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Singapore's net business formation lower than usual in 2019 so far
IN the first nine months of 2019, net formation of business entities has been about a quarter lower than the average in recent years, Senior Minister of State for Trade and Industry Chee Hong Tat said in response to a parliamentary question on Tuesday.
Net formation - the number of new entities formed, less the number which ceased - was about 9,900 for the first nine months of the year, 28 per cent less than the average of 13,800 for the same period over the years 2014 to 2018.
"Most sectors saw a fall in the net formation of business entities during this period, including the transportation and storage, business services and construction sectors," he said, citing heightened global uncertainties and Singapore's resulting economic slowdown as likely factors contributing to this.
"MTI (Ministry of Trade and Industry) expects the net formation of businesses to remain subdued for the rest of 2019," he added.
In response to Member of Parliament Saktiandi Supaat's further question on efforts to ensure healthy net formation, Mr Chee pointed to MTI's efforts in transforming industries, developing new sectors such as agri-tech and precision medicine, and supporting companies to tap external growth opportunities.
Second, MTI is also fostering a pro-enterprise environment by lowering the barriers to entry and exit, for instance with the recently launched GoBusiness Licensing portal for food services, which reduces the number of regulatory touchpoints for such firms from 14 to one, with lower licence fees and quicker processing.
"We will extend this to other sectors, such as retail and environmental services, so that more businesses can benefit from the rules review and process re-engineering," he added.
Third, MTI will continue to develop a vibrant startup ecosystem, he said, noting the Startup SG initiative which began in 2017 and provides startups with access to local financial and non-financial support.
Asked how the government might define a "healthy" rate of cessation of businesses, Mr Chee replied that the entry and exit of firms "is part and parcel of a well-functioning economy". The government has "no targets" for the rate of firms exiting the economy, but the process of allowing such churn, and letting resources be channelled to more productive and competitive firms, is a healthy one.