I delivered the following two speeches during the Committee of Supply debate for the Ministry of Trade and Industry on 6 March 2015.
Growing Singapore’s Global Corporate Champions
Mr Chairman, we have recognised the limitations of relying on Multi-Nationals to drive our economy. SMEs account for 70% of employment but contribute a much smaller percentage of GDP.
I like to call for a whole-of-government approach to nurturing Singapore’s global corporate champions; just had we had done so in our pursuit of FDI.
This is an important national priority. We should create an inter-departmental secretariat to take ownership of the target to have 1,000 Singapore enterprises with revenues above $100 million by 2020 and even more ambitious goals. This is similar in approach to our National Productivity Council which sets over-arching goals – such as the 2-3% productivity growth targets – and then works with various agencies to set sector goals and monitor sectoral progress. For other urgent national priorities, we have committees, such as the National Climate Change secretariat and the National Population and Talent division
Such a secretariat could work with MFA to ensure that the wish-lists of the most promising Singapore firms be fully factored into our trade diplomacy. It could work with companies to identify R&D needs and coordinate with our tertiary and research Institutes to help to focus important IP developments. It could work with MAS and MOF to address issues related to funding – and perhaps revisit the idea of an EXIM Bank which some of our competitor nations have. It could also work with all agencies to help improve access to government procurement opportunities or special innovation projects in ways that are GPA-compliant.
It could also work with economic agencies like IES, EDB and SPRING to ensure that more aggressive support is given to firms with the most potential to become our global corporate champions. It could help bring partners together to exploit opportunities as well as government co-investment. But support has to be conditional on delivering results – exports, revenues and spin-off benefits to the Singapore economy.
In the early days of South Korea’s industrialization, then-President Park Chung Hee made aggressive government support available to the emerging chaebols, but conditional on the achievement of very aggressive export targets. Otherwise the firms would be dropped from the program.
Looking at other countries with a similar population size to Singapore which have nurtured global champions – like Israel, Denmark, New Zealand and Norway – as well as looking at how a few of our promising local firms are making good progress globally, I believe that using this results-oriented approach can help build a strong third pillar to our economy.
Mr Chairman, we need to grow our promising local firms into globally competitive companies, but with their roots in Singapore.
The new programmes such as IGS (International Growth Scheme) and the Double Tax Deduction for Internationalisation are a welcome step in the right direction. These schemes can benefit companies venturing abroad, especially by organic growth. However, in some situations, acquisition may be more efficient.
We can improve our ecosystem to enable our future world champs. We should encourage more companies to use IFS (Internationalisation Finance Scheme) now that it can be used for M&A. The number of companies getting IE-administered grants for cross-border M&A has been increasing but is still small at 32 last year.
To encourage strong development of our brands overseas, can we have a lower tax rate for IP-related income from abroad instead of the usual 17% for corporate tax?
I also like to ask about the new schemes. Can DTD cover manpower expenses incurred to put Singaporeans overseas, such as kids’ schooling allowances and relocation costs?
For IGS, is there a target for the number of companies to be on this? We have targets for the other schemes, but what about IGS? And how many years will be granted and what are the key conditions for renewal at expiry?
For Venture debt risk-sharing, do the schemes apply for overseas M&A?