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SINGAPORE: Business leaders in Singapore are calling for funding schemes to be tweaked, to help small and medium-sized enterprises (SMEs) to grow.
At a forum hosted by the Economic Strategies Committee, business leaders discussed proposals received from the Government Parliamentary Committee on Finance, Trade and Industry. They also suggested that a new investment agency be set up to invest in local firms.
Singapore's AWAK Technologies, which has developed a portable kidney dialysis machine, is eager to expand but said that funding is a challenge. While SPRING Singapore has some schemes available, these are not always sufficient.
Neo Kok Beng, president & CEO, AWAK Technologies, said: "If you look at the various funding schemes - there are many, many funding schemes. SPRING has done very well, for example, they have a seed capital fund that funds about half a million dollars.
"But in my venture, our initial capital just to start is already three million dollars. (In) our biomedical industry right now, we do not have sophisticated venture capitalists who know how to invest or how to value us."
AWAK said that there are not enough venture capitalists in Singapore who understand the biomedical industry. While the company may receive approaches from overseas, these often come with strings attached.
"There are certain parties that approached us - mainly from the US and San Francisco and Silicon Valley and the Boston area. The issue is that if I accept the fund, then the requirement is that in order to monitor your investment, they will want us to be located there," said Mr Beng.
"And therefore, what we have built in Singapore in terms of knowledge and the talent will all be shifted overseas. And I think that, besides what you call a brain drain, you also reduce our possibility of contribution to the manufacturing sector in Singapore."
Other than funding, SMEs said they find it difficult to enter overseas markets because they do not have a long track record.
Some are hoping for government incentives - to get multi-national companies to collaborate with them on overseas projects. This would help to build up their reputation and ultimately help them gain easier access to credit.
Simon Lee, executive director, Singapore Contractors Association Limited, said: "Any banks that support local companies will ask if we have any overseas track record. If we don't have, we will have a lot of problems getting credit facilities from banks. That's one.
"Our overseas clients will look at us and say, what are the projects that you have done? And if most of the bigger projects are done by foreign contractors for instance, then they say you don't have the track record."
While some said that a national investment agency could be set up to invest in local SMEs, there are concerns that too much government intervention may hurt market forces.
PK Basu, chief economist, Daiwa Securities said: "Ultimately of course, Singapore's government doesn't want to interfere too much on the market place. They want to make sure that the market-based incentives prevail and that, of course, limits the amount of intervention...
"We have three large Singapore banks. They can easily be the source for specific funding for SMEs. The government can play a facilitator role in encouraging the banks that already exist to enhance their lending to SMEs. I don't think there is a need for a special bank to be created for that purpose."
The Economic Strategies Committee was set up in May this year to develop and recommend strategies in order to grow Singapore's economy in a new world environment. It plans to put forward its key recommendations in January 2010, after taking in proposals from the public and private sectors.
- CNA/sc
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