Lawrence Leow Chin Hin
Singapore
“Sir, many of the SMEs are concerned that the industrial rental may end up like REITs' play in the retail malls where rentals only go up. So, would the Government consider getting feedback from the users of industrial space, and not rely solely on the consultant's recommendation alone?”
“The Government has also been actively encouraging companies to globalise. I would like to ask the Government to consider this scheme I have put forth which, I believe, will serve to help many more companies venture abroad and globalise successfully. Singapore Business Federation”
“Sir, I want to inform the Hon. Minister of a situation where a subsidiary of a Government agency competes with an SME and the same Government agency has to decide on the award of the project.”
“It is heartening to see that surpluses generated from the positive growth of Singapore being shared among Singaporeans and not just the lower income earners and older workers but all Singaporeans at large through the new Progress Package. With that, Sir, I support the Motion. 12.48 pm”
“After all, a frail economy would bring about many other forms of social problems. Hence, focusing on building a strong economy has always to be a priority. I am convinced that the Government would put in place appropriate measures and safeguards to minimise and contain the negative social impact of the casinos.”
“To be helpful to the SMEs, financial assistance from the Government must go beyond just working capital financing. Perhaps, the Ministry may wish to consider extending the scope of the LEF Scheme to also include overseas lending to SMEs venturing abroad. 6.15 pm Building Global Brands”
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“Sir, many of the SMEs are concerned that the industrial rental may end up like REITs' play in the retail malls where rentals only go up. So, would the Government consider getting feedback from the users of industrial space, and not rely solely on the consultant's recommendation alone?”
“Second, what are the measures the Government has in place to ensure that industrial land and space would remain competitive after the divestment and that business cost would not be driven up consequently. Town Councils”
“Mr Chairman, Sir, the Government's move to divest businesses that are non-strategic and non-core is to be lauded. On first look, the impending divestment of JTC's business to the private sector appears to be another move in this direction. However, on closer examination, it is a divestment that has raised several concerns. Sir, in my opinion, the impending divestment of JTC's business is a divestment of a strategic business. JTC was established with the objective of making available industrial land and space at competitive rates to promote our economy. I feel that such a role of JTC cannot be replaced by the private sector and the divestment of JTC's business will bring with it wide-ranging implications. First, what will happen to the price of industrial land and space after JTC diminishes its role as an agency that supplies industrialists with land and space at competitive pricing? Will it then lead to a rise in business cost? Sir, the next concern relates to control and usage of industrial land and properties. At present, JTC can take back industrial buildings and facilities that are tenanted to companies in old industrial estates and redeploy them. JTC could upgrade the old estates, redesignate or recluster them to meet the future needs of our economy. However, depending on the extent of the divestment, such control and flexibility over old industrial estates could be lost after divestment. 3.45 pm Sir, I would like to put forth the following questions: first, why did the Government decide to divest JTC business, which carries with it implications across the entire industry and which is a strategic area that the Government should retain control?”
“The Government has also been actively encouraging companies to globalise. I would like to ask the Government to consider this scheme I have put forth which, I believe, will serve to help many more companies venture abroad and globalise successfully. Singapore Business Federation”
“Sir, the whole idea is to encourage and attract but not to force or coerce, as there will always be those companies who will find these identified locations unsuitable or unattractive. This is inevitable. However, that notwithstanding, if we embark on such an initiative to identify, promote, attract and encourage companies to co-locate in these strategic locations, we will be able to realise the creation of a business cluster in these markets. The benefits of a business cluster are obvious. Apart from the synergistic links amongst the businesses located together within the cluster, by banding them together also serves to strengthen the position of each individual member within the cluster. Once I had a conversation with a Chinese official on the topic of Singapore business ventures in China. This official made a very crude remark. He said that given our small size, with a population of only four million, even if our entire population goes over to China to invest, and if we are dispersed all over, we would be very insignificant and almost negligible. The only way for us to make an impact is for our businesses venturing there to band together, co-locate and create sizeable clusters. While it may sound crude, it is indeed very true. If we can start to create business clusters in this market today, in a decade or so, they may perhaps see a Singapore Business Community being established in these countries. When this happens, we have cause to rejoice as it means that we have successfully built an external economy outside our geographical territory. 1.30 pm Sir, with the intensified competition, compounding the effects of a small domestic market, many companies have realised the importance of venturing abroad to extend their reach.”
“Sir, the Government, through IE Singapore, has made available various schemes to assist local enterprises venture abroad and many, amongst the local business community, have actually benefited from these schemes. IE Singapore should be commended for doing a good job in this respect. Be that as it may, there are still companies which are unable to access the schemes made available by IE Singapore, either due to ignorance or because they could not meet the requirements of the schemes. Sir, one other scheme to help more companies venture abroad successfully which I would like to propose is to have the relevant agencies, like IE Singapore, work on an initiative to identify and promote strategic locations to our companies. China and India are two huge markets in Asia that are ideal starting points for such an initiative. PM Lee had once mentioned that there are lots of opportunities that fall within an eight-hour flight radius from us. Within this radius, China and India stand out as two huge markets that we cannot afford to miss. The relevant agency should, first, work with their counterparts in these countries to identify suitable locations and thereafter negotiate and procure a deal that will render companies investing and locating there maximum benefits and relief. If it is politically sensitive for a Government agency to identify and promote only selectively certain locations, the relevant agency can actually rope in SBF, trade associations and business chambers to assist in this area. The key is to identify suitable locations and thereupon actively work with the foreign counterparts to sweeten the ground, so as to incentivise Singapore companies whose operations fit in with these identified locations or are location-neutral to co-locate there.”
