2. Speeches
Speech by SMS Lee Yi Shyan During the Committee of Supply Debate under Head V
6 March 2014
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INTRODUCTION
1. Madam Chairperson, may I have your permission to display some slides on the LED screens later on in my speech.
2. Minister Lim Hng Kiang has highlighted the need to stay the course in economic restructuring. We need to press on with our productivity efforts. Companies need to transform and evolve their business models commensurate with Singapore’s cost structure. Many need to find new markets here and overseas to grow their profits.
PRODUCTIVITY WILL CONTINUE TO BE A KEY ENABLER OF GROWTH
3. Mr Heng Chee How and Mr Lim Wee Kiak asked about the progress of our productivity drive. Since 2010, our national productivity growth has averaged 2.7 per cent per year, within our target of 2-3 per cent per year. However, the growth was front loaded due to the strong cyclical recovery in 2010, and became weaker subsequently.
4. At the sector-level, some sectors are doing better than national average. Precision Engineering and Transport Engineering for instance saw good productivity growth. Sectors which performed below national average include Construction. These sectors added manpower faster than they could raise output.
5. Our goal therefore is to help the leading sectors grow even more, and the laggards to catch up. Productivity improvement is a long-term undertaking. This is nearly an inside out process. To do so, we have taken a sectoral and broad-based approach.
6. Since 2010, the National Productivity and Continuing Education Council (NPCEC) has been working with the industry to develop and implement sector-specific productivity roadmaps. 15 roadmaps out of 16 priority sectors have been endorsed. These roadmaps seek to build capabilities and address weaknesses in sectors’ eco-systems. We also have productivity consultants to help companies acquire the know-how to implement productivity initiatives. To date, 17,000 companies have benefitted.
7. To complement the NPCEC initiatives, we also have broad-based enablers such as the Productivity and Innovation Credit (PIC). PIC has helped about 40 per cent of active companies in 2013. This was discussed by DPM Tharman in his round-up speech.
8. Madam Chairperson, may I now speak in Mandarin:
9. 张松声先生询问，如何衡量一家公司或个别领域的增值和生产力。
10. 张先生也问及，我们如何帮助传统行业发展。以食品制造业为例，这是个传统行业，也是我们提升生产力蓝图下的一个重要的领域。新加坡食品厂商联合会、标新局和全国生产力与延续教育理事会（NPCEC）紧密合作，协助业者提升生产力和强化它们的企业能力，同时也帮助企业和它们的员工，保留珍贵的传统手艺和技能。
11. 简单来说，生产力的定义就是 = 增值/ 员工。 一家企业若要提升它的增值， 就必须提高税前营运盈利（EBITDA）和员工的薪资。说白一点，越赚钱的生意， 生产力越高。
12. 当然，一块豆干的价钱无法和一个芯片相比。但是我知道有很多“金牌小贩”，他们凭着与众不同的配方，良好的口碑，吸引大量的顾客，天天门庭若市。从樟宜路上段的福建炒面，到芽笼的田鸡粥； 从马里士他路的肉骨茶到汤申路的海南鸡饭。 因为生意好， 他们的收费比别人高，盈利也高，生产力自然就比同行的平均值高。 这就是传统食品业所谓健康的“三高”。除了金牌小贩，一些业者已经看到规模生产更有利可图。一方面保留传统的美味，另一方面实行科学生产，提升食品的品质和口味。从食品零售模式转向食品生产模式的成功案例，也大有人在。从手工制作的红龟果到机械化生产的Bengawan Solo的规模生产；从手工烘培的面包，到中央厨房的面包物语 (Breadtalk)；从手工搓捏的Roti Prata到第一家的自动化煎饼生产，这些运营者凭着锐利的眼光，灵敏的嗅觉，独特的判断，为他们的企业开创了成长的康庄大道。
13. 以 “波拿糕饼”（Polar Puffs and Cakes）为例， 它过去是一家传统的门面小食店。它一天能卖多少，就要看制糕师傅的手脚有多快，和到店里光顾的顾客人数。要在这种经营模式之下取得增长，只有两个变数：一个是增加店面（即多开分行），或增加制糕的人手。不过这都是传统的做法，很多人会这么做，很多人也在做。但这不是最赚钱的做法。
14. 到了1980年代，波拿糕饼改变经营模式。与其依赖手工，它们设立中央厨房，采取机械化生产， 逐步形成自己的供应链和糕点销售网络。从那时侯开始，波拿糕饼的增长和盈利就不再受到小店门面(shop front)和厨房员工人数的限制， 而走出了一条成长的道路。
15. 今天，波拿糕饼已经同许多添油站合作，并继续积极在企业对企业的商务模式（B2B）空间内，寻找更多发展机会。它们正在探讨为航空公司、餐饮服务公司、连锁餐馆、酒店、本地和海外供应商提供糕点。若成功开发新市场，波拿糕饼预计在三年能取得30%的销售增长。为了确保公司有能力支撑在海外业务的扩充，“波拿糕饼”新添置了机器，与时并进，生产“品味兼优“的糕饼。
16. 许多议员在这几天的辩论里也谈到零售租金昂贵的问题。“波拿糕饼” 的做法， 显示了它们努力改变成长模式，拟定出可以跨越店面和员工的限制的策略，做更多的生意，赚更多的钱。
17. 食品行业竞争激烈，所以业者力求创新，以奇至胜。 相信大家对自动贩卖机并不陌生。在世界各地许多大城市，尤其是高人流的地点，我们可以看到自动贩卖机的设置。 它们全天24小时售卖薯条、汉堡、甚至是新鲜蔬菜，正如图上所看到的。而在新加坡，我们也注意到自动贩卖机的数目也在增加。接下来的这个画面显示了我一位同事在凌晨两点从贩卖机买了一包热腾腾的炒米粉。据她形容，味道还不错。更重要的是，许多在机场，医院， 宾馆， 工厂工作的工友，和住在大学宿舍的学生， 都多了一个全天候的餐饮选择。 而提供这项24小时便利的企业更不需要担心昂贵的店面租金和雇员不愿值晚班的问题。
