Budget

Paper 2015
Overview

The Association of Small and Medium Enterprises (ASME) is a non-profit organisation

established in 1986.

With wide-ranging services and programmes, ASME strives to equip members with the
business knowledge and market opportunities to help them grow.

As the champion of a pro-enterprise Singapore, ASME bridges the public and the private
sectors to promote a more conducive business environment which facilitates the start-up,
growth and development of a larger pool of SMEs.

To date, ASME has initiated many relevant programmes to build the capabilities of SMEs and
create business vibrancy in Singapore.

In tandem with its continual engagement with the government, ASME has compiled a set of
recommendations for Budget 2015 that are based on findings from its recent Business
Sentiment Survey.

Business Sentiment Survey

In December 2014, ASME conducted its Business Sentiment Survey to track the outlook of
SMEs for 2015 in areas such as profitability, business costs, impact of Budget 2014 and
internationalisation.

The key finding from the survey revealed that SMEs are still grappling with high business costs
and are looking to explore overseas expansion.

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TURNOVER

In the survey, 40.7% of respondents indicated a decrease in turnover for 2014 with majority
(16.8%) indicating a decrease by over 20%.

T URN OVER IN THE PAST 12 MONTHS

By over 20% By 11% - 20% By less than 10%

40.7% 39.8%

DECREASE REMAINED THE SAME INCREASE

39.8% of respondents reported an increase in turnover while 19.5% of respondents found that
their profits remaining the same in 2014.

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Key factors behind increase/decrease in turnover

REASONS THAT LED TO INCREASE/DECREASE IN

TURNOVER IN THE LAST 12 MONTHS

Local economic conditions 40.9%

Global economic conditions 25.5%

Consumer spending 16.4%

Ability/inability to increase business activities 43.6%

New/lack of business opportunities 32.7%

Other 20.0%

43.6% of the survey respondents said that “ability/inability to increase business activity” was
the key factor that led to the increase/decrease in their turnover. This was a slight increase
from 40.6% in 2013.

However, the percentage of respondents (40.9%) citing “local economic conditions” as a

factor leading to an increase/decrease in turnover more than doubled compared to 2013.

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Turnover forecast for next 6 months

Looking ahead, 41% of respondents are expecting their turnover to increase while 29.5% of
respondents are expecting a decrease in turnover over the next 6 months. This compares
with 55.3% of respondents who expected their turnover to increase and 19.1% who expected
their turnover to decrease in 2013.

T URN OVER F ORECAST IN THE NEXT 6 MONTHS

By over 20% By 11% - 20% By less than 10%

41%

29.5%

DECREASE REMAINED THE SAME INCREASE

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BUSINESS COSTS

Similar to 2013, business costs remain a concern for SMEs. More respondents (44.7%) cited that
their operational costs have increased by 11-20%, compared to only 34.7% in 2013. This is an
increase of 10%.

IN CREA SE IN COST OF OPER ATIONS B ETWEEN

2013 AND 2014
By over 20% By 11% - 20% By less than 10%

90.6% 91.2%

2013 2014

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Key factors that led to higher business costs

The top three cited factors for higher business costs are “Manpower” (86.6%), “Rental”
(57.1%) and “Foreign Worker Levy” (48.2%). This is broadly similar to the findings in 2013 where
respondents also ranked these three factors as the top reasons for higher business costs.

FACTORS CONTRIBUTING TO HIGHER BUSINESS COSTS

Manpower 86.6%

Foreign Worker Levy 48.2%

Rental 57.1%

Transportation 44.6%

Complying to government standards 35.7%

Utilities 24.1%

Others 8.0%

Based on survey results, there has been an increase in respondents citing “Rental” as a
contributor to higher costs while a drop in respondents regarding “Foreign Worker Levy” as a
factor leading to higher costs in 2014 as compared to 2013.

RENT AL A ND FOR EIGN WOR KER L EV Y

BET WEE N 2013 AND 2014
2013 2014
58.9%
57.1%
51.0%

48.2%

RENTAL FOREIGN WORKER LEVY

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Forecast for business costs in next 6 months

84.6% of respondents predict that their operational costs will increase in the next 6 months.

C OST OF OPERA TIONS IN THE NEXT 6 MONTHS

By over 20% By 11% - 20% By less than 10%

84.6%

4.5%

DECREASE REMAINED THE SAME INCREASE

Factors behind increasing business costs

“Manpower”, “Foreign Worker Levy” and “Rental” remain as the top 3 factors that
respondents expect to contribute to higher costs in the 6 months ahead.