“Sir, the Enterprise Development Centre (EDC) is a very good initiative by the Government that offers a one-stop comprehensive range of services and assistance to local enterprises. Supported by Spring, the Association of Small and Medium Enterprises opened the first EDC in Singapore last March. Since it started operation, the Centre has, to date, serviced more than 1,000 SMEs and handled in excess of 4,000 enquiries. EDC is, in essence, one of the two key channels set up by the Government under the EnterpriseOne initiative to assist our SMEs. The other channel being an online web portal that allows SMEs to identify funding options and Government assistance schemes that best suit their needs. Sir, following the promising debut of EDC on the local SME scene, I have a few concerns which I would like the Government to address. As I understand, EDC is a scheme that is co-funded by the Government on a three-year plan. Hence, I would like to ask the Minister whether EDC is here to stay and, if so, what is the long-term vision for EDC, as it is rather difficult to have an effective long-term programme for EDC without a long-term vision in place. Next, as there are already three EDCs in operation today, I would like to ask the Minister how many more EDCs will be set up. Given our small market, I am concerned with the problem of "crowding out" if there are too many EDCs in operation. A more prudent approach would be to let the EDCs that are already operating manage the requirements of the SMEs and decide from there whether there is a further need to set up more EDCs. Sir, my third and final question is whether the Government would provide sustained funding to EDC, if EDC is here to stay. Expanding Overseas”
“Sir, I want to inform the Hon. Minister of a situation where a subsidiary of a Government agency competes with an SME and the same Government agency has to decide on the award of the project. How can the Government help to ensure that there will be fairness when the award criteria are not based on price alone but based on very subjective elements like design?”
“In the case of Hong Kong, the age limit is also 18 years old. With a population of about 7 million versus 4 million in our case, Hong Kong has some 450,000 business establishments as compared to about 150,000 here. I am not certain if the proportionately higher number of business set up in Hong Kong as compared to Singapore, has anything to do with the lower age restriction on setting up businesses, but the statistics do seem to suggest that there may be some correlation. Sir, I am not suggesting to leave the age limit entirely, but I do feel very strongly for a case of lowering the age limit on setting up businesses to 18 years old. I acknowledge that people below the age of 21 years old are deemed as minors. However, we ought to give due regard to the world we are in today. Sir, as our youths today are quite discerning and better poised to assume greater responsibility, we should trust that they would be responsible businessmen. For those who may be concerned about dealing with businesses run by people for whom they deem as too young, we should let them assess their own risks and make their own judgement calls whether to deal with such businesses. After all, it is really a case of caveat emptor. Sir, if there are no big problems in those countries that operate a restriction on the age of 18 years old, I cannot foresee the problem to be of any greater if we were to implement it here in Singapore. I would therefore like to know if the Government would consider allowing people of age 18 to set up a business here. Government Procurement”
“Sir, in essence, I would like to know if the Government has in place, and if not, whether the Government would consider putting in place measures to ensure a more level playing field, that would allow SMEs an equal chance of securing public projects when they are faced with competition from the GLCs. Age Limit for Business Our youths today are no longer quite the same as those of older generation. They are knowledgeable, more IT-savvy and have better access and resources to pursue their interest. This has led to quite an encouraging number of our youths owning inventions and IP. However, by virtue of their age, they are unable to form a company to register their invention and IP. Many from this group are students from the polytechnics and other local institutions, who are eager to take the entrepreneurial route but are unable to register a company in their own names because of age restrictions. Often, they have to register their invention or business in the names of their parents or friends, to circumvent the problem. Since we are actively promoting entrepreneurship amongst our younger generation and are encouraging them to be innovative and to take risks, we could be sending a contrasting signal by forbidding them from registering their business or invention in their own capacity because of age restrictions. At present, people below the age of 21 years old are considered as minors and not allowed to register a business in their names. However, from what I have found out, many countries in the world have lower age restrictions on business registration. In countries like the United States, England and Wales, there is no specific age restriction, while in Germany, Australia and New Zealand, the age limit for setting up a business is 18 years old.”
“I would like to propose that for projects of relevance, the review and award committee that is tasked with the job of evaluating the bids and making the final decision on the award of such projects, include representatives that are neutral, such as representatives from the Pro-Enterprise Panel that could provide a more balanced approach to the evaluation process leading to the award of the projects. This would also help to eliminate any perception problem, as the saying that "justice must be seen to be done" is of great relevance in such a situation. Having a review and award committee that is seen to be neutral would go a long way to correcting any misperceptions the SMEs may hold. Sir, incidentally, I am also a member of the Pro-Enterprise Panel and I would like to clarify that my suggestion to have the representation from the Panel stems purely from the intent of injecting a greater sense of neutrality to the evaluation and award process. Besides the evaluation and award process, the size of a project, if it is too big, could well rule out SME's participation. Where feasible, a project should be broken down to smaller parts or make them "bite size" so that SMEs can have the opportunity as well as the resources to take a bite and have a share of the pie. I would also advocate for a strong message to be issued from the PM's Office, emphasising the need to grant SMEs a fair and equal chance to succeed in their bids for public projects, in the light of upholding fair competition. The above are just some suggestions and a more comprehensive set of measures has to be devised and implemented for this purpose.”
