My Budget Speech – 28 February 2012

Yee Jenn Jong Budget Speech (28 February 2012)

Mr Deputy Speaker Sir, I welcome the noticeable shift from previous budgets which concentrated mostly on economic growth towards more social programs in this Budget.

Over the last decade, our society faced many challenges such as widening income inequality; rising inflation and slower social mobility. Wages of low and lower-middle class earners have stagnated or grew much slower than that of our highest income earners. Our over reliance on market-driven policies has resulted in deficiencies in the provision of social goods.

Refocusing on the weak, disabled and elderly amongst us is timely. The government has to step up to mitigate the adverse impact of the widening income inequality by proactively providing essential social goods and services.

This budget is a first step. Moving forward, we need to tread between growth and equity; between individual’s and society’s responsibility. How far will we go in our journey to be inclusive? How much do we provide for in elderly care and medical costs? What is affordable public housing? What levels of social security are we comfortable with? These questions must be debated upon as our nation define a new social-economic model going forward.


Next, I like to touch on Small and Medium Enterprises, a subject close to my heart as I operate in this space.

There are a number of assistance schemes in this Budget for SMEs. We have not been short of schemes for SMEs in the past, especially in the form of grants. While these can provide some slight help given the challenging environment SMEs operate in, they are like aspirins for short term pain relief. We need to look deeper beyond assistances to tackle directly the important issues confronting SMEs.

In preparing for this section on SMEs, I recall a hike I made into a primary rainforest in Sarawak some years ago. Walking into the rainforest on a hot day, I noticed dim lighting and a distinct lack of undergrowth. With sunlight blocked by the canopy of the giant trees, smaller plants could not flourish.

SMEs operate in challenging environments. Industrial rent increased at more than three times inflation rate at 16% last year. This increase is the highest level in the past 14 years. Retail rent rates have been rising steadily too. Industrial and retail spaces are now dominated by REITS. I join Members Inderjit Singh and Mr Teo to echo my concerns about the effects of a decade of the proliferation of REITS. Could the retail rents increase be partly driven by Retail REITS enhancing their negotiation position given common market practice that they can obtain the retailer’s gross retail turnover data? I urge serious review on the effects of REITS on SMEs.

Going forward, SMEs will find it harder and more costly to hire suitable manpower. In certain industries, there will be continued competition from the big boys. The Budget provides for assistance in Merger and Acquisition. Some SMEs may be forced to close or merge. SMEs form 99% of our business entities and employ some 63% of our workforce. Jobs will be at risk as a result of closures and mergers. We need brace ourselves for a rough ride in the SME space in the next 5 years as the economy restructures. We need to be prepared to help those whose jobs will be lost during this period of restructuring.

We dream of the next big thing to fly the Singapore enterprise flag globally. How do we achieve that?

Going back to the rainforest analogy, how do we get smaller plants to grow? They need air, water, good soil and sunlight. The seeds themselves must also be of good quality.

Companies need a positive business climate, which can be promoted by good government policies, just as plants need air and water for sustainability. We do have fairly positive policies that allow companies to get started up quickly. We need to constantly look ahead to ensure our environment stay small business friendly.

The market place is the soil the plants grow in. We may not have a large domestic market, but we do have a domestic market that can sustain our SMEs. It would help if the government can make the soil richer by stimulating domestic consumption from time to time.

The seed represents the soundness of each company’s business ideas as well as the talents it has. Good programmes to cultivate our young to be more innovative and entrepreneurial can help seed improvements for our future SMEs.

Carving out space to grow strategic SMEs 

SMEs need space to grow, just as plants need space for sunlight to come through. In the rainforest where there were patches that giant trees were absent for whatever reasons, there were thriving smaller plants. The space vacated by the giants had allowed smaller plants to flourish. I had spoken previously on this. I will agree to disagree with some members of this House as to whether there’s crowding out by large trees, the industry giants. Beyond arguing about crowding out by large companies, I like our government to create fresh spaces for SMEs. It can do so by being a significant player in the economy to drive the creation of innovative SME-led solutions in certain key sectors.

For example, the government’s call for consumer and first-user of innovative solutions to be developed by local enterprises in the 2010 ESC report, backed by a $450 million co-innovation fund is the right step.

We can do more.

There is danger that there may be risk aversion by government officers to buy solutions from SMEs for fear of having to answer for failures, even if SMEs can meet specifications and offer lower prices than larger companies. We need to prevent this mindset. One possibility is to have smaller tenders that only SMEs can participate in. If there are no SME who can fulfil the requirements, then the tenders will be opened to larger industry players.