FACTORS EXPECTED TO CONTRIBUTE TO INCREASING COSTS

Manpower 82.3%

Foreign Worker Levy 38.1%

Rental 48.7%

Transportation 40.0%

Complying to government standards 31.0%

Utilities 18.6%

Others 13.3%

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IMPACT OF BUDGET 2014

Effectiveness of Budget 2014 on SMEs

49.5% found the Budget to have no impact on their businesses. This was an increase from
38.3% in 2013. Furthermore, there is a drop in respondents who found the Budget to have a
positive impact.

EF F EC T IVENESS OF B UD GET 2014

2013 2014

49.5%

46.6%
38.3%

33.9%
16.5%
15.3%

NEGATIVE IMPACT NO IMPACT POSITIVE IMPACT

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Initiatives leveraged on in 2014

In 2014, the “Enhanced Productivity & Innovation Credit” (PIC) was the most utilised
government scheme.

SCHEMES UTILISED IN 2014

Enhanced PIC scheme 79.6%

R&D tax deduction scheme 3.7%

Write-down allowance scheme for IP rights 4.6%

ICT for Productivity and Growth 13.9%

Internationalisation Finance Scheme 3.7%

Global Company Partnership Programme 2.8%

None 13.0%

Others 9.3%

The second most popular government scheme was the “ICT for Productivity & Growth” (IPG),
utilised by 13.9% of respondents.

It is important to note that 13% of respondents have indicated that they have utilised none of
the schemes. With the exception of PIC and IPG, the take-up rate for other government
schemes are on the lower percentile. In this light, there is scope by the government to review
and evaluate the relevance of the prevailing schemes for SMEs.

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Reasons for not tapping on Budget incentives

55.3% of respondents said that the requirement to pay upfront and be reimbursed later was
the top deterrent of tapping on government schemes. This factor was also the top deterrent
in 2013.

REASONS WHY SCHEMES WERE NOT HELPFUL

Too complicated to understand 38.8%

Require upfront payment 55.3%

Unsure of where to obtain information 18.5%

long, complicated or tedious audit process 32.0%

High consultant fees 30.1%

Long approval and reimbursement time 38.8%

Not applicable to micro-enterprises 28.2%

Others 13.6%

Both “Too complicated to understand” and “Long approval and reimbursement time” were
the second top reason for businesses not leveraging on the schemes (38.8%).

However, as survey results revealed that PIC was the most popular scheme for SMEs, the long
approval and reimbursement time could have led to a high volume of applications and
posed a challenge to the timely approval and reimbursements.

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Initiatives for Budget 2015

Both “initiatives to look for local staff and talent” and “initiatives to reduce rental costs” were
equally important (58.3%) to respondents in terms of expectations for Budget 2015.

A similar percentage (57.4%) of respondents would also like to see more “initiatives to
increase productivity”.

INITIATIVES EXPECTED IN BUDGET 2015

More initiatives for SMEs to reduce

41.7%
dependence on foreign labour

More initiatives to increase productivity 57.4%

More initiatives to help SMEs expand

46.3%
overseas

More initiatives to help SMEs look for local

58.3%
staff and talent

More initiatives to reduce rental costs 58.3%

Others 16.7%

These three initiatives were also the most sought-after initiatives in 2014.

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INTERNATIONALISATION

SMEs are looking to explore overseas expansion. This intent is reflected in the survey, with
68.2% of respondents looking to expand overseas within the next 2 years.

INTENTION TO EXPAND OVERSEAS

WITHIN THE NEXT 2 YEARS

Not sure, 17.3%

No, 14.6%

Yes, 68.2%

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Overseas strategies and concerns

When asked about their strategy for expansion, the majority of respondents (76.7%) are
looking at overseas partnering as an approach. This is a jump from 2013 (48.6%).

OVERSEAS STRATEGY

Overseas partnering 76.7%

Partnering local companies to venture abroad 17.8%

Market entry via joint ventures and mergers 35.6%

No strategy 1.4%

Others 19.2%

The survey also provided insights into what are SMEs most pressing challenges encountered in
overseas expansion. 74% of respondents cited that “difficulty in finding a trustworthy partner”
is their top concern with regards to expansion aboard.