“There have been situations where GLCs, their subsidiaries or private arms compete with SMEs for public projects locally. These are inevitable situations as both GLCs and SMEs are equally entitled to bid for such projects. However, by virtue of their size and background, GLCs have a distinct advantage over their smaller counterparts, and from feedback gathered, GLCs are almost always favoured over SMEs in a head-on competition for the same projects. I would acknowledge that in certain situations, it could well be a problem of a perception rather than GLCs being granted an edge over SMEs. However, besides feedback that I receive on this matter, on a personal note, I have also similar experience, so I would say that the problem does exist. It is more a question of extent than existence. Sir, I would like to declare that I have an interest here, as I too run a SME setup and would definitely get into situations where business comes into competition with GLCs for projects. In the interest of fair competition, I have put forth this cut in the hope of having a more level playing field that SMEs can thrive on. I am fully aware that our Government operates a laissez faire environment, leaving the market to set the price and determine the outcome. Sir, I am not suggesting that we have to deviate from such a policy. Neither am I calling for SMEs to be accorded special treatment. However, to uphold fair competition, and to better align our objective of promoting the growth and development of SMEs, some measures have to be instituted to allow SMEs a fair and equal chance when they get into a competitive situation with GLCs.”
“It is heartening to see that surpluses generated from the positive growth of Singapore being shared among Singaporeans and not just the lower income earners and older workers but all Singaporeans at large through the new Progress Package. With that, Sir, I support the Motion. 12.48 pm”
“Due regard has to be given to measures implemented in preceding Budgets to better appreciate the overall plan and intent of the Budget. In this context, having focused on the immediate and shorter term measures to restore our economy in the preceding year's Budget and now with the economy generally in a good state of health, this year's Budget is focused on implementing the mid- to long-term measures, of which the benefits may not be immediately tangible but are, nevertheless, important for the long term benefit of our economy. The emphasis on training, funds committed for research and developments and plans to help local businesses globalise are important aspects of a long-term plan to strengthen, restructure and upgrade the economy. Let me refer to a term commonly used by economists to measure the long term growth prospect of an economy - Multi-Factor Productivity (MFP). MFP is influenced by the degree of innovation and learning in an economy. While there have been much contention and differences in opinion with respect to the way MFP is measured, there is little argument on the proposition that the higher the MFP, the better the long term growth prospect of an economy. So the focus on training and research and development in this year's Budget reflects the Government's commitment towards elevating the level of innovation and learning in our economy, which will in turn enhance our MFP and help to strengthen and upgrade our economy. Finally, Sir, I hail this year's Budget for its focus on helping the lower income families progress in tandem with the economy.”
“Given the importance of assisting our local SMEs venture abroad, I would suggest that a high-level committee be set up to look into designing and implementing a more comprehensive set of measures that will eliminate or at least minimise these gaps that exist in our current system so that SMEs would be able to venture overseas to explore and set up new markets. This high-level committee should send study teams to learn and understand the successful models of overseas ventures by others, be it models that advocate venturing together or co-locating in a pack. There are already great examples of such successful models in Kunshan and Donguan in China where the Taiwanese and the Hongkongers have done extremely well with their investment there. These models should be studied and, where appropriate, applied to help our local SMEs enhance their chances of success in overseas ventures. The significance and contribution of SMEs to our local economy have been reiterated many times before and I will not take further time to indulge in these areas. But suffice to say, since SMEs make up the indigenous part of our economy, they are rooted in and committed to Singapore. This, in itself, is a strong enough factor to warrant greater resources to be committed to promoting the growth and development of SMEs, an integral part of which is to help them venture overseas to set up new markets successfully. Some in the business community have expected more pro-business measures in this year's Budget which they felt are lacking. Strictly looking at this year's Budget alone, such feelings are not unfounded. However, the Budget should not be viewed in isolation or in a snapshot manner. The Budget must be looked upon as part of a total plan comprising a series of budgets.”
“Otherwise, we could have a situation where only the big boys stand to gain from such divestments which outcomes could run counter to the objective of such divestment exercise. Take the case of JTC's impending divestment. Rental could end up higher after the divestment if the divested business ends up in the hands of one or two big players for whom, unlike in the case of JTC, there is no real cost for them to keep rental down other than if imposed upon by market forces. So we need competition to keep rates down. In essence, to achieve the objective of freeing up businesses for local SMEs to participate, there must be measures that will help to facilitate SME participation in the divestment exercise. Besides measures to free up businesses in the domestic market that are incongruous with but are yet dominated by the GLCs, a more comprehensive approach towards assisting SMEs venture overseas to set up new markets has to be brought into action. I acknowledge that the Government had reckoned the importance of helping local businesses venture overseas and then taking them international. PM Lee had also touched on the Government's plan to assist our local enterprise become global players during his recent Budget speech. While the focus of IE Singapore has been aligned towards helping local companies grow and internationalise by offering a wide range of services to help local companies embark on their overseas ventures, many SMEs still face difficulties in their bid to go international. From feedback that I have gotten, one of the primary problems is that there are gaps within and between these various schemes that are available. SMEs that fall into these gaps will end up not being able to leverage on or not being able to enjoy the full benefit of these available schemes.”
