Debated in Parliament on 4 Aug 2014.
Mr Teo Siong Seng asked the Minister for Trade and Industry whether our local enterprises face a serious challenge in loss of competitiveness due to (i) the year-on-year decline of 4.6% in June 2014 for non-oil domestic exports, especially the sharpest decline of 32% witnessed in personal computer exports; and (ii) the 6% and 1% drops in shopping and food/beverage spending respectively notwithstanding the 5% increase in tourism receipts in the first quarter 2014.
The decline in non-oil domestic exports (NODX) in June was largely due to external factors. In particular, the drop in personal computer (PC) exports came on the back of weak global PC demand. According to market research firm IDC, global shipments of PCs are likely to decline by 6.1% in 2014 due to lacklustre demand, following the 9.8% contraction in 2013.
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Similarly, the fall in tourist spending on shopping and food services in the first quarter of 2014 was due to external factors. In particular, Indonesian visitors, who are one of our top spenders, had contributed to the bulk of the decline in shopping expenditure. This was likely due to their weaker purchasing power as a result of the depreciation of the Rupiah against major currencies, including the Singapore dollar.
These developments do not signal a loss of competitiveness of our local enterprises. In fact, other SME-dominated sectors like precision engineering and general manufacturing activities, such as furniture manufacturing, continued to post positive growth in the first half of the year. Net business and company formation has also remained healthy across most sectors, including the manufacturing and food services sectors, with the number of new firms formed increasing in the first five months of 2014 even as the number of firms that ceased operations remained stable.
Nonetheless, we recognise that tighter labour constraints and rising business costs may have adversely affected some local companies. The key to companies coping with higher costs, without affecting their competitiveness, is to raise their productivity. In this regard, we encourage more companies to step forward to tap on the various productivity schemes that the Government has in place.
We also encourage local companies to internationalise in order to ride on the growth opportunities in overseas markets. The Government will help companies do so through schemes like the Global Company Partnership (GCP), which provides customised assistance in areas, such as market access, financing and manpower development. At the same time, the Government will continue to strengthen linkages with our trading partners so as to boost exports. Over the years, Singapore has built up an extensive network of Free-Trade Agreements (FTAs) with key economic partners, such as the G3 and ASEAN economies. We have also deepened economic linkages with emerging economies in South Asia, the Middle East, Sub-Saharan Africa and Latin America. This gives local enterprises the opportunity to access a diversity of markets and strengthens Singapore's trade resilience.
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