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9. Mr Teo Siong Seng asked what determines the value-add and productivity of sectors or firm. 10. He also asked how we can grow our traditional sectors. Traditional sectors like Food Services and Food Manufacturing are our NPCEC priority sectors. The Singapore Food Manufacturers’ Association, SPRING and the NPCEC are working hand-in-hand to raise the sector’s productivity and capabilities, while helping companies and workers retain precious traditional skills. 11. To put it simply, productivity is defined as value-added per worker. To increase value-add, a company has to increase its operating profit or EBITDA and workers’ wages. In even simpler terms, it means the more profitable a company, the more productive it can be. 12. Let us look at this in the context of famous local hawkers, who have made a name for themselves using their own unique recipes and a steady stream of customers. From the fried Hokkien Mee at Upper Changi Road, to the Frog Leg Porridge at Geylang, to the Bak Kut Teh at Balestier Road, to the Hainanese Chicken Rice at Thomson Road. These famous stalls are able to charge more for their food, hence making a higher profit. As a result, their productivity will be higher than that of their fellow hawkers. Apart from these examples, there are others that have embraced productivity. Some local companies started out as a food retailer but have later moved into food manufacturing. For instance, Bengawan Solo, which has come a long way from the days of making traditional Ang Ku Kueh by hand to automating the process; BreadTalk used to make bread by hand and now has a central kitchen; Tee Yih Jia, no longer making Rota Prata by hand and has instead gone the automation route. These companies’ foresight and ability to seek out and analyse opportunities have brought them much success, and enabled them to enjoy a stable growth for years. 13. Polar Puff and Cakes, once a traditional food services company, is another example. The number of pastries it could sell each day depended on the speed the chefs were producing them, and the number of customers. To grow under such a business model, Polar had two options – either to have more café outlets or hire more kitchen staff. However, these were not sure ways of making profits. 14. In the 1980s, Polar changed its business model. Instead of relying on manual production, they set up a central kitchen. Since then, their growth was no longer restricted by their shop front and the number of staff it had. As a result, Polar multiplied its outlets to grow sales and achieved economies of scale. 15. Today, Polar is partnering petrol kiosks and convenience stores, and they are looking for more growth opportunities in the B2B space. They are also exploring supplying to airlines, catering services, chained restaurants, hotels, as well as local and overseas supermarkets. By then, we can expect Polar to do even better. 16. To expand their capacity to do so, they have purchased new machinery to produce consistently delicious pastries. If their expansion plans come to fruition, they expect to achieve 30 per cent sales growth in 3 years. 17. Over the past few days, many Members of Parliament (MPs) have also raised the issue of high rental costs. Polar is a good example of how a company has changed with the times and adopted a different business model, allowing it to move past its reliance on shop front and staff, to increase its topline. Competition is rife in the F&B industry. I believe many of us are familiar with the idea of vending machines. Around the world, especially in places with high human traffic, vending machines are readily available. These machines sell French fries, burgers and freshly grown lettuce 24/7. Do you know that you can also purchase cooked food from vending machines here in Singapore? This is a picture of my colleague purchasing fried bee hoon at 2am, which she described as fresh and tasty. With vending machines, places such as airports, hospitals, hotels, dormitories or hostels can now have a supply of food round the clock. In addition, this business model negates the costs of bidding for a shop front and eradicates the issue of having to hire staff to man the night shift. |
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TECHNOLOGY ADOPTION IN INDUSTRY TRANSFORMATION
18. Madam Chairperson, adoption of technology can begin where the business is. The example of Redring Wanton shows even traditional stores can upgrade. Redring Wanton invested in a Japanese noodle cooker to ensure noodles are consistently cooked at the right temperature and duration.