“Let me briefly recap some of these. In the 2003 Budget, the Government's announcement to progressively stop providing services that the private sector could supply and the introduction of a three-yearly review on businesses conducted by all Government-related companies brought cheer to the SME sector. In last year's Budget speech, PM Lee also gave an update on what the Government had achieved through the Best Sourcing Initiative where it was announced that the Government had outsourced $57 million worth of contracts to the private sector. Indeed, this initiative by the Government to free up businesses for the SMEs is to be lauded. Today, we are seeing more of our GLCs and statutory boards moving towards divestment of some aspects of their businesses. One recent case is JTC Corporation's impending divestment of some of its business that would help to generate business opportunities for the private sector property players. However, there is a genuine concern that the divested business may actually end up in the hands of one or two big players, including foreign companies. The Government should therefore study the divestment process. Of particular concern would be the criteria set upon the bidders and the size of the divestment. If it does not hinder the overall divestment plan, the Government should consider breaking down the business for divestment into smaller chunks or units so that smaller companies can participate in and bid for it. If it is not yet in place, the Government should introduce a set of guidelines or principles, governing Government's divestment, which would include measures that would help to level the playing field so that smaller companies can get an equal chance to participate in, and hence, benefit from the Government's divestment plans.”
“The structural changes that underpin our economic development had, over the years, somewhat created a dichotomy in our economy where we have the ironic situation of an advanced and high-tech sector recording a healthy growth rate while, at the same time, the more conventional sector continues to experience difficulties. The crux of the problem for the conventional sector is typically the intense competition within a small domestic economy. This leads to downward pressure on the top-line as businesses struggle to generate enough revenue to keep them viable. In this House, I have previously spoken on the need to implement measures to address the problem of helping SMEs increase their top-line and I wish to reiterate this point given its significance. Yes, the Government had done a lot in providing local businesses with measures to lessen their burden, particularly in the previous two Budgets. While needed, these measures are generally focused on reducing business cost, the act to improve the bottom-line of a business, but are not specifically directed at addressing the primary concerns of these SMEs, which is a problem of not having enough business. The growing competition in the region, arising from the awakened giants, India and China, and our neighbouring countries in Southeast Asia, has hastened the need to help our SMEs, particularly those operating more conventional businesses, to find new markets, with the small domestic size of our economy compounding the problem. With the general feeling amongst SMEs that there is not enough business for everyone, improving the top-line for SMEs has emerged a more pressing problem. Along this line, the Government has implemented some measures to help alleviate the plight of these SMEs in the past.”
“Mr Speaker, Sir, thank you for allowing me to participate in this debate. This year's Budget has been described by many as a people-centric Budget, one that focuses on providing fiscal relief to the general population, in particular, the lower-income earners and older workers. With the measures rolled out by the Government in the last few years, having brought the economy back on track, recording a better than expected growth rate of 6.4% for 2005, the Budget's inclination towards providing for the lower-income families and older workers is just and right. This group of people, the lower-income earners and the older workers, had contributed towards restoring the economy. Wage freeze, wage and CPF cuts, job losses were some of the sacrifices that this group in our population had to put up with during the difficult times over the last few years. Now that the business environment has improved, and with the economy growing at a healthy rate, it is timely for the Government to distribute the goodies to the general workforce who had played an important part in the economy's recovery. Whilst the general population would benefit from this generous and inclusive Budget, from the business angle, there is a segment of the business community that felt that the Budget has nothing much for them. To a certain extent, this feeling is understandable as this year's Budget does not contain specific measures that have created the excitement and buzz in the business community like those in the preceding years' Budgets. We have to acknowledge that even though the economy has recorded a healthy rate of growth, the recovery is not across all sectors of the economy.”
“After all, a frail economy would bring about many other forms of social problems. Hence, focusing on building a strong economy has always to be a priority. I am convinced that the Government would put in place appropriate measures and safeguards to minimise and contain the negative social impact of the casinos. Besides, the casinos are only part of the IRs and there would be entertainment and leisure facilities in these resorts to enrich the social lives and recreational experience of Singaporeans. In this regard, the IRs would also have some positive contribution to the social lives of Singaporean families and that, to a certain extent, would help to mitigate the negative social impact of the casinos. Sir, I am, therefore, pleased that the Government is proceeding with the IRs.”
“Mr Deputy Speaker, Sir, I speak in support of the Government's decision to proceed with the two Integrated Resorts (IRs). From a business standpoint, there is no reason to object to the two IR projects as they are expected to bring in a total investment of $5 billion, create some 35,000 jobs and fuel the growth of the tourism industry with spin-offs for the other business sectors. The economic benefits are substantial. Our economy, particularly the tourism and related sectors like retail and F&B, is in need of a booster. And now, it will come in the form of the IRs. SMEs in these sectors will benefit from the impetus and new opportunities the IRs will bring. As an economy that is not well-endowed with natural resources, we have to work extra hard to stay competitive and attractive. The IR projects will certainly help to enhance our attractiveness as a business and tourist hub in this region. While there have been a lot of concerns expressed in respect of the social ills that may accompany the casinos in these IRs, which I would acknowledge are valid concerns, we must trust that the Government would put in place measures to tackle these potential problems. Apart from a proven track record of making sound decisions, our Government is also known to be prudent and conservative in its governance. If one were to consider the fact that even chewing gum has been banned here, it must really mean something for the Government to want to allow casinos in Singapore. I would say it is a decision which is easier to make against than for, and it is a decision that has been made for, and for the long-term good of Singapore. It is a decision that places greater emphasis on the long-term economic outlook over the potential social cost that may arise out of the casinos, and rightly so.”
