Ladies and Gentlemen

Friends from the media

Good Afternoon

1. Singapore has a large and vibrant community of some 161,000 small and medium enterprises or SMEs. They make up 99% of all enterprises, employ six out of every 10 workers and account for half of the total value added in the economy.

2. This year’s GDP growth for Singapore is expected to contract by between 4% and 6%. On current indicators, our economy is likely to have bottomed out and we are past the worst of the recession. All signs point to an economic recovery, albeit an anaemic one. The worry however is not about if we will get out of this. The worry is about the longer term.

3. This year’s survey findings provide an overview of how the SMEs are coping with the current economic crisis and their plans in riding out the crisis. Though the economic downturn has had a negative impact on SMEs’ sales and revenue, we are encouraged to see that they are largely optimistic about their outlook, with 78% confident about their ability to weather the economic downturn and 12 percent indicating that they can hold out for at least another year even if the recession continues. More than half or 52.7% of the SMEs see the current economic recession as an opportunity to grow and are planning to take on some expansionary actions.

4. To help SMEs overcome this challenging period and continue their growth journey, SPRING with our partners have worked together to roll out several initiatives.

Preparing for the Upturn

5. Financing is always invariably a concern among businesses, especially so during a crisis. In a recession, credit becomes scarcer and more expensive. SMEs especially may find it hard to finance not only investments, but also their day-to-day activities.

6. Hence the government enhanced existing SME financing programmes in January this year and introduced a Special Risk-sharing Initiative to ensure that financial institutions continue to lend to cash-strapped but otherwise viable SMEs.

7. As the key government agency for enterprise development, SPRING has worked closely with our partners to actively push out these programmes to the SMEs. Our appreciation to the 16 local and foreign participating financial institutions that help to administer these programmes. Many have expanded their enterprise banking units to meet the increased demand and reach out to SMEs.

8. I would like to commend too the various business chambers and associations, namely the Chinese Chamber, Malay Chamber, Indian Chamber, ASME, SMa and SBF¹ who collaborated to launch the Financial Facilitator Programme which provides professional financial advice and loan facilitation to SMEs free-of-charge. This service is administered through the Enterprise Development Centres and the Enterprise Business Information Service within these chambers and associations.

9. So far, more than 10,000 loans amounting to S$4.7 billion have been approved under the various enhanced financing schemes. This far exceeds the total loan disbursement by SPRING to SMEs over the last two years amounting to some S$1.7 billion². SMEs make up the bulk of the loan beneficiaries at 92%. This year’s survey findings showed that more SMEs have taken up the government funding schemes, with a higher take-up rate of 11% as compared to 7% in 2008. Financing challenges are also seen as the least worrying, compared to sales related and other operating issues.

Building for the Future

10. Amidst the uncertainty, opportunities still exist in various growth sectors and emerging markets. We hope that growing SMEs will be able to spot and seize these opportunities by enhancing their enterprise capabilities and increasing their productivity to differentiate themselves from their competitors.

11. Hence, SPRING increased its funding support under the Business Upgrading Initiatives for Long Term Development (BUILD) from 50% to 70% of qualifying costs for all its existing capability development programmes. This includes areas such as technology innovation, design, branding and business management systems, business leadership development, process re-engineering, IP management and product development.

12. In the area of technology innovation, there are several programmes to help SMEs develop their competitive edge. For example, SMEs can tap on the Innovation Voucher Scheme (IVS) to conduct technology feasibility studies at the Centres of Innovation, the Technology Enterprise Commercialisation Scheme (TECS) to develop the first working prototype, and the Technology Innovation Programme (TIP) for technology projects that result in new products or enhanced processes.

13. The response to BUILD has been encouraging. To date, we have supported more than 850 companies on their upgrading projects.

Attracting and Developing Talent

14. From the survey, it is heartening to note that SMEs are not turning to Reducing Headcount as their priority during this recession. We would like to encourage the able and growing SMEs to leverage on the various government programmes to strengthen their talent pool.

15. SMEs can tap on SPRING’s Business Leaders Initiative to train existing leaders and managers. There is also the Business Advisors Programme administered by the Singapore Management University and the National University of Singapore where they engage experienced PMETs in various disciplines for short-term business consultancy projects. SPRING supports 70% of the project fees and to-date, we have supported some 90 companies. SMEs could also employ these PMETs if they find them to be useful assets for the companies.

16. In addition, fast-growing SMEs with aggressive expansion plans can consider the Executive Training Programme to recruit fresh graduates from the three local universities as management trainees for 12 to 24 months. These graduate trainees will serve as future talent to fuel the growth of these fast-growing SMEs.

Conclusion

17. Amidst the current challenging global environment, the government will continue to maintain close ties with SMEs to get feedback on their situation and potential issues. Only then can we help them in a more timely and relevant manner.

18. What’s certain is that to compete, our companies need to innovate and develop their own core competencies so that they can differentiate from their competitors, and be able to react swiftly to customers needs.

19. We are heartened to see more SMEs strengthening their capabilities and looking to go overseas to expand their markets. We will continue to invest in SMEs’ capability development efforts to help them retain their competitive edge in these periods of economic uncertainty so that they can prepare and position themselves well for the upturn.

Thank you.

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¹ Singapore Chinese Chamber of Commerce & Industry, Singapore Malay Chamber of Commerce and Industry, Singapore Indian Chamber of Commerce and Industry, the Association of Small and Medium Enterprises, the Singapore Manufacturers Federation and the Singapore Business Federation

² In 2007, 3,566 loans amounting to S$683 million were disbursed by SPRING while some 3,114 loans amounting to over S$1.03 billion of loans were approved in 2008