Call for holistic SME development in Budget 2015 recommendations

Singapore

A MORE holistic approach to small and medium-sized enterprise (SME) development is needed, with more detailed data points, backed by a single SME authority, said the SME Committee (SMEC) on Wednesday, as part of its Budget 2015 recommendations.

More comprehensive and coordinated data about SMEs will help not only companies, but also industries, plan ahead, it said.

"I think the data is available, it's just that it is not currently the priority of the government to put out the data in a comprehensive way," said Ho Meng Kit, Singapore Business Federation's (SBF) chief executive.

"If you believe SMEs are important, it's important for us to know what's happening with SMEs - how many SMEs are formed? How many are failing? Where are they exporting to? What sectors (are they in)? Are they getting loans? Are they having trouble getting access to financing?"

While some of the information may be available, it is fragmented.

"I think if the government pulls all their databases together, they can provide a far more comprehensive picture of what is happening to our SME sector," said Mr Ho.

Further, having one SME authority to champion the rights of SMEs - across the various relevant functions - will offer synergies and greater coherence, said Kurt Wee, president of the Association of Small and Medium Enterprises (ASME).

"It's more important for us to look at ... (whether we can) achieve better synergy, more coherence, (and) support the competencies of SMEs across the board, if we have a single agency. Spring Singapore takes on extensive segments of the role right now, the Workforce Development Agency (WDA) for instance handles the manpower competency issues, and then you have IE Singapore that represents businesses wanting to go overseas. So it is on a multi-platform framework right now. And I think we all want to explore ... 'if we have a single agency, will that help the SME landscape much better?' "

It is not about dismantling existing agencies but thinking about an SME strategy on a more macro level.

"This is doable in our opinion (since) we've had a economic review committee before, that looked at the whole Singapore landscape," said Mr Wee, who is also the chairman of the SMEC sub-committee on cost of doing business. "More centralisation also means a bit less red tape, less bureaucracy. And that is worth exploring."

The recommendations outlined by the SBF-led SMEC focus on three main areas: a call for a more holistic approach in SME development strategy; a recommendation to implement more targeted measures to help SMEs in their transformation; and a call for help for SMEs to grow through internationalisation, innovation, and collaboration.

To help SMEs in their transformation, SMEC has recommended a Restructuring Loan Scheme with loan quantum of up to S$3 million. Further, government loan programmes should adopt interest rates pegged at more equitable rates compared to commercial banks and enhance risk-sharing among stakeholders to lower financing costs.

To help SMEs lower cost, SMEC is also recommending that the government hold back on further planned increases in foreign worker levies.

"We find that this planned increase of levy this July is not going to help in terms of the original intention. I think the government's original intention is to ensure that we don't pay our Singaporeans lower salary because we can tap on a cheaper source. Now, these levies are no longer able to contribute in that sense," said Lawrence Leow, chairman of the SME Committee.

"So we're saying let's give companies a breather, let's push it back. Obviously we are hoping the government will give up the increase but to be fair, we are only asking for a deferment."

Four in five of the respondents who participated in the SBF National Business Survey 2014/15, said they are affected by high labour costs. It was cited as the top challenge faced by these companies in the next six to 12 months.

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