SMEs seek sustainability and local support for the long haul

Singapore

SINGAPORE businesses, asked what they would like to see laid out in this year's Budget, have cited bread-and-butter concerns, though some also trained their sights on longer-term issues such as sustainability and support for local brands.

The national business survey by the Singapore Business Federation (SBF), done last month, found increasing business costs and rising wages cited among the key concerns for businesses.

Foremost on businesses' wish lists for Budget 2020 - to be delivered by Deputy Prime Minister Heng Swee Keat on Feb 18 - are tax reliefs and better access to government resources.

SBF chief Ho Meng Kit remarked that this short-term view could obscure businesses' view of more significant, long-term issues.

But several companies that The Business Times spoke to did acknowledge the importance of policy moves that will pay off in the longer term, such as stronger advocacy for local businesses.

Albert Teng, chief strategy officer of Singapore-listed building maintenance and upgrading company ISOTeam, called for "greater support for home-grown companies when calling for high-value contract tenders".

This could mean, for example, giving priority during the selection process to local companies with strong track records, he suggested.

"This would not only give home-grown companies more opportunities to take on bigger, higher-value projects, but can also be an effective way to encourage them to strengthen their capabilities," he said.

Vincent Lim, chief executive of BH Global, which provides technical services to the offshore and marine sector, expressed hope that the government would give local small and mid-sized enterprises (SMEs) and their products a chance in project tenders.

"We have developed world-class products which are selling well in developed countries elsewhere, but are not recognised in local government projects," he said.

Other SMEs, also with an eye beyond making their businesses thrive, said they recognised the importance of environmental sustainability, and said they hoped the government's plan for expenditure and revenue would also include measures to help them do more for this cause.

Urban landscaping company Elmich hopes the government will set out clear directives and guidelines for the next few years, raise awareness of the issue and encourage industries to adopt environmentally-friendly practises.

Goh Tee Swee, the company's finance director said: "When a private organisation promotes something, people think they're trying to make a sale. But if it comes from a government agency, it is taken as information. Awareness comes more easily that way."

Both Elmich and engineering services company Boustead Singapore hope the Budget will offer incentives for sustainability-linked projects.

These could take the form of tax breaks or lower annual tax rates for green projects, so that some profits can be re-invested in other eco-friendly projects, said Keith Chu, senior vice-president of corporate marketing and investor relations at Boustead. Relevant technology and service providers could also use the funds to research into and develop better, environmental-friendly solutions, he added.

Longer-term issues aside, Singapore businesses undoubtedly still grapple with perennial problems of day-to-day operations, such as manpower and cash flow.

Some SMEs that BT spoke to called for a review of the foreign worker policy, even though the government has not budged on its stance in the past few years.

One frustration they cited is that of a shortage of willing, local talent to go around.

Ong Boon Huat, chairman of MCI Career Services, said the government has built a conducive business environment, but firms - his included - are finding it tough to hire enough people to fuel their business growth.

"We have access to all the job candidates and job secrets, but we also have problems hiring local talent. Can you imagine what it's like for our clients?" he lamented.

One suggestion is for the government to consider separate foreign worker quotas for different industries. "Having only one quota system creates a lot of imbalances," said Rasel Catering co-founder Alan Tan. In the services sector, not everything can be automated, he added.

To ease the labour shortage in the F&B sector, Japan Foods Holding proposed a quota allowing foreign students from recognised culinary or hospitality institutions to take up local internships, on top of the current foreign worker quotas.

The quota could be below 5 per cent of the total workforce, the company suggested. Levies could also be lower, at S$150 per person a month.

On the manpower front, home-grown business Motorist (which runs an online platform for buying and selling cars) is looking to the government for financial help to hire senior executives.

Current grants can be used only in the hiring of mid-level managers or lower-level positions, and SMEs typically lack the funds to woo the best qualified for their top-tier positions, said its chief executive, Damian Sia.

"This makes the hiring of higher-level talent - essential for companies if they are to take the next step - particularly challenging."

Finally, liquidity remains an issue, as raised by one firm in a construction-related sector. This comes as SMEs in the sector can expect to have less access to financing in the first half of 2020, as found by a quarterly survey by the SBF and global information services company Experian.

The number of slow payments in construction has risen, said the latest quarterly figures from the credit bureau.

Derek Wu, managing director of D-Team Engineering, asked whether the government could set aside a kitty to alleviate some of the liquidity pressures faced by local companies.

"When companies run into financial crises, it doesn't mean they have no income. It's just that when their debts are due and they need to pay, they're unable to get money from upstream customers on time," he said, noting that this is a common problem, given the number of contractors involved in each stage of a construction project.

Deputy Prime Minister Heng has said that the Budget is not a "short-term giveaway", but an investment to help the nation build capabilities over the long term.