Why Singapore needs to re-invest more in SMEs
Small and medium-sized enterprises (SMEs) in Singapore take up 99%[1] of all enterprises on this island. This is indeed an overwhelming figure, coming to think of it. They employ 7 out of every 10 workers, and contribute over 50% towards the National GDP[2].
It is obvious how big a part SMEs contribute to the Singapore’s economy. Despite the vast role that SMEs are contributing to the economy, the annual growth in labor productivity only went up by 1%[3]. This is a staggering number and we need to reanalyze and more importantly, re-invest back into our SMEs.
Are SMEs in Singapore swimming against the tide with newly implemented regulations during the 2012 Budget then?
Firstly, the government is initializing upfront initial outlay of capital for process improvements in IT, technology and training, which many bosses may be resistant to spend.
Secondly, the reduction in dependency ratio ceiling and increase in foreign worker levy may force companies to hire local which will result in incurring higher staff costs. Thirdly, banks are likely to likely to tighten credit policies; in turn affecting support to SMEs in capital and trade financing.
Despite all the available grants and government assistant schemes available, it seems like productivity levels are not increasing. As mentioned by Mr. Inderjit Singh, many SMEs lacked the ‘resources to focus much on productivity’ and are ‘fire-fighting with high costs’, despite the sufficient measures implemented in this year’s Budget to boost productivity[4]. Through our daily interactions with SME business owners, we do note that there is a severe lack of education of the available schemes that can help with productivity improvements in the long run.
While it is true that there are many schemes made available by the different government agencies, it is also very important to note that the primary focus to kick-start the call to improve productivity is to re-invest in education of these schemes.
SME owners must also re-look into their existing business operations and strategize their future plans with the schemes in mind. The need to re-invest in SME is almost always a bitter pill to swallow, but it is, without a doubt, a necessary one to take for the future of the Singapore’s economy.
[1] Performance Indicators, 2012, Spring Singapore, http://www.spring.gov.sg/aboutus/pi/pages/performance-indicators.aspx
[2] ibid
[3] Statistics: Key Annual Indicators, 2012, Department of Statistics Singapore, http://www.singstat.gov.sg/stats/keyind.html
[4] SMEs need more help: Inderjit Singh, 2012, Xin MSN, http://news.xin.msn.com/en/singapore/article.aspx?cp-documentid=5938685
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