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Government not in the business of picking winners: Iswaran
THE impact of Budget 2017 and the Committee on the Future Economy report on small and medium enterprises (SMEs) was one of the most intensely discussed topics in Parliament on Tuesday.
Many of the speakers expressed agreement with the direction charted in the Budget for SMEs to digitalise, internationalise and build capabilities.
However, they were concerned that these businesses may be left behind due to a perceived lack of short-term support measures; there is also a perception that the support schemes are targeted at larger, more established enterprises.
Singapore Chinese Chamber of Commerce & Industry president Thomas Chua, who is a Nominated Member of Parliament, said in his speech in Mandarin: "The major concern of businesses are operational costs, while the government's concern is the nation's mid- to long-term competitiveness. How a balance may be achieved is most worrisome."
Member of Parliament (MP) Lim Biow Chuan (Mountbatten) said some businessmen were looking to Budget 2017 to yield some form of financial relief or reduced cost.
"However, it seems that their hopes may not materialise. The feedback which I've received is that many of the budgetary measures will help only a specific segment of the business community."
He added that he did not think that businesses were looking for handouts from the government; they were, however, appealing for a less costly, "friendlier" business climate.
To allay SMEs' anxieties, Minister for Industry S Iswaran spoke in depth about how the government is "resolute" in its commitment to help SMEs to transform: "Large companies don't necessarily need this depth and breadth of support - it is the small companies that do." It was a message he returned to repeatedly.
He cited the example of the International Financing Scheme (IFS) for Non-Recourse Financing introduced in the Budget to help SMEs in the infrastructure sector to grow overseas. The scheme is designed to encourage financial institutions to provide non-recourse loans to SMEs once projects move into the post-construction stage, so SMEs can free up their balance sheets to take on new projects.
Over the next five years, the government expects to catalyse S$600 million dollars in loans, which will correspond to approximately S$1 billion in infrastructure projects.
Again, he added: "I'm talking here about the small businesses, not the big companies."
Mr Iswaran highlighted that the government has set aside S$1.5 billion in grant support for capability development in SMEs.
He also refuted an argument by Non-Constituency Member of Parliament Leon Perera, who had pointed to Budget 2017's "missed opportunities" to build local enterprises.
Mr Perera had asked: "Should we not make our support to companies more selective - with much more generous support at higher caps given to companies who truly have a track record of results and the acumen and ambition to succeed globally?"
He added that it was this kind of "tough-minded, results-driven approach" that enabled Japan and Korea to groom world-leading companies in the 1960s.
But Mr Iswaran defended the government's position of not picking and choosing winners.
"Sure, the companies that are prepared to move further and go faster will receive more support, but that does not mean we are picking winners. The winners are picking themselves."
He pointed out that while the government had a role in initiating schemes and creating channels to communicate these initiatives, the onus still lay with the SMEs to seize them.
"Ultimately, whether a local enterprise becomes a global champion cannot rest with the government."
Mr Iswaran said SMEs have a plethora of resources at their disposal - the SME Centres are an example - so that they do not need to navigate the terrain alone.
Often, what is required is not government intervention, but for the government to keep track and understand the situation, he said.
The government has stepped in when necessary, such as in the case of the IFS for Non-Recourse Financing, in response to smaller players voicing their difficulties in getting loans to finance overseas infrastructure projects.
The minister stressed that the government, through broad-based and targeted programmes, will support companies that are prepared to make important transitions and steps to move themselves forward.
SMEs will remain the central focus of the government in all the efforts it makes, he said.
MP Darryl David (Ang Mo Kio GRC) called for "sophisticated guidelines and assessment processes" to be put in place to ensure that the funds that are set aside are used to support SMEs with the best potential to internationalise.
"The assessment criteria and methods must be appropriate and transparent, and support must be given to high-potential SMEs regardless of their size."
Mr Chua, towards the end of his speech, called on the government to back businesses that use Singapore as their regional headquarters and venture overseas.
In Mandarin, he reiterated: "The government should give the utmost support to those local enterprises which have the gumption and willingness to do so, be they traditional industries or newly emerging industries. Not one must be left behind."