CONCERNS WITH EXPANSION OVERSEAS

Lack of knowledge and information on overseas

57.5%
market

Lack of logistics/infrastructural support 30.1%

Unfamiliar with the language and cultural

38.4%
practices

Harsh competition from companies established in

42.5%
the country

Lack of awareness on the rules and regulations 64.4%

Difficulty in finding a trustworthy partner 74.0%

Political instability in the country 34.3%

Shortage of funding/cashflow 49.3%

Others 6.9%

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Survey results also revealed that the general lack of information on the intended overseas
market is a concern for respondents. 64.4% indicated a lack of awareness on other countries’
rules and regulations such as taxation and labour laws, whilst 57.5% of respondents cited a
lack of knowledge on the overseas market.

Other top concerns include the shortage of funding/cashflow (49.3%) and harsh competition
from companies established in the country (42.5%).

Popular countries for expansion

Amongst those looking to expand overseas in the next 2 years, majority of respondents are
keen to explore neighbouring countries in the Southeast Asian region, with Indonesia (16.4%)
as the most popular choice.

TOP 5 COUNTRIES LISTED (2014)

China 10.5%

Indonesia 16.4%

Malaysia 13.2%

Myanmar 10.5%

Thailand 11.2%

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Reason for expansion

When asked their reasons for choosing to expand into the above mentioned overseas
markets, 83.1% of respondents indicated “New market opportunities”. “Low labour costs”
came in as the second reason (49.3%) for expansion abroad while the proximity of market
(40.9%) came in third.

REASONS FOR EXPANSION INTO THE ABOVE

MENTIONED COUNTRIES

Availability of skilled manpower 15.5%

New market opportunities 83.1%

Accessible to raw materials 2.8%

Nearer to market 40.9%

Lower cost of space 36.6%

Lower labour costs 49.3%

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RECOMMENDATIONS FOR BUDGET 2015

The survey indicates that business costs and manpower issues continue to be the
respondents’ main concern. Based on the findings from ASME’s Business Sentiment Survey as
well as issues highlighted during dialogue sessions with several government agencies and
ground intelligence, ASME would like to submit the following recommendations for
consideration in the upcoming Budget.

SME Development

SMEs contribute 70% of our nation’s GDP and employ 90% of our workforce. To ensure that
SMEs continue to remain a key economic pillar, the government should adopt a long-term
strategy that includes some of these measures:

An “ESC-like” strategy development is needed to chart SME growth

Explore the setting up of a high-level SME-centric strategy group that is similar to the
Economic Strategies Committee (ESC) to chart future growth of SMEs by establishing macro
SME-centric policies for SMEs, especially for micro and small SMEs, as the current policies are
broad-based.

A national strategy would also promote more alignment across the sectors, whether public,
private, GLCs, SMEs, and policy makers. As part of this strategy, it may be necessary to
consider “segmenting” the SMEs from the current definition used by the agencies.

Single SME authority

The government should study the need to establish a single SME authority that is empowered
to champion SME development across whole-of-government. This ensures a more
coordinated approach in addressing SME issues and policy implementation.

Currently, we have various agencies that have developed their “core expertise” and the
agencies are namely; SPRING, IE Singapore, JTC, IDA, WDA, IPOS (the main agencies that
SMEs deals mostly with). Whilst it may continue to remain necessary to maintain separate
agencies to retain depth in their core expertise, an SME-Centric higher body with a more
direct policy influence may be better position to strategise, align, and champion the cause
of SMEs.

Administration of incentives / schemes

SMEs would like to see more schemes that require less out-of-pocket payment and shorter
reimbursement time.

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Engagement with industry cluster level

We applaud the government in their recent approach in engaging specific industry clusters
to support and resolve their specific issues. Such initiatives include but are not limited to the
cleaning industry, security industry, and hotel industry. We feel that more open consultations
to obtain ground sentiments for the purpose of creating industry-centric policies can be
conducted. For instance, the IT Industry suffers from a “leakage of talents” and have been
unable to hire manpower of sufficient quality and quantity. For a prolonged period, the retail
industry has also experienced a difficult and tough ecosystem when they face oligopolistic
institutional landlords. Therefore, having more industry-specific consultations would allow a
timelier and more suitable venue to address ground issues that SMEs face.

Development of framework to help SMEs engage students from ITE, polytechnics and
universities

Through our annual ASME Forum (that engages ITE students), the SME Talent Programme (run
by SPRING for polytechnic and ITE students) and discussions with the Singapore Institute of
Technology, ASME has found a pressing concern amongst SMEs.

 SMEs are eager to engage and employ students.

 However, students are not ready, often planning to further their studies and possessing
the mindset that higher qualifications will lead to higher paying jobs and better job
positions. This is especially true for higher NITEC and polytechnic graduates.

ASME supports the move to encourage students from universities, polytechnics and ITEs, to
join the workforce in order for them to gain work experience and advance their career path.

We call for the government to set up a body including MOM, MOE and MTI, to develop a
structured framework or curriculum that allows:

1. SMEs to work with higher education learning institutes to provide certification (such as
graduate diplomas) for workers, based on training record and work experience.
2. Institutes of higher learning to recognise these certificates, giving credits to students
when they embark on their further studies or while they are working with SMEs.

Shared services

ASME has undertaken an initiative to develop shared services on cloud platform to help SMEs
better and more efficiently manage their accounting and HR functions. These shared services
will mean freeing up of valuable resources and time for SMEs, allowing them to concentrate
on managing their core businesses and at the same time remain complaint to the
Employment Act, keeping their filings and submissions to ACRA and IRAS timely.

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This initiative aims to achieve manpower and cost savings through the provision of
standardised operating and reporting format that is acceptable by various stakeholders,
including the auditors and government agencies. Having this one common platform will also
minimise the need for training and retraining of staff as more companies come
onboard. ASME hopes to receive support for the development of shared services platforms
from the partnering government agencies.

Business Costs

Rising business costs has been a primary concern of SMEs over the last two years. With
increasing rental and labour shortage contributing to the higher operating costs, the
government can do more to alleviate the plight of SMEs by considering the following
measures:

Rental

- Build more low-cost no-frills industrial spaces for SMEs.

- Provide more flexibility in office use for SMEs.
- Government to urge institutional landlords to adopt the Fair Tenancy Framework.

Manpower

Due to the tight job market, many SMEs (particularly F&B and services) are unable to secure
manpower resources to run their operations. To provide more assistance for SMEs facing this
dilemma, more initiatives and schemes would go a long way to help them secure the much-
needed manpower. These include:

- Hold back on planned increases in foreign worker levies to help SMEs.

- Remove/revise levies for S-Pass holders since they are already subjected to DRC and
minimum salary.
- Consider more targeted and transparent use of manpower levies towards areas of
rewarding productivity improvement.
- Extend the Wage Credit Scheme by another 3 years for SMEs.

We call for the government to consider a finer comb in manpower policy. The current tools of
“levy, quota, ratios” and ratios when applied on a sectorial basis may be too blunt a tool.

In recent years, companies have continued to face manpower shortages. Furthermore, the
economic conditions going forward are also looking less favourable. As such, we call for the
government to consider more refined incentive-based manpower policy that rewards
companies that prove year-on-year improvement in productivity and value-add. Such type
of manpower policy incentives will create a greater alignment in the drive for higher
productivity.

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Productivity

Over the years, the PIC scheme has been immensely popular and further enhanced in
Budget 2014. However, the cash pay-out of $15,000 which was meant to last for 3 years was
not extended when the scheme was enhanced.

As PIC requires SMEs to pay first and then reimbursed later, this will significantly affect their
cashflow and deter them from investing in productivity enhancements. To support more SMEs
in their productivity investments, we are proposing:

Extension of PIC Bonus

The PIC Bonus should be extended for another three years until 2018. During this extension
period, there should be a minimum of $6000 as cash bonus to maintain support for the first
$15,000 of productivity upgrades at 100% (60% cashback + $6000 = 100% support on first
$15,000 of upgrades).

Moving beyond the “hardware purchase” phase

Thus far, SMEs have benefitted from the PIC scheme, helping them invest in hardware that
can improve productivity.

However, the utilisation of the PIC scheme for process improvement is not as high. SMEs have
expressed that they have invested in product development to take their products or services
to a new level, but their submission have been rejected in the R&D category of the PIC grant.

The PIC scheme needs to be revised and fine-tuned to encourage companies to moving
beyond the “hardware purchase” phase and instead, evaluate and redesign their workflow
and processes that drive productivity while at the same time, given a multi-year extension to
hand hold the SMEs through this next phase of productivity transformation that will
encourage them to look deeper, and look further.

The PIC bonus should also be reinstated for expenditure on process redesign, software
development, implementation and enhancements to encourage process change.

Soft skills, soft processes and software development need stronger support from the
government which will bring about greater growth in productivity leading to the next lap of
growth in our SMEs.

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Internationalisation

Local SMEs are also considering overseas expansion to further their growth.

As such, more assistance is required to connect SMEs to overseas business opportunities,

providing them financial assistance for market assessment and penetration and assistance for
SMEs that are already operating in overseas markets but facing challenges. Practical
measures include the following:

Overseas market exploration travel subsidies

More broad-based low support for SMEs to penetrate larger markets within Asia.

Global Company Partnership

Raise the in-market turnover ceiling on grant availability for in-market sales support and allow
multiple claims for new businesses within the same country.

iMap

Extension of support for iMAP programme to include airfare and lodging.

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ASME Business Feedback Roundtable Discussion

ASME held its inaugural roundtable sessions on Tuesday, 27 January with a healthy turnout of
various small and medium enterprises from diverse sectors and industries. The feedback
sessions, a timely opportunity and initiative to actively engage SMEs in conversations was
established by the Member Relations team to tackle the issues that concern entrepreneurs
and their businesses.

Some of the topics discussed at the roundtable were based on the Business Sentiment Survey
conducted, these comprising of the current financial situation for the companies present
(specifically their main reasons for increase or decrease for both turnover and cost of
operations), their usual pain points such as the manpower crunch and rental costs, as well as
their expectations for the upcoming Budget 2015.

ASME highlighted several government programmes and activities that have been created to
tackle the issues and the SMEs discussed extensively on the potential of these schemes being
effective and improving the SME business environment. These suggestions made in response
to the existing government policies and schemes have been collated and will be presented
at future meetings with the relevant agencies to better structure holistic programmes that
would aid and advance local SMEs in their plans for greater growth.

MANPOWER

 Broad policy for (manpower restrictions) is not favourable for SMEs and their businesses
 Re-examine SMEs’ needs in greater detail to better shape regulations
 Consider subjugating policy into smaller clusters (for example, certain industries require
more employees, with the demand for foreign workers to fill these positions)
 Policy should evaluate the manpower restrictions according to different sectors, nature of
business and companies’ manpower needs and structure the policies accordingly
 Hollowing effect has been occurring in several industries and this effect is worsening as
companies made up of a single or majority nationality continue to hire foreign workers
from their (native country). Such employment practices may deter Singaporeans (or
other nationalities) from applying for jobs in that particular organisation or industry.
 Manpower is difficult to attract and/or retain as very few locals are interested in joining
SMEs, this despite SMEs’ efforts in welcoming locals to apply to their companies

Reasons being

- Lack appropriate branding and the resources to do so, unlike MNCs

o ASME has embarked on discussions with SIT and various SMEs to conduct in-
depth study of how framework of rewarding staff with certificates issued by
educational institutes of higher learning can attract more locals to join SMEs
o Several SMEs at the discussion support this collaboration with schools as the
certification students receive can serve as both education accreditation and
bring about improved employability
o ASME mentioned the SkillsFuture scheme and ASPIRE programme, two
government initiatives that promote constant upgrade of skills and lifelong
 learning, developing a more dynamic and competent workforce, which
complements the SMEs’ expectations of changes for the education structure
- Preference for bigger companies due to better pay, benefits and career progression
prospects – this despite more SMEs presenting better offers to potential workers
- Little employee appreciation, with greater (or sole) emphasis on business owners, due
to media and general public focusing on promoting entrepreneurs’ successes
o Consider angling communications and working environment to also celebrate
staff (their progress alongside the company and their contributions)
- Education system rooted several mindsets
o Further education necessary, especially for polytechnic and ITE students, to
survive in the competitive workforce
o Students groomed to interview and enter MNCs; little or lacking
acknowledgement from local institutions

For the F&B industry, REITs has mandated that companies need to open for twelve hours so as
to secure their business space. In order to maintain or cut manpower costs, many business
owners try to hire workers to cover the twelve-hour duration, but few are willing to work such
long hours. Coupled with MOM manpower regulations, SMEs have little choice but to open
up two shifts this despite the shortage of manpower.

SMEs have also stated that they find difficulty in improving productivity for their businesses
when they lack the necessary manpower and are bogged down by manpower cost issues.

Build national job index of favourability to Singaporean workers, the index reflecting higher
scores for the jobs locals are interested in, of which the government can utilise this index to
formulate quotas and levies accordingly.

RENTAL

On this issue of onerous clauses in tenancy agreements, there was discussion of provision in
framework to give SMEs greater transparency to make informed decisions about rental.

ASME has always been pushing for more initiatives against rising rental costs, with the upward
trend closely related to the institutionalized ownership of commercial and industrial real
estate. Many SMEs have voiced their helplessness when negotiating rental agreements with
such large organisations and have suggested that the enterprises band together so as to
engage in collective bargaining, a sign of persuasive strength in numbers.

A new phenomenon has also been uncovered – businesses are maximizing their rental space
and reducing warehousing spaces, demanding suppliers to make frequent deliveries of
smaller sizes. This has resulted in an increase in delivery costs that affects both transportation
and manpower.

SMEs have also mentioned that landlords have used the existing tenancy agreements and
contracts to bind them to their rental spaces, increasing the expenses close to 20%, a move
that results in many businesses packing their bags and moving elsewhere. Some SMEs have
indicated that their only viable solution was to purchase the rental space for their business.

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As such, the enterprises have requested for more office spaces in non-CBD areas with
cheaper rentals as an alternative solution to buying office space, an extremely costly move
that most SMEs are financially incapable of doing.

TRANSPORTATION

Another cost issue gaining traction is transportation, nearing the top three main reasons for
the increased costs of managing business operations. Companies that own their own
vehicles are concerned about the COE prices and how it would affect their overall business
(if they are able to maintain status quo or reduce their current fleet.

Currently COE is tagged to commercial vehicles, resulting in rising business costs that is
thereafter passed onto consumers – SMEs have suggested that COE be tagged to non-
commercial vehicles instead.

There were also talks about how URA (in charge of making the land-space planning
decisions) have altered certain aspects of the existing guidelines, resulting in a shortage of
parking space for larger vehicles that are more often than not modes of delivery (cargo)
transportation.

REGULATIONS

Healthcare

All medicinal products imported or sold in Singapore require the Health Science Authority’s
Product License – it indicates that a locally registered company is responsible for the safety,
quality and efficacy of any product sold. Companies need to identify their product
classification, observe Good Distribution Practice standards set by the agency and provide
the necessary documents for license application. Applications are valid for one year and
have to be renewed two months before expiry of the current license – the many stages to
clear in the approval process have driven up costs for SMEs, who also added that the
procedure is both complex and time-consuming.

GRANTS

Several SMEs pointed out that a prevailing issue concerning grant is the duration taken for the
claims to be processed and how the time taken to receive the claims affects their businesses.
Smaller companies are also finding it difficult to apply for grants due to the lack of resources
required and are seeking for assistance in this aspect. This is sometimes due to the condition
that upfront payment for the grants and schemes are required, which in turn affects the cash
flow of SMEs. In addition, the application procedures are complicated and therefore time-
consuming; hence SMEs are looking for options that can ease the current application
process.

One such grant that has proven difficult to apply for is WorkPro, the joint scheme initiated by
the Ministry of Manpower (MOM) and the Singapore Workforce Development Agency
(WDA).

- Disqualifying applications from the start due to organizational size

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 - Complex application procedures
- Constant change in regulations
- To convince government agencies are required to provide quantitative data

The majority present at the discussions stated that they utilize the IRAS Productivity and
Innovation Credit (PIC) scheme for their businesses, due to the convenience, speed and ease
of attaining the funding. Most SMEs have indicated little or no issue with the application of
PIC grant for their enterprises, although few have adopted this scheme for research and
development (R&D) projects.

A negative trend that is increasingly observed is that business owners are more inclined to
reduce their costs of operations than apply for government assistance grants and schemes.

Recommendation:

- Project the realty of rising cost

- Identify if certain policies are driving up the cost

INTERNATIONALISATION

Several SME owners have expressed their interest in expanding overseas but lack the relevant
experience and knowledge. They agreed that speaking to business owners who have
ventured to regional and international markets is more beneficial than seeking advice from
consultancies as the latter group may advise based on theories and choice case studies and
not on experience, which business owners deem more practical for their expansion plans.

There is also the uncertainty that SMEs face, expanding overseas – other countries operate
differently and enterprises need to understand that institutional regulations that govern their
industries in the foreign markets differ from those in Singapore.

Most SMEs have indicated the ASEAN region and China as possible countries for expansion.

Some enterprises suggested attracting foreign companies to invest and headquarter their
Asian/Southeast Asian premises in Singapore, thereby bringing with them work and job
opportunities that can boost economic activity for local SMEs.

SMEs are constantly evolving at various stages of the economic cycle and it would be
beneficial if IE is aware and have programmes that match the stages an SME is currently at.
Presently, IE does a pre-qualifying process where a panel of analysts evaluates if companies
are ready to expand abroad. However, this assessment deters businesses in their plans of
expansion to overseas markets due to the following:

- Certain businesses may not do as well in the local market but may perform better or
attain greater success in an overseas market
- The cost of preliminary assessment by consultants are borne by business owners

- END -

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