“Since SMEs come in all shapes and sizes and have varying needs, a more flexible scheme, which provides for adjustment in the risk-sharing quantum, will serve the SME community better than the present one-size-fits-all approach that works on a fixed risk-sharing formula of 50:50 between the Government and the banks. Second, because part of the funds is provided by and disbursed to the borrowing SMEs from the participating banks in accordance with their share of the loans, the Government would have more funds available to lend to more SMEs, thereby improving access to financing under the scheme. Third, I would also propose the share of the returns from interests charged to be in the same proportion as the lender's respective share of the loan. This is a more equitable way of sharing the returns than the present arrangement where the participating banks take a fixed spread of 2.25% and also share with the Government whatever that is charged above the base interest rate. Sir, I would urge the Ministry to review this scheme. I think it would be good and helpful to the SMEs' access to financing. Entrepreneurship”
“Instead of using interest rate to measure risks, it would be more appropriate to use the quantum or, more specifically, the relative quantum of loan between the participating financial institutions and the Government as a means to gauge risk involved in the lending. This would require some changes to the present scheme. Instead of the Government providing the full sum of the loan under the present scheme, I would suggest that both the Government and the participating financial institutions provide the loan in accordance with their respective share of risks. This means, unlike the present scheme, where the participating financial institution only needs to put up its share of the loan when it turns bad, the participating financial institution would have to put forth funds for the lending in accordance with its share of the loan at the outset. I would propose that all loans by default be set at 80:20, ie, the Government provides 80% and the participating financial institutions 20% of the loan. However, if the banks are prepared to lend more for any specific cases, they should be allowed to do so and, depending on their risk appetite, it can be anything from 20% up to 50% of the loan. Sir, if we are committed to developing our SMEs and wish to encourage risk-taking among our citizenry, the Government must show the way by undertaking more risk. After all, the 80% risk quantum is not something new, as the Government had actually adopted it during the difficult times in the last few years. Sir, I would like to sum up by setting out the merits of the proposed scheme. First, it is more flexible than the present scheme and allows the participating banks to participate more if they feel comfortable and so desire.”
“Sir, the Government has lowered its risk share under the Local Enterprise Finance Scheme (LEFS) back to 50% from 80% towards the end of last year because economic conditions had improved. Sir, I feel that the LEFS should be administered independent of economic conditions and assessed primarily on the nature and risk of the project and the company applying for the loan. Further, the loan is a tenure that typically extends beyond the difficult times. Hence, a big part of the actual performance of obligations and repayment of the loan would take place during improved conditions and not during bad times. Hence, regulating the share of risk under LEFS by the Government in accordance with economic conditions may actually be superfluous. Recently, a new scheme under LEFS, called V-Loan, was introduced where interest rates may be varied from case to case by the participating financial institution processing the loan. While still working on the same risk-sharing principle of 50%, the participating financial institutions may now charge higher interest rate above the base rates. Sir, while I am not against the principle of matching risks to interest rates charged, in the case of V-Loan, it may not necessarily enhance SMEs' access to such loans. The participating financial institutions are unlikely to just approve loans that are risky for higher interest rates. What I fear about this scheme is that it could bring about a higher interest rate for SMEs without improving SMEs' access to such loans. Sir, I would like to ask the Minister to consider a variation to this existing scheme.”
“To be helpful to the SMEs, financial assistance from the Government must go beyond just working capital financing. Perhaps, the Ministry may wish to consider extending the scope of the LEF Scheme to also include overseas lending to SMEs venturing abroad. 6.15 pm Building Global Brands”
“Once, I had a fortuitous meeting with some government officials in Kunshan and they generally felt that Singapore companies were too scattered in China. Based on what I have learnt from them, to start the ball rolling on this cluster initiative, the Government may work on a government-to-government level to help identify strategic investment sites where preferential terms can be negotiated and agreed upon for Singapore-based companies investing in these sites. The Government can then promote these identified sites to local businesses and offer incentives and inducements to encourage local companies to set up operations there. Inevitably, there will be some businesses that will find these sites unsuitable or prefer, for their own reasons, to be located elsewhere. That is all right. But the majority of the local companies will be encouraged to locate in these selected sites. Through such a coordinated effort, over time, we can create clusters of Singapore companies and businesses in these strategic markets and will be in a position to reap the benefits, much like what the Taiwanese have achieved in China. Sir, my third question is somewhat related to my second question. I would like to ask the Minister whether there are any schemes initiated by the Government that provide financing to SMEs to support them in setting up new overseas operations, besides the LIS 2 loan scheme that only caters to financing working capital needs. Indeed, if we are committed to building a strong external economy, and if we wish to see our SMEs play an instrumental part in this build-up, then the Government must be prepared to offer greater financial assistance to SMEs, including offering loans to finance setting up of overseas operations and capital investment on plant and machinery.”
