supported through LEAD+.

68.      We recognise the importance of TACs as our key partners. We will increase the overall FY2016 to 2020 budget under the LEAD Programme to $100 million to help more TACs to step up and do more for their members.

69.        First, we will expand our reach to more TACs. We have received feedback from several smaller associations that they too would like to embark on projects to help their members. But they say they lack the know-how or experience to do so. To help these TACs take the first step, we will support them in improving their internal systems and processes, as well as in implementing bite-size industry upgrading projects.

70.       Second, we will strengthen TACs in all the 23 ITM sectors, so that they can play a stronger role in driving industry transformation and internationalisation.  

71.        Third, we will encourage TACs to collaborate with each other to reap greater benefits. Cross-sectoral, multi-TAC or projects where larger TACs step up to support smaller ones, can be supported up to 90%, from the current 70%. Such projects should have clear productivity enhancements or innovative outcomes that benefit a sizeable number of SMEs.

72.         The full benefits of industry transformation cannot be felt if we have only a handful of progressive, creative SMEs in each industry. These benefits can only be unleashed when the majority of SMEs participate fully in the transformation process.

73.         In this respect, we ask two things of SMEs – if you have found forums, workshops or networking platforms provided by the MTI family to be useful, please spread the word. If you have achieved success with a boost from our assistance schemes, please do not shy away from speaking up when invited or interviewed. This will help contribute to a more collaborative business ecosystem. 

74.         I recently attended the Turning Passion into Profits shareback event organised by the Singapore Productivity Centre. The aim was to help raise awareness about the resources and support ecosystem that F&B startups and microenterprises can tap on. I was very encouraged that several successful entrepreneurs came back to share their stories with others.

75.         One example was Ms Diana Teo, owner of a fast-casual restaurant retailing premium quality Japanese-inspired rice bowls. She spoke very passionately about the assistance she received. We know there are many more Diana Teos out there, and their collective sharing will help many more entrepreneurs build better and more competitive businesses. 

CONCLUSION

76.         Sir, SMEs are at the heart of our economy. The MTI family is committed to supporting them.

77.         We shall press on with our efforts to restructure the economy, even as we cope with more immediate challenges.

78.         I have explained how we intend to do this through the ITMs, various initiatives to help SMEs stay competitive, and working in closer partnership with our TACs.  Together, I am confident that our SMEs will emerge stronger and better prepared for the future.

79.         Sir, in Mandarin, please.

80.         中小企业是我国经济的中坚分子；中小企业在未来经济中该如何转型升级，是政府与社会共同关注的重要课题。

81.         中小企业常反映的心声，政府非常重视。首先，中小企业由于规模有限，比较需要帮助。

82.         之前数位​部长之前已介绍了政府在支持中小企业方面所推出的短期与中长期措施，如何帮助他们维持竞争力。

.        第二，不少中小企业反映，希望政府的支援计划可以更简便易懂，让它们更容易获得帮助。我

们也很认真地看待这个问题。

84.          因此，政府设立了十二个“中小企业中心”，并不断强化他们的服务素质，为中小企业提供更有针对性的客户化商业咨询服务。

85.         这些“中小企业中心”为政府所设立的“企业通”门户网站(SME Portal) 发挥了很好的辅助作用。我们也正在积极加强“企业通”网站。

86.         新添的内容包括适合中小企业采用的科技和数码方案。我鼓励广大的中小企业充分利用“中小企业中心”和“企业通”网站，作为他们寻求援助和获取信息的第一站。

87.         第三，一些有意愿转型的中小企业也反映，希望在具体做法上获得更多指引，少走弯路。为此，政府乐于为这些企业提供更细致的帮助。

88.         其中包括“中小企业数码化计划”(SME Go-Digital Programme) 以及新科研将推出的“商业与科技运作蓝图”(Operation & Technology Road-mapping) 。

89.         当然，逐一帮助个别中小企业，不如通过商会商团来得更有效。为了让更多的中小企业可以享有各类援助措施，政府也在深化同商会商团等伙伴的合作。

90.         全国商联总会便是一个很好的例子。它们秉着一股“邻里企业当自强”的精神，努力为邻里商业活动另辟蹊径，注入新活力。

91.         接下来，政府将支持全国商联总会为特定邻里制定发展计划，率先在宏茂桥和勿洛推展。

92.         我希望看到更多中小企业善加利用并壮大商会商团的阵容与网络，探索如何更好更快地开启产业转型之旅，为自己，也为新加坡经济开创新的篇章。

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