19. Like their counterparts in the food sector, other SMEs have also adopted technology to achieve higher productivity.
20. Let me illustrate with the application of “smart devices”. Intelligence is built into our personal items such as mobile phones, backpacks and even clothing. Increasingly, the things we use will be able to communicate and “talk to each other”.
21. For instance, pest management companies are installing “smart pest traps”. Workers are deployed to collect and dispose pests only after the pests have been caught.
22. Likewise, “smart sensors” installed at construction worksites send site vibration and other safety data to control rooms. For FOSTA, this eliminated 90% of the manpower previously required to manually inspect sites.
23. A*STAR also developed the “smart fence” system. Advanced optical fibre sensors are planted at regular intervals on fences. They detect intrusions far more accurately than other similar systems around the world. Today, these “smart fences” protect our airport, SBS Transit’s bus depots as well as the North-East Line (NEL) train depot. “Smart fence” reduces the need for security patrols. Existing security officers can be deployed in control room to monitor more fences with far greater accuracy.
24. To support companies in adopting technological solutions like this, A*STAR launched the $51 million Technology Adoption Programme (TAP). Mrs Lina Chiam may be pleased to learn that TAP benefits many sectors including Construction, Food Services, Retail, Precision Engineering and Logistics.
25. Our companies must find new and imaginative ways to compete. Technology adoption clearly offers us a way forward.
SHARED SERVICES TO ENHANCE COLLECTIVE COMPETITIVENESS
26. One challenge SMEs face is their small-scale operation. As many members have pointed out, they are unable to invest in capital equipment. To help SMEs reduce upfront capital investments and save on ongoing operating costs, JTC will custom-build a new generation of industrial space, with shared facilities as a key feature.
27. Ms Foo Mee Har will be pleased to learn that companies operating in JTC’s new Food Hub, for instance, can utilise a shared integrated cold room warehouse while tenants in JTC’s new Surface Engineering Hub can benefit from a centralised wastewater treatment plant. Such shared services will help companies save up to half a million dollars collectively on upfront capital expenditure and enjoy 10-20 per cent off their long-term operating costs.
28. Some shared services take a non-physical form. For logistics companies operating out of JTC’s upcoming Integrated Logistics Hub, the shared IT management system will enable companies to schedule and monitor the flow of container movements within the depot, cutting down drivers’ waiting time.
29. This year, JTC will be rolling out more than 10 such customised industrial facilities. Other sectors that will benefit from such facilities include General Manufacturing, Electronics and Medical Technology.
BUSINESS TRANSFORMATION FROM WITHIN
30. Competition is often cited in surveys as one of SMEs’ key challenges. For some, competition brings out the best in them.
31. If I told you that a start-up in Singapore was growing at 20-30 per cent month-on-month, would you have guessed that they did so by selling your everyday products, such as toothbrushes, shampoos and detergents?
32. This company is RedMart, a wholly online grocer.
33. RedMart’s success lies in its ability to meet the needs of this target market and consistently fulfil delivery orders. Its integrated supply chain allows them to do so. From inventory management to delivery, they maximise productivity. Being online also means it avoids the common challenges its competitors face, such as high commercial rentals and manpower constraints.
34. Being wholly online, RedMart can understand its consumers better than its competitors can. Because every order is tracked, analysed and compiled, it can establish patterns and preferences of its consumers’ purchases. RedMart’s business model is based on knowledge and intelligence, and data analytics is a new competitive tool for the company.
35. Associate Professor Eugene Tan suggested that companies could leverage Corporate Social Responsibility (CSR) as a branding strategy for business success. In my opinion, we welcome and encourage companies to undertake meaningful CSRs in the areas they have passion for, and have conviction in.
36. I would not though, hard-wire a company’s CSR program with its branding strategy and expect business benefits from such linkages.
37. But, we believe branding of our firms’ products and services is important. To help companies define their branding strategy, SPRING’s Capability Development Grant is a well-established program that offers funding support for companies developing their brands.
