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Singapore Budget 2018: Help SMEs scale to compete globally, MPs urge
MEMBERS of Parliament on Wednesday pitched a number of ideas to help small local firms scale up and compete with established global players.
Ang Wei Neng of Jurong GRC, for example, pointed out that in Singapore's rail system, most of the tunnelling projects go to large foreign firms, leaving local construction companies the subcontracted jobs.
With the rail network length expected to double by 2030, he asked whether efforts were being made to develop local firms so that they can eventually build MRT tunnels and trains and develop signalling systems.
Mr Ang noted that many large international firms grew with support from their respective governments, and that the government could perhaps require overseas firms involved in local train projects to form joint ventures with companies here.
Working with such established firms will enable local firms to pick up expertise, their technologies and their processes, he added.
"For the first 180km of MRT lines, our local firms played a supplementary role in building, supplying and upgrading the MRT system. For the next 180km, I hope our local companies can play a significant role in building, supplying and upgrading the Singapore MRT system that we can be proud of," he said.
Another speaker who raised the concerns of small and medium-sized enterprises (SMEs) was Dennis Tan, a Non-Constituency MP from the Workers' Party, who talked about opportunities in the maritime industry.
The industry transformation map for marine and offshore engineering has identified liquefied natural gas (LNG) and offshore renewables as two new growth areas, he said, but asked how many SMEs can compete in these arenas.
He added that many SMEs are highly specialised, and that their size could limit their ability to scale up in order to compete with the big boys on the international stage, he said.
To help these smaller players, he proposed that the government bring SMEs in the maritime industry together on a platform so they jointly develop products and pitch for bigger projects internationally at a consortium level, tapping each other's expertise and economies of scale.
"Our local banks can help with appropriate financial support, and the government can consider providing initial funding and support for setting up," he said.
MPs also spoke on the impact of cost pressures and the proposed Goods and Services Tax (GST) hike on local SMEs.
Sembawang GRC MP Lim Wee Kiak expressed concern that the GST hike would raise business costs and hurt Singapore's competitiveness.
He also touched on the extension of the wage credit scheme (WCS) and the costs incurred.
"Many employers are concerned with raising salaries, as this will permanently increase manpower cost, whereas the wage credit scheme is temporary. Most employers will prefer to share the company's profits with the staff by special bonuses, which are once-off and will not permanently increase manpower cost for the companies," he said.
Nominated MP Azmoon Ahmad said that while initiatives to support firms to cope with near-term challenges (such as the extension of the WCS) are laudable, one area that he felt was missing from the Budget was help with premise rental.
He proposed more financial help and even a structural solution for business operators, especially SMEs, to lessen their burden from premise rental, but did not elaborate.
Jessica Tan, MP for East Coast GRC, spoke on measures to help resource-strapped SMEs to innovate.
Referring to the increase in tax deduction on licensing payments for commercial use of intellectual property (IP) and the increase in tax deductions for firms that undertake research and development (R&D) in Singapore, she pointed out that many SMEs that are developing in this space have little or no profits.
"Hence they would not be able to benefit from these tax deductions," she said.
More targeted grants oriented for IP and R&D-related costs would better benefit smaller companies, she suggested.
For more Budget 2018 stories visit bt.sg/budget18