Let a hundred thousand entrepreneurial flowers bloom
By Mano Sabnani, Business and Financial Consultant
First published in TODAY
1-2 Mar 2003

One of the tenets of the government's manifesto in the last General Elections, in late 2001, was jobs, jobs and jobs. That year was not a good one for the economy, with the unforgettable events of September 11 in New York making things worse. And unemployment was rising. The People Action Party's focus on jobs in the election campaign was, therefore, not misplaced.

That priority remains on the national agenda today, 15 months after the PAP was returned with an improved mandate.

Unfortunately, what Singaporeans are reaping is not more jobs but the dreaded three Rs. Not a day goes by without news of retrenchment exercises, retirement schemes and restructuring or rightsizing by companies. Despite the best of efforts by the best of brains on this island, job creation has not been easy, it appears.

The multinational corporations are leaving, local companies are relocating and even government departments are downsizing. Unemployment could hit 5.5 per cent of the workforce this year, which means more than 100,000 people out of work.

How do you create more jobs in such a situation? Self-employment is one of the solutions but that means a genuine commitment to promote entrepreneurship. Let a thousand flowers bloom in the form of small enterprises and some of them will eventually become big employers. In a sense, that seemed the focus of DPM and Finance Minister Lee Hsien Loong in his Budget 2003 speech yesterday.

He conveyed a clear recognition that the national mindset had to switch to a more entrepreneurial one in the long term and the government is moving to further tweak taxes and incentives to encourage business formation and growth.

It is going to be easier for companies to be formed and regulated, taxes and costs will be kept down, there are incentives to upgrade technology and develop intellectual property, and government has promised it will not compete with local companies, where possible. And to coordinate it all, there will be a new minister in charge of entrepreneurship. Mr Raymond Lim, Minister of State, who has advocated that government should not be in any business which is found in the local Yellow Pages directory, will now provide leadership.

The challenge is to deal with rising unemployment arising from structural changes in the economy and organisations. Most of those without jobs now have skills and also innate talents and hobbies. Can they be helped to develop these skills and talents into revenue generating activities? They could be offered basic training on business skills and procedures, covering human resource matters, finance and corporate governance. Government agencies like Spring, the Economic Development Board and IE or International Enterprise are also ready to offer them various forms of assistance.

EDB, for instance, has its SEEDS programme whereby it co-invests in small, often newly started companies. But it requires some seed capital to be in place before it co-invests and that can be a problem.

Singaporeans may have ideas but they are, by-and-large, asset-rich and cash-poor. In many cases, there is money in the Central Provident Fund, over and above the Minimum Sum in the Special Account and Medisave. The Ordinary Account may have taken care of housing needs and have spare cash. But as it stands, such savings can only be used for investment or education, other than property.