INTERNATIONALISATION FOR GROWTH
38. We discussed earlier how raising sales is a sure way to raise productivity. For ready Singapore companies, developing overseas markets is a logical and integral part of their productivity strategy. For some, designing products for the global market has actually been their growth story since Day one.
39. Started seven years ago by brothers Ryan and Reuben Lee, then 29 and 32, the company makes pocket-size X-mini Capsule Speakers to go with today’s many smart devices.
40. From day one, Xmi recognised the company’s fortune lies in the global market. This was why they launched their first product in Western Europe. Today, Xmi sells its range of X-mini speakers to over 80 countries. Such sales make up 95% of their revenue of S$32 million. X-mini overcame stiff competition by differentiating itself. It promised quality through its “made-in-Singapore” branding, invested in Research & Development (R&D) to grow its product line and launched very slick and targeted marketing campaigns in the various markets.
41. As Mr Liang Eng Hwa and Ms Foo Mee Har pointed out, a company’s internationalisation journey is not without challenges. We agree. In fact, our agencies offer a comprehensive suite of support programs by focusing on three areas: (1) expanding our overseas networks; (2) partnering our companies in their growth, and (3) grooming a pipeline of global-ready talent.
42. First, to help companies gain market access and knowledge, we are increasing our overseas connectivity. We have a network of 20 Free Trade Agreements (FTA) that have helped to open new markets for our companies. This is complemented by 41 Investment Guarantee Agreements (IGAs) that provide companies with greater confidence and legal certainty when investing overseas. MTI will continue to pursue more of such agreements.
43. In terms of in-market assistance, companies can leverage IE Singapore’s network of 38 Overseas Centres globally, from Africa to the Americas, from Middle East to East Asia. These overseas centres, together with the network of Singapore companies overseas, form a natural and powerful source of market insights for our companies seeking opportunities and partnerships.
44. Even in newer markets like Myanmar and Ghana, IE's overseas centres have engaged more than 100 companies in the past year alone.
45. Second, we will continue to partner our companies in their growth. In 2013, IE Singapore assisted over 26,000 companies, of which 85 per cent are SMEs. There is scope to do even more.
46. Going forward, we will set aside $25 million to enhance IE Singapore’s programmes to better cater to companies at different stages of growth. The enhancements are expected to benefit 200 companies over the next two years.
47. For companies who are rapidly expanding, securing financing is often a challenge. We will therefore double the maximum loan quantum under the Internationalisation Finance Scheme (IFS) from S$15 million to $30 million to support companies.
48. For companies who are looking to enter new markets or learn from overseas partners, we will enhance our Global Company Partnership (GCP).
49. We will increase our support for pilot and test-bedding projects from 50 to up to 70 per cent. Companies can tap on this to test out the viability of their products and solutions in new markets.
50. In addition, we will expand our support for market attachments to include companies sending their staff overseas to acquire new business capabilities or technologies. Companies can tap on this to develop their manpower resources and at the same time gain new strengths. We will extend up to 50 per cent funding support.
51. For start-ups who are looking to broaden their overseas connections, we will introduce the Market Access Incubation Programme (MAIP).pdf to provide up to 70 per cent funding support for participation in overseas missions and fairs organised by approved incubators.
52. Together, I am confident that these enhancements will help more companies expand into new markets.
53. Lastly, we are helping companies to tap on local talent for their overseas operations, as this is pivotal to the success of their internationalisation plans.
54. In my travels, I often meet globally-oriented Singaporeans. Consider our two intrepid youngsters: Esther Yap, 28, and Denise Lim, 27, for example. I met Esther in Ghana last year and learnt that she is working as a Marketing Manager of a beverage distributor and has been living there for three years since she graduated from NTU. As for Denise, she quit her job as a management consultant to set up a restaurant in Guatemala and was recently featured in Channel News Asia’s Business Warriors. Denise and Esther show that our youths are bold and dare to step out of their comfort zones.
55. Our youths have the potential to spearhead the overseas expansion of our companies. IE Singapore’s Young Talent Programme (YTP) will support our local schools and companies to identify and groom a pipeline of talent. Since its launch last year, 11 undergraduate scholarships have been awarded and about 500 undergraduates have received support for overseas immersion. I am encouraged by our youths’ enthusiasm and their readiness to learn. This augurs well for our companies seeking local talents to chart their overseas growth.
CONCLUSION
56. Madam Chairperson, the most fundamental way to secure our social and economic well-being is through productivity improvement. Productivity improvement itself is hard work. There is no short cut. It is a long-term endeavour and requires commitment.
57. With imagination and determination, and our companies in the driver’s seat, we can together restructure our economy and transform our companies. We have made much progress in the last four decades and we will continue this journey towards excellence.