Speech by SMS Lee Yi Shyan at the Official Launch of the Business Expansion Programme Portal at SMF House

Good Morning

His Excellency Andri Hadi, Ambassador of the Republic of Indonesia

His Excellency Dato’ Husni Zai Bin Yaacob, High Commissioner of Malaysia

Mr. George Huang, President, Singapore Manufacturing Federation

Distinguished Guests

Ladies and Gentlemen

Introduction

1.             It gives me great pleasure to join you this morning for the official launch of the Business Expansion Programme (BEP) portal.

SMEs need to remain globally competitive

2.             Chinese lunar new year is just around the corner. Soon we will be ushering  in the Horse Year. Speaking of the horse, many of us would have good things to say about this very well-liked animal. The horse is often described as free spirited, quick-witted, independent, devoted and determined. A Chinese folklore also tells the story of 伯乐与千里马. While 千里马 has become the metaphor of the most superior of all horses which would travel thousands of miles in a day,  伯乐is used to describe the rare ability of a person  to spot the exceptional and perhaps even hidden qualities of a horse, from among the thousands of ordinary.

3.             In today’s fast changing and challenging business environment, we could reflect on the story of 伯乐与千里马and ask what it could mean for our business leaders and their organizations. How do we spot talents, how do we organize our businesses for superior performance, how do we build winning teams, how do we grow our businesses?

4.              I would like to believe all of our business leaders in this room have tackled all the above questions and more in growing their businesses. As Singapore is small in terms of market and land resources, amongst other limitations, many of our businesses have adapted their business models and supply chains to those that are distributed across markets and geographies – business models that avail to 伯乐 and 千里马 from a larger pool of human resources and markets outside Singapore.

5.             Regional expansion is therefore not new to Singapore firms. As early as in the 80s, Singapore firms began in noticeable ways to set up factories in our neighbouring countries as they tapped on the markets there. In the early 1990s, the concept of “Growth Triangle” comprising the regional markets and production bases of Singapore, Johor and Riau Islands Indonesia was mooted. Indeed over time, Singapore’s trade and investments in Johor and Riau Islands Indonesia have grown significantly.

6.             Recently, I visited Batam. A shipyard manager there told me that Batam only had around 450,000 residents in 2000.  Now it is over a million. Investments in infrastructure such as  roads, power generation, bridges, and in commercial sector such as hotels ad factory buildings have also grown substantially.  In Iskandar Johor, Singapore firms are setting up factories to make better use of the resources there. They are also investing in new sectors such as healthcare, education, tourism and real estate. Over time, we would only see more integration among our industries and economies. It is in our common interest to harness this integration for a win-win-win partnership.

7.             Back home, our businesses continue to face with challenges on manpower constraints, land intensification and rising operating costs. While we tackle the supply-side factors such as production costs and labor productivity, we also ought to tackle demand-side factors including quality and value of products, and expanding demand for products through market development. We can overcome higher cost of production if we can double or triple our sales to bring down the average unit costs.

8.              Therefore, the ability to expand our sales overseas is a critical factor for the profitability of our SMEs. According to the SME Development Survey 2013 conducted by the DP Information Group, 2 out of 5 SMEs with reported overseas revenue are generating up to 30% of their revenue from overseas and over half of the SMEs generating more than S$5 million in turnover have overseas revenue.

Role of TAC in helping companies

9.             In this context, I am happy to learn that the Singapore Manufacturing Federation (SMF) has set up the Business Expansion Programme (BEP) to assist SMEs tap on the regional opportunities. With the strong industry partnerships and regional networks of our Trade Associations and Chambers, SMF can play an important role in linking up SMEs in Singapore, Iskandar and Riau Islands.

10.        The SMF, through its extensive network and experience in Malaysia and Indonesia, will be able to help SMEs navigate through each country’s regulatory requirements and to help point them in the right direction in the shortest possible time. Mr George Huang has shared earlier on with us about the comprehensive suite of services offered under the BEP. The BEP initiative will be also useful in helping our enterprises tap on regional opportunities. I urge SMEs to tap on the BEP portal to expand into Iskandar and Riau Islands Indonesia for regional growth.

Encouraging SMEs to develop competencies to internationalise

11.        To help build capacity for internationalisation, IE Singapore offers to our businesses two key tools –

a.   the Global Company Partnership (GCP) for companies with existing overseas presence and

b.   the Market Readiness Assistance (MRA) for companies new to internationalisation.

12.        The GCP is a long-term, in-depth, tailored approach to help Singapore businesses in the areas of capability development, market access, financing and manpower development. The MRA is a broad-based assistance framework for all companies that are just beginning to grow internationally. It provides information about countries and industries and offers financial assistance to companies which need consulting services in the areas of legal advice, tax advisory, overseas business matching or restructuring the business model. In FY2012, more than 15,000 companies had approached IE for help in understanding overseas markets, connecting to the right business partners and developing capabilities.

13.        An example of a SME who benefited from IE’s facilitation is Scanteak. Scanteak participated in IE’s missions to Johor to meet the industrial park developers to understand the industrial scene in Iskandar Malaysia in 2013. IE’s in-market facilitation helped Scanteak to set up a light manufacturing base on 3.6 acres of leasehold titled land in Iskandar Malaysia. This manufacturing base supports its future overseas expansion plans in the region, which are expected to result in around S$4 million of overseas sales & S$1.5 million of net exports.

14.        Another example is Singatac Engineering which recently acquired a 7ha waterfront site in Bintan. With the addition of its waterfront site in Bintan, the company is able to include offshore logistics as part of their total solution package. Singatac Engineering is also enhancing the capability of its Bintan yard through ISO quality certification and has created close to 400 skilled jobs. As part of its long term strategy, the company is tapping on SPRING’s Capability Development Grant to enhance its competitiveness through higher value-added design.

15.        There can be more of such win-win examples in the making. I urge local SMEs to take up these initiatives to internationalise.

Conclusion

16.        In conclusion, I wish to congratulate SMF on the launch of the BEP portal, and encourage SMEs to leverage on this portal for their regionalisation efforts.

17.        Finally, let me share this poem entitled “Horse and Rider” by Kim Schilling with you:

Galloping towards the base of the steep hill,
watching the breeze bluster through her mane,
with a mild touch I veered her with reign;
For a serene moment all time stood still.

Horse and mount journeying with great skill,
but collectively as one we must attain;
Galloping towards the base of the steep hill,
watching the breeze bluster through her mane.

Feeling the power beneath me is a thrill,
and racing across the meadowy plane,
a feeling rushes over I can't explain,
perhaps the reality of taking a spill;
Galloping towards the base of the steep hill.

18.        Galloping towards great success and happiness, I wish you. Thank you.