- POSTED: 01 Oct 2013 21:47
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Under the government's Partnerships for Capability Transformation programme, large organisations are encouraged to work with SMEs to transfer knowledge and co-develop new products.
SINGAPORE: Under the government's Partnerships for Capability Transformation (PACT) programme, large organisations are encouraged to work with small and medium enterprises (SMEs) to transfer knowledge and co-develop new products.
According to SPRING Singapore, the programme has supported 20 projects between large companies and SMEs since this April.
Through these projects, close to 130 SMEs are expected to benefit.
Defence firm ST Kinetics has awarded contracts worth S$650 million to 2,000 SMEs over the past three years.
These SMEs are crucial as they support ST Kinetics in areas that it does not have the volume to focus on.
One of them, Tex-Star Engineering, has recently automated its welding process.
As a result, it saw a 27 per cent jump in productivity.
Joe Er, executive director of Tex-Star Engineering, said: "It actually took us less than three months to get this project completed with the help of ST Kinetics. This enabled us to (be) less reliant on labour and to have better quality products as well. "
Sew Chee Jhuen, president of ST Kinetics, said; "There will be a cost in terms of our people resources, working with suppliers, partners, looking at the processes, helping them to improve, giving them ideas... But all this is worth it because it will result in cost savings for us, as well as raise the quality of their products."
ST Kinetics is also partnering 10 other SME suppliers to raise capability.
It expects the business volumes of these suppliers to grow by 5 to 7 per cent every year, for the next three years.
Such partnerships are partially funded by the government's PACT programme, which has broadened its scope to include non-manufacturing firms this year.
Teo Ser Luck, Minister of State for Trade and Industry, said: "I don't see every sector undergoing the same kind of collaboration. We have to encourage more of them to take up some of these initiatives.
"That is not easy, but I think there is a high possibility for every sector to come forward - whether it is to centralise production, or in small-scale operations with a smaller number of SMEs. I think that small step will help productivity rises in a big way."
Under the programme, SMEs can qualify for funding support of up to 70 per cent of development costs.
These include costs relating to manpower, software and intellectual property acquisition.