Overseas Expansion by Local SMEs

Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) what is the current state of internationalisation by local SMEs; (b) what has been the number of companies that have sought assistance from IE's Global Company Partnership schemes; and (c) whether there is an increasing trend of SMEs off-shoring their operations to lower-cost locations overseas.

Based on the latest 2013 SME Development Survey, about half of local SMEs reported overseas revenue in 2013. Of these, about 60% generate at least a third of their revenue from abroad. Wholesale, transportation and storage, and manufacturing are the top three sectors where SMEs have internationalised. Malaysia is their biggest market, followed by China and Indonesia. Our SMEs are also starting to enter new markets, such as the Philippines, Myanmar and Brunei.

In 2013, close to 24,000 companies, mostly SMEs, approached IE Singapore for help in understanding overseas markets, connecting to the right business partners and developing capabilities. This was an increase of approximately 60%, compared to 2012, and reflected a strong and growing interest in internationalisation.

These companies received help under two key assistance frameworks – the Global Company Partnership (GCP) and the Market Readiness Assistance (MRA). The GCP is tailored for businesses with existing overseas presence and looking to deepen it, while the MRA is a broad-based framework for businesses new to internationalisation.

While IE Singapore tracks companies which establish overseas presence, it does not have comprehensive data on which parts of their operations are being moved offshore. However, we understand through feedback that many companies are considering regional production models. This enables them to benefit from lower-cost manufacturing locations, while retaining key management and business functions out of Singapore. The Government will continue to support the overseas growth of Singapore-based enterprises.

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