I delivered the following speech was delivered during the Ministry of Trade & Industry Committee of Supply debate today.
SMEs have borne much pain from a tight labour market and continuously higher industrial and commercial rents.
Supporting SMEs is vital to lift productivity across a huge swathe of our economy. In Germany and Switzerland, SMEs are celebrated as drivers of exports and economic growth. Some of their mid-sized companies have world-class capabilities and are global leaders in their fields.
We should aim to help some of our home-grown companies become global leaders.
First, I echo the concerns of members who have called for attention on industrial and commercial rents. We have already lost the ability to manage rental costs, having ceded buildings that the government once controlled to REITS, which now dominate the market. In commercial retail, REITS, with their huge collective hold on the market can force up prices, sometimes steeply with each renewal. I call on the government to look at intervention measures, including having more industrial space of its own to set desired rental benchmarks and to provide checks on the rental practices of REITS in the malls as described by various members earlier.
Next, financing. MLP has provided 3,500 loans to small companies over the last 2 years. Even with government’s increased risk share, banks may still not be willing to lend to start-ups with short track records. MTI had said it does not monitor the success rate of loan applications for MLP. I hope SPRING can work with banks to raise the awareness of MLP and other schemes, and monitor the success rate of applications. It could intervene should banks be found to remain unduly cautious.
Also, there are many SME schemes, administered by different government agencies. The range of schemes is daunting and are often difficult for the ‘小白兔’ (little rabbit) type of small companies Mr Teo Siong Seng spoke about, to take up.
I am concerned that some schemes are too prescriptive. My colleague Mr Giam had in his Budget speech cited the example under IPG, where IDA pre-qualifies vendors for sectoral solutions under iSPRINT.
SMEs will be limited to these vendors if they want a fuss-free way to tap on IPG funds. SMEs sometimes know which solution they want. A pre-qualified list may restrict the development of new innovative solutions.
I declare that I had used grants from various agencies previously. Other than PIC, I have found the rest challenging in terms of application, approval wait time, making claims and writing of reports.
Perhaps we can learn from the PIC. PIC benefitted from much publicity. Can we “push” schemes to SMEs by requiring the completion of a simple questionnaire in the annual filing to ACRA? This questionnaire could ask about planned investments in training, software, automation, and so on that are not receiving scheme support. Based on responses, forms for relevant schemes or SME Centre officers could be dispatched to the companies.
 Budget 2014 in brief