We can identify certain areas where there is substantial government demand and a strategic reason for us to have our home-grown innovative solutions. A positive example that comes to my mind is in water technology. We could have imported all the technologies but it was good that we chose to also go with local firms which allowed them to grow and compete in similar projects internationally. We need more of such successes. 

We have many public building projects ongoing now. We can use this opportunity to aggressively push the development of innovative home-grown green technology to be incorporated into the buildings. We could also use it to push for productivity improvements in our construction industry by insisting on productivity conditions and rewarding for innovation in productivity enhancements.

I also like to see policies requiring the public sector to favour green procurements. This can spur the development of our local suppliers to meet green standards that will allow them to compete for projects in countries that have already implemented such policies. Green procurement policies are already gaining traction in places like Taiwan, Thailand, Canada, Japan and Korea.

We can even dovetail this initiative with that of the Renovation and Refurbishment Deduction Scheme by having better tax deductions for retail and F&B outlets to adopt renovations that are eco-friendly.

I was encouraged recently to learnt that a local SME, Greenpac (S) Pte Ltd had developed an environmentally friendly packaging solution for a global eye-care leader CIBA Vision, that won the international WorldStar Packaging Award 2010. I learnt that not only was the solution eco-friendly, it also saved space, resulting in lower transportation costs and eliminated unnecessary unpacking and re-packing , which resulted in productivity gains for the client.

There was a call to use green lenses in government procurement in the 2010 ESC report. I like to see greater speed in legislation and in execution of this recommendation. We can certainly develop more local SMEs to become world leaders in the promising green technology industry.

Sir, I have confidence in the innovativeness of our SMEs to rise to the challenge when spaces are open up for them to demonstrate innovative solutions to meet our public projects’ needs.

The Necessary Mindset For 21st Century Singapore

I like to end with a story. I took a walk outside this House recently and noted the inscription on the statue of Sir Stamford Raffles by the Singapore River. It says “On this historic site, Sir Thomas Stamford Raffles first landed in Singapore on 28th January 1819 and with genius and perception changed the destiny of Singapore from an obscure fishing village to a great seaport and modern metropolis.”

Singapore has moved into a new phase of our development. The world has moved into a new century. There is a great need in this 21st century to have our people to be genius and perceptive to spot gems of opportunities caused by constant upheavals. There will be plenty, brought about by constant technological advancements, political changes, and shifts in economic power. We live in an exciting world. Mark Zuckerberg, founder of Facebook became the world’s youngest self-made billionaire at just 23 years old four years after starting his business in the dormitory of his university. Such opportunity and speed are only possible today with the constant technological changes that break down old barriers and level the playing field for innovative newcomers. In this innovation-driven era, we need to empower our people through mindset change to achieve quantum leaps in productivity improvements.

Sir, We need people full of creativity, innovativeness, perception and daringness to find the next Angry Bird or Facebook in us. Sir Stamford Raffles took risk with Singapore, a small and undeveloped fishing island. In this age and time, we need to find in ourselves the genius, perception and risk-taking spirit to discover brave new worlds out there.

I like to conclude by saying that significant challenges lie ahead as our economy restructures. Our forefathers have worked diligently to get us to where we are. We need brace ourselves for changes to come, and find faith in our abilities to rise above the challenges, as we have done so in the past.

Thank you.

2 comments on “My Budget Speech – 28 February 2012

  1. An economy needs both big & small enterprises. The proposed lowering the ceiling for foreigner workers will especially hit those small local enterprises in the sector. Some policies should come out to mitigate this impact instead of punishing them with more levies. Indeed, some space should be allocated especially for SMEs, as I agree wholeheartedly with you that the sort of rental rates we have now can very easily kill businesses. Having said that, in the long run, our economy needs to lower the overall dependency on foreign workers. We’re already seeing Singapore as a less popular place for foreign maids, slowly this trend will spill over to other lower-paid jobs that are now done mostly by foreign workers. Take for example, there is a trend now in China of workers in the inland provinces working closer to their villages than going to faraway places due to better economic conditions there. The implication is in the long run, there will also be less and less foreign workers filling up those jobs that locals do not want. I can’t think of any solutions at the moment. But this is something that is bound to happen and Singapore has to do something or else one day, due to our heavy reliance on them, we will be caught short. I think in the long trend, assuming Asian economies continue to boom, unavoidably, overall wages will go up.

    I think there is a need to set up something like Small Business Bureau (model after a similar unit in the US) to provide one-stop solutions or help/support to SMEs. The time to do this is now, because this is slowly happening now!

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