Corporate leaders call for radical changes to help businesses

SINGAPORE — Corporate head honchos here have come together, for the first time, to put up a raft of recommendations to develop a vibrant economy — some of which, by their own admission, may seem radical but are necessary to avoid “greater failure” in the coming years.

In a 32-page position paper — complete with quotes from corporate chiefs - released today (Jan 6) by the Singapore Business Federation (SBF), there were perennial calls to relax the foreign manpower regime, including reviewing the foreign worker levy system, and for the Government to look into the rising business costs and study how to manage them.

But among the wide-ranging proposals which span the immediate and the medium to long term, the paper also urged policymakers to recognise the limits of “Foreign Direct Investment (FDI)-centric” economic development strategy. This model is “so entrenched in (Singapore’s) economic policy, many of our public agencies are so geared towards this”. However, the agencies need to do more to help local enterprises venture and succeed overseas. The role of IE Singapore, for instance, should be scaled up and given more resources.

The paper - backed by 28 trade associations and chambers as well as some 70 top-level executives - also said there was scope for the Government to “practice what it preaches by demonstrating organisational innovation to increase effectiveness and be leaner on manpower”. Public officers and scholars should also be deployed to growth areas in the private sector, it suggested.

To inject more life into the “moribund” stock market, sovereign wealth fund GIC can also invest Central Provident Fund monies in local shares - similar to how other countries used pension funds to support their own stock markets.

“The newly elected Government now has a fresh and strong mandate. There is no better time than now to take bold and decisive moves that will strengthen Singapore’s position now and in the long term,” said SBF chairman Teo Siong Seng.

He added: “Some of our proposals might appear radical and require substantial changes to existing policies. There are risks involved and our proposals may not fully deliver the desired results. But we have to act decisively or risk greater failure in the years ahead.”

Work on the paper, which took about six months, started before September’s General Election which saw the ruling People’s Action Party win 69.9 per cent of the popular vote share. Economists and academics were also consulted.

‘HIGHER COSTS DUE TO FDI MODEL’

Among other things, the business community noted that the FDI strategy has been successful in driving economic growth and creating jobs. However, it has also resulted in rising business costs given Singapore’s land and labour constraints.

Dr Teh Kok Peng, senior advisor at China International Capital Corporation, said: “Most of our resources are concentrated in bringing businesses into Singapore. The same degree of energy is required to help businesses go overseas. This strategy will greatly alleviate our land and labor constraints… It will involve risks and failures. But given our existential constraints, there are not many other ways to remain exceptional.”

Another “development pillar” should be cultivated to create “a second Singapore outside Singapore” where there is a much larger economic space for the country and its companies, Dr Teh added.

Tiong Seng Holdings CEO Pek Lian Guan called for “a shift in the mandate and mindset so that our companies can grow stronger as they compete in overseas markets”. “When Singapore companies focus only on our small domestic market, there is only so much they can grow,” he said.

Wing Tai Holdings chairman Cheng Wai Keung said the Government can identify new growth strategies and develop economic infrastructures to help home-grown enterprises “plug into a new global economy”. “By nurturing and growing native ventures, we’d have a firmer domestic core that grows alongside and complements foreign multinational corporations for a strengthened Singapore base,” he said.

The Government can also directly invest its reserves in local enterprises by setting up a new institution with domain knowledge in the key industries, offering long term financing capabilities as well as investment and corporate advisory services, similar to those provided by private equity firms.

Pointing out that Singapore companies are “being constrained by their inability to hire foreign workers” as a result of the tighter immigration

policy, the paper urged the Government to work with the business fraternity to exercise greater flexibility such as having larger quotas as a “transitional arrangement” for sectors where Singaporeans are unable or unwilling to fill the vacancies.

ECONOMISTS WEIGH IN

Economists interviewed by TODAY agree on the need for more support for local enterprises.

Nevertheless, they noted that the Government has done that, to some extent. UOB economist Francis Tan said: “If we look at the rate at which start ups from other countries are rushing into Singapore, it suggests that we have a good - possibly the best in the world - ecosystem to support small companies. So nothing really stops Singaporean companies to take advantage of that.”

He added: “We do hear voices calling for more support for smaller businesses. The Government has however been taking reasonable efforts to ensure support to businesses through various agencies.”

Still, CIMB Private Banking economist Song Seng Wun said it may be helpful to consolidate the functions of the relevant agencies - IE Singapore, Spring Singapore and the Economic Development Board - as they share the common underlying objective of promoting economic development.

Both economists were lukewarm on the suggestion to invest CPF monies in the Singapore stock market.

Mr Song said: “There is no dearth of funds for companies with good business proposition. Helping smaller businesses have access to capital is required but this is hardly an initiative that will assure it.”

Mr Tan added: “We must not forget that CPF monies are for retirement times and should not be excessively exposed to high risk investments like in the equity market.”

SBF will hold a conference on Tuesday to discuss the paper with the wider business community. At the conference, the paper will be formally presented to Finance Minister Heng Swee Keat, who chairs the Committee on the Future Economy.