“However, apart from promoting Singapore companies to venture overseas in a pack, it is important to promote co-location of Singapore companies in strategic markets to create a cluster effect. The benefits of cluster in overseas ventures have been clearly demonstrated by Taiwanese businessmen in China, particularly in the cities of Kunshan and Dongguan. I have shared this in this House, in my speech on the President's Address during the opening of this Parliament, how the Taiwanese were able to swing many things in their favour in their negotiations with the local governments in these cities through leveraging on their strength of a cluster. I would not elaborate on this further, but suffice to say that a cluster can be powerful because small individual parts, when combined together, can be a force to be reckoned with. This is therefore a model that suits well the SMEs. Each SME is typically small by nature and would not have the bargaining power of an MNC, a GLC or a TLC. The best way to strengthen them is to encourage them to co-locate to form a cluster. Hence, I would like to ask the Minister whether his Ministry has looked into implementing any scheme or programme that will promote strategic sites to local businesses and encourage Singapore companies to co-locate in these sites so that, over time, we can see clusters of Singapore companies forming. The Taiwanese model has proven that the benefits of a cluster go beyond enhancing negotiation powers with the local government. It also provides greater synergy among companies operating within the cluster. I would urge the Government to set up a team to study these successful cluster models and to carve out similar schemes to help our SMEs.”
“Sir, I would therefore ask the Minister to review the functions of SPRING, expand its scope, allocate it more resources, and entrust it with more power and authority to act out its new role as the development board for SMEs. Following up on this, I would also ask the Minister to consider renaming SPRING to better reflect its role as the development board of SMEs in Singapore. Sir, my second question relates to helping SMEs venture abroad. We have enjoyed decades of strong economic growth under an export-led growth strategy, built on attracting FDIs and growing the GLCs. But with the awakening of the giant economies, like China and India, and competition from lower cost regional economies in recent years, we have to review our economic strategies in the face of these new challenges. SMEs, which form the indigenous part of our economy, would undoubtedly feature prominently in these economic strategies. Sir, the emphasis on SMEs has accentuated in recent times and, given the constraints of a small domestic economy, helping SMEs venture abroad must make up an important part of our plan formulated to help SMEs grow and develop. I am aware that the Government has promoted the concept of venturing abroad in a pack. IE Singapore has initiated an International Partners Programme (IPP) that encourages greater collaboration amongst Singapore-based companies venturing abroad. There have been some cases of success where Singapore companies from the same industries went in a pack to a particular market and successfully clinched deals and initiated projects. I think this is a good initiative, and I applaud IE for that effort.”
“Sir, under this cut, I would be raising three questions. But before that, let me first take this opportunity to put on record in this House the good job done by SPRING and ACE in helping the cause of SMEs. Despite its rather short history, ACE has done a creditable job in promoting entrepreneurship and enterprise here. In the case of SPRING, it is the de facto champion of the SMEs' cause in Singapore, and it has implemented many good programmes and initiatives that have benefited many SMEs. One such recent initiative is the Enterprise Development Centre (EDC) which serves to benefit both SMEs and new start-ups. For the benefit of Members of this House who may not be aware of this new setup, the EDC is a one-stop information and advisory centre that will serve as a facilitator and promoter for the development of local businesses. It offers a broad range of programmes and services spanning from assistance on new business start-ups to helping businesses enhance their competitiveness in the global marketplace. SPRING, Sir, has certainly played an important role in championing the cause of SMEs in Singapore. Earlier in this House, Mr Inderjit Singh had called for the setting up of a specialised board dedicated to the development of SMEs in Singapore. I support the idea. But rather than set up a separate board, I would think that we should let SPRING perform this role. At present, SPRING is already championing the cause of SMEs in Singapore, and what is needed is an expansion of its scope and a realignment of its focus, and SPRING would be on course to perform the role of a development board for SMEs, similar to what EDB does for foreign businesses and MNCs.”
“If we look at the wider implications, apart from doing itself a disservice by paying unnecessarily high rent, the new start-up had also driven out the previous tenant who was operating a thriving business but was forced to relocate because it was not prepared to match the rent paid by the new start-up. I was also told that the business for the previous tenant was also affected after it had moved to a new location. Hence, the repercussions of a simple situation of competition for space could have a damaging chain effect. The case brought up here is not a one-off situation, and it is quite common in the retail industry. In this regard, Sir, I would like to ask the Minister to look into the matter of providing information on rental and lease transactions to the public on request, particularly those relating to commercial and industrial properties, since rent is a significant component of business costs. With IRAS administering the stamping of lease agreements, it would have ready access to all rental transactions presented for stamping. Perhaps the Ministry could work with IRAS on the provision of such a service to the public. Heavy Vehicle Parking”
“Sir, at present, there are official records available to the public on sale and purchase transactions of properties. I would like to know whether official records on rental and lease transactions, similar to those on sale and purchase transactions, could be kept and made available to the public, especially rental rates for commercial and industrial properties. The availability of such information would help retailers and smaller businesses to be more discerning about the market rates for rental of properties and help them make a more informed decision in their negotiations with landlords. Some friends in the retail business have related to me their experience on taking up space at popular retail locations. I was told that, typically, for a popular retail location, competition for retail space could be quite keen. Without information on the prevailing rental rates and, in the heat of the competition, some over-zealous retailers would agree to rentals which are higher than the going rate, just to secure the space. 4.45 pm I was told that a new retail start-up operated by a group of young graduates once went all out to secure a space at a popular shopping location and ended up paying a rental rate that was almost 50% higher than the prevailing rental there. Of course, the landlord was very happy, but everyone else suffered. On the surface, this may appear as competitive forces at work. However, if we examine the issue a little closer, we have to be really concerned with such a situation. I was told that, with such a high rent, this new start-up fizzled out after operating for a while and eventually folded up.”
“Mr Chairman, Sir, the early scrapping of vehicles, primarily passenger cars, is quite prevailing in recent years. It reached its peak in 2001 as prices of new models plunged when the ARF was cut from 140% to 130%. The ARF is now 110%. Excise duty was also cut from 31% to 20% in 2002 and has since remained at that rate. Since 2000, an average of 95,000 vehicles have been taken off the road each year, many of them before five years. With these cars intended to be on the road for 10 years, this rather premature scrapping of cars is quite alarming. While car buyers are quite happy with the lower prices of new cars, and many have taken the opportunity to switch to newer and bigger models, I am not sure if this early scrapping of cars could lead to an economic loss for us as a whole. The benefits, as I see it, ultimately flow to the car manufacturers, all of whom are offshore operations that do not offer any direct contribution to our economic activities, despite a rise in car sales. Putting an asset, in this case, a car to rest, when it is still in good working condition and with more than half its useful life to run, does seem rather wasteful. Sir, I am just concerned about this trend and implication. Hence, I would like to know if LTA has looked into this matter and whether there are any adverse implication arising from such early scrapping of cars. And, if there are adverse implications, is LTA taking steps to fine-tune the current system? Pedestrian Overhead Bridges”
“Nevertheless, to those who have complained that the Budget has not adequately addressed their concerns, I would like to urge them to look at the Budget not in isolation or in a snapshot manner, but rather to look at it as part of a total plan comprising a series of budgets. Viewed in this light, one would be able to better appreciate the intents and objectives of the measures meted out. Further, the tangible aspects aside, the intangible aspects of the Budget should not be ignored. In this year's Budget, we can find one such aspect, among others, in PM Lee's message, calling for the civil service to adopt a risk management approach in place of a risk- elimination one, so as to encourage and promote enterprise and entrepreneurship. This can only bode well for local businesses and help to foster a conducive business environment. With that, Sir, I support the motion.”
“We have the opportunity to change rules and make what was previously illegal, legal, and that is what keeps us awake at night and that is what wakes us up in the morning." These messages invariably represent an emphasis on mindset shifts in the civil service towards more risk taking in order to promote enterprise. It is indeed reassuring to learn of the emphasis placed by our leaders and top officials on a mindset shift in the civil service, but the old and familiar concern of whether the same emphasis has trickled down to those down the line remains. Such emphasis and initiative on mindset shifts for the civil service would come to nothing unless those down the line for whom businesses deal with, are similarly aligned in their thoughts. Sadly, if the feedback I gathered from my dealings with SMEsis anything to go by, I am afraid that this trickling down has not quite yet achieved its desired effect. Be that as it may, there is no clearer message than the one from the Prime Minister for civil servants to adopt a risk management approach rather than to fear taking risk and, with that, I trust that many more civil servants would follow suit in adopting an approach that is more pro-business and less risk-avoidance in their dealings with businesses. Finally, Sir, I would like to say that this year's Budget is wide ranging, inclusive and pro-enterprise. Perhaps the one contention I have is that on the hike in foreign workers' levy which may have come a little too soon, since many in the conventional business sector that are relatively dependent on foreign workers in their operations are still not clearly out of the woods yet.”
“With these as its main functions, SPRING should be the champion for the cause of SMEs in Singapore and it must emulate what the EDB does for foreign companies investing in Singapore in its dealings with SMEs. Sir, EDB has earned a very good reputation in the way it manages and assists foreign companies investing here and I am confident that SPRING would likewise emerge and act out as the "the EDB for SMEs." To facilitate the role and functions of SPRING, I would like to urge the Government to allocate it with more resources so that it can be in a position to render more support and assistance to local businesses. And for that matter, I would also urge the Government to allocate more resources to IE Singapore who has an instrumental role to play in helping SMEs venture overseas. PM Lee, in this year's Budget speech, had underlined the Government's commitment towards creating a more resilient and dynamic economy and helping private enterprise flourish. PM Lee also advocated the adoption of a risk management approach to regulation to promote enterprise, by takingthe perspective of managing risk instead of eliminating risk. Previously, when Acting Second Minister for Finance and Senior Minister of State for Foreign Affairs, Mr Raymond Lim was the Minister for Entrepreneurship, he mentioned that the Government should, when dealing with businesses, set its default key at "yes" rather than "no". And to quote Acting Minister for Community Development, Youth and Sports and Senior Minister of State for Trade and Industry and also the current Minister for Entrepreneurship, Dr Vivian Balakrishnan, atan ACE forum last December, he said, "We are in politics ...”
“The relevant Ministry can perhaps provide an update on the success of this "piggy-back" arrangement. The relevant agency should also study successful models of overseas ventures by others and initiate schemes that emulate these successful models to help our local businesses go abroad. Due to our historical links as an entrepot and the reliance on export-oriented growth strategies, SMEs had in the past not played a predominant role in the economic growth of Singapore. But with the emergence of huge and regional economies like China, India and Vietnam and faced with a less certain environment, search for new economic strategies that can achieve resilient growth has brought about a fresh focus on the role of SMEs. With SMEs accounting for almost half of total employment and contributing about 30% of our total value add, the significance and contributions of SMEs to our economy should not be undermined, particularly since these enterprises make up the indigenous part of our economy. They are rooted in and committed to Singapore and are here to stay. Contrary to their once relatively anonymous presence and role, growing SMEs and promoting entrepreneurship have now emerged as an integral part of future growth strategies. The main functions of SPRING Singapore as listed in the Annex to the expenditure estimate for the financial year 2005/2006 include nurturing a pro-business environment that encourages enterprise formation and growth, facilitating the growth of industries, enhancing productivity, innovation and capabilities of enterprises, and increasing access to markets and business opportunities.”
“Venturing into overseas market thus elevates from being a part of a good business plan to an essential part of a business strategy for these local businesses aspiring to achieve their growth ambition. For these businesses, the only way out is to look for new opportunities in overseas markets. Unfortunately, albeit their willingness to venture abroad, many local businesses are not adequately equipped with the competencies to venture abroad successfully on their own. Many would need help in this area. I acknowledge that the Government has reckoned the importance of helping local businesses venture overseas and taking them international. The focus of IE Singapore had been aligned towards helping local companies grow and internationalise. IE Singapore offers a wide range of services to help local companies embark on their overseas ventures and it includes providing market intelligence, advice and ground facilitation services. However, despite the services rendered, many SMEs still face difficulties in their bid to go international. Once again, the ERC had previously made certain recommendations to help SMEs venture overseas, one of which was a proposed "piggy-back" arrangement to allow SMEs to ride on GLCs in penetrating overseas markets. This proposal was premised on the fact that owing to their small size, SMEs have lesser resources and offer less perceived credibility as compared to GLCs, and these factors make it more difficult for them to succeed in their ventures abroad. If GLCs could lend SMEs a helping hand by making them part of the package in their venture, it would help open the doors to these overseas markets for SMEs. I think it was a good proposal, but I am not sure how much success has been achieved in this regard.”
“The situation has not been helped by the fact that some Government-linked Corporations (GLCs) continue to be involved in certain aspects of businesses that appear rather incongruous to the SMEs. Previously, the Economic Review Committee (ERC) had made recommendations for GLCs to exit from non-core businesses so that they can focus on building up their core competencies and external wings while allowing SMEs more room to manoeuvre in these business segments. This would help to correct the rather contentious matter on the crowding out effects exerted by state enterprises on SMEs. In a move that aligned with the ERC's recommendations, it was announced in Budget 2003 that the Government would progressively stop providing services that the private sector could supply and that a review would be conducted on all Government-related companies every three years. The Government's move in this regard is to be lauded. PM Lee in his Budget speech this year had given an update on what the Government had achieved through the Best Sourcing initiative. We learned that under this initiative, the Government had outsourced S$57 million worth of contracts to the private sector and in turn benefited with S$9 million worth of annual savings. A win-win situation indeed! Notwithstanding the Government's efforts in outsourcing its non-core functions through the various initiatives, there would always be a segment of local businesses that would continue to find it increasingly difficult to rely on the domestic market alone. For these businesses, it gets increasingly more difficult to meet their growth objectives by just focusing their business on the domestic market.”
“The irony is that while the Government made announcements on the healthy economic growth that has been registered in the last four quarters, businesses in these conventional industries were unable to feel or sense the improvements in business conditions. There is no doubt that the Government had done a lot in providing these businesses with measures to lessen their burden, but these measures, though helpful and welcomed, are generally focused on reducing business costs and are not meant to directly address the root cause of their problem, which lies with the level of business available to them. Indeed, the smallness of our domestic market had exacerbated the effects of the structural changes in our economy and together, they have placed greater pressure on local businesses in the more conventional industries. These businesses are finding it hard to survive because too many players are fighting over the same piece of cake and to make matters worse, it is not a very big piece of cake, to begin with. The Budget had acknowledged the importance of small businesses as being the backbone of many economies and there are measures in the Budget to help our SMEs. Amongst others, the loss carry-back feature and the waiver of fee for subscription to the Government e-procurement portable GeBiz for one account are helpful to small businesses. But reflecting on the sentiments of many SMEs, these measures do not adequately address the more fundamental problem faced by them - the lack of business. The general feeling amongst SMEs is that there is not enough business for everyone. Hence, improving the top line for SMEs has emerged as a more pressing problem.”
“Mr Speaker, Sir, thank you for allowing me to participate in this debate. Sir, since the announcement of the Budget, there are mixed reactions from the Small and Medium Enterprises (SME) community. As is always the case, there are some who are pleased with the measures announced in the Budget and some who are not particularly impressed. So, the saying that "You cannot please everyone" is proven right once again. Nevertheless, the general feeling is that this year's Budget, though comprehensive and covered a wide range of issues from babies to the aged, is more of a refinement budget. Some SMEs felt that the measures for businesses, which apart from the