Firms’ ability to migrate to new business models is key, says minister
SINGAPORE — Small and medium enterprises (SMEs) feeling the pinch of the productivity push, with some possibly failing despite the Government’s help, is a by-product of Singapore’s economic transformation and its changing business landscape.
However, the Government would continue to step up its support for the business community and help firms adapt to the use of technology, said Mr Lee Yi Shyan, Senior Minister of State (Trade and Industry), on the sidelines of a productivity forum yesterday.
When asked about the side effects of the national campaign to improve productivity, Mr Lee said: “A competitive economy is characterised by one that always has a lot of new businesses coming in and old, uncompetitive ones winding up. Singapore is a competitive and open economy and, in fact, one of the best places to start new business ideas. So, the turnover or churn is actually a good sign.
“The key question now is whether those that give up the old business models can migrate to new ones,” he added. “We’ve been talking a lot about the Internet and new media… What we want to do is focus on our traditional businesses and new trends in the business world to make sure they are aware of the speed of competition and adjust accordingly.”
Various schemes and programmes have been rolled out or expanded in recent years to help firms upgrade capabilities and optimise manpower. This year’s Budget enhanced the Productivity and Innovation Scheme to offer more help to SMEs. A Singapore Productivity Centre (SPC) was also launched last August to provide support to local retail and food-services companies.
“So far, 190 companies have benefited from the workshops, study missions and consultancy offered by the SPC. The SPC will be ramping up its activities to assist more than 2,000 enterprises over the next three years,” said Mr Lee.
The centre will also organise new activities this year to focus on improving management practices and leadership quality, he added.
Despite the concentrated efforts, productivity growth has continued to fall behind expectations, with no improvement in overall figures last year, MTI data shows.
For the process to speed up, experts speaking at the forum yesterday — supported by the National Productivity and Continuing Education Council (NPCEC) — urged companies to be more active in adopting technology, which can potentially help small firms grow beyond their existing business models.
This can include using digital platforms to expand sales channels and address limitations of a bricks-and-mortar operation. Such an idea is not the luxury many companies think it is.