Measures to Help SMEs Pursuing Greater Productivity to Cope with Rising Costs

Mr Thomas Chua Kee Seng asked the Minister for Trade and Industry what measures is the Ministry looking into to help businesses, in particular the SMEs, adjust and cope with rising costs while they are still embarking on productivity improvements which will take time to show results.

As part of economic restructuring, the Government has provided continued support to small and medium enterprises (SMEs) to upgrade their capabilities and improve productivity through schemes, such as the Productivity and Innovation Credit (PIC), Innovation and Capability Voucher (ICV) and Capability Development Grant (CDG). We are seeing some encouraging developments and positive results from these initiatives. In a recent survey conducted by the Singapore Chinese Chamber of Commerce and Industry, 90.3% of surveyed companies have adopted productivity measures in 2014, compared to 83.9% in the previous year. Another survey conducted by DP Information Group in 2014 showed that a growing number of SMEs are pursuing productivity improvements and investing in new technologies.

The Government has been actively engaging SMEs to raise awareness and to help them apply for different Government grants and assistance schemes. We have collaborated with trade associations and chambers to set up a network of 12 SME Centres to assist SMEs from different parts of Singapore. The SME Workgroup, comprising representatives from the Government and private sector, has also been reaching out to SMEs to gather feedback and explain how the companies can benefit from different Government schemes. Some initiatives which we will be implementing based on industry feedback are to facilitate the participation of SMEs in Government procurement tenders by publicising more information on how SMEs have successfully bid for such tenders and to work with the Singapore Business Federation on a fair to increase awareness of the available opportunities.

To date, more than 22,000 companies have benefited from the productivity initiatives introduced by the National Productivity Council. Export-oriented sectors registered healthy productivity growth of 2.1% per annum from 2010 to 2013, which is significantly higher than the 0.2% per annum growth for the overall economy. These sectors accounted for 56% of value-added in Singapore’s economy. For other sectors, including retail, food services and construction, the Government will continue to work with companies and industry

Page: 92

associations to raise productivity and improve efficiency. We have to persevere with these efforts as sustained productivity improvements are essential for Singapore’s economy to remain competitive and to provide good jobs for Singaporeans.

The Government has also taken steps to manage cost increases affecting SMEs. For example, rentals for industrial space have been moderating, following our release of more land and space over the past few years. In the third quarter of 2014, the rental indices for overall industrial space and multiple-user factory space fell by 1.3% and 2.3% respectively, on a year-on-year basis. This is the first year-on-year decline since 2010. There will also be a steady supply of industrial and retail space in 2015 and 2016, which will help to exert downward pressure on industrial rents and land prices. In addition, we are improving the transparency of rental data for industrial, retail and office space, which will provide more information for SMEs to make their leasing decisions.

The Government will continue to support our SMEs on the economic restructuring journey, to help them become more competitive and productive. This requires the collective efforts of all parties, including the Government, employers and workers. We will also actively engage SMEs and gather their feedback on how Singapore businesses can benefit from new growth opportunities through internationalisation, innovation and collaboration.