SINGAPORE: More steps need to be taken to help local businesses cope with a more challenging environment, as firms grapple with issues like rising costs, a shrinking workforce and foreign manpower curbs, the Singapore Business Federation (SBF) said.
In a “position paper” released on Wednesday (Jan 6), SBF called on the Government to help companies cope with restructuring in the immediate term, while helping to build Singapore as a home base for companies expanding overseas in the long term.
SBF said the paper was prompted by the challenging internal and external macroeconomic environment - where rising business costs, ageing demographics and a lacklustre global economic outlook are taking their toll on some businesses.
A host of recommendations aimed at supporting businesses and Singapore’s economic growth is outlined in the paper.
In the immediate term, the paper recommended that the Government takes a “deep dive” to analyse and address cost and manpower issues.
In the long term, it said that while attracting foreign investment will continue to remain as an important development pillar for Singapore, creating an external economy will enable businesses to overcome land and labour constraints.
One of the main strategies outlined in the paper was on helping local companies internationalise. While the focus in itself is not unfamiliar, the paper has recommended a different approach to helping small- and medium-sized companies get the capital they need to expand overseas.
One suggestion by SBF involved taking steps to boost liquidity in the local stock market, such as by allowing pension funds, such as CPF money, to be invested in local companies. It also recommended that more of Singapore's reserves be directed at helping local firms expand abroad.
"So far the Government funds have invested through GIC and Temasek, they tend to invest as a portfolio. They put in the money and cash out at the right time. There's no involvement in management and Singapore brand. So if the Government can take a more direct investment in companies that are prepared and able to go overseas, then you also have a Singapore brand going abroad," said SBF's chairman S S Teo.
"Some of our proposals might appear radical and require substantial changes to existing policies. There are risks involved and our proposals may not fully deliver the desired results. But we have to act decisively or risk greater failure in the years ahead," added Mr Teo.
“The newly-elected Government has a fresh and strong mandate. There is no better time than now to take bold and decisive moves that will strengthen Singapore’s position now and in the long-term."
About 70 business leaders and 28 trade associations and chambers contributed their ideas to the paper, SBF said. The recommendations will be presented to Finance Minister and chairman of the Committee on the Future Economy Heng Swee Keat on Jan 12.
"APPROACH TOWARDS PRODUCTIVITY SHOULD CHANGE"
Construction firm Tiong Seng Holdings started automating the production of its pre-fabricated materials in 2012. By 2014, it had set up plants in Malaysia and Myanmar to supply its pre-cast products to these markets.
Tiong Seng’s chief executive Pek Lian Guan said the firm's willingness to look abroad gave it the scale to invest in plant and equipment, allowing it to become more efficient. Mr Pek, a member of the steering committee that produced the SBF Position Paper, said the approach towards productivity must evolve.
He explained: “While we look at all this productivity, that you need to invest in technology, there will be constraints. The constraint is our small domestic market. When your domestic market is small, sometimes you ask yourself, why do you invest?
”So first, businesses will have to take the step to look at it this way: 'Now, my market is beyond just Singapore.' Now when you look at the market, it's a much bigger market. Your decision to make investments and changes will have a different driver."
GOVERNMENT TO CONTINUE WORKING WITH PRIVATE SECTOR
Meanwhile, the Government will continue to work with the private sector to help firms develop business continuity plans to prepare for disruptions such as those caused by the haze, said Minister of State for Trade and Industry Koh Poh Koon.
Speaking at an annual Business Continuity Management (BCM) conference organised by SBF on Wednesday, Dr Koh said the Government will work with the private sector to implement two new initiatives.
The first initiative involves helping small and medium enterprises (SMEs) develop a basic plan to manage specific disruptions resulting from the haze and pandemics. The second is the introduction of a BCM-Readiness Framework handbook for companies in the cold chain, warehousing and storage industry.
The handbook will be distributed to logistics companies and is a collaborative effort between SBF and the Singapore Logistics Association.
"The standards enable businesses to understand and prioritise the threats to their businesses, as well as put in place a management system to protect against, reduce the likelihood of, and ensure that the business recovers from disruptive incidents," explained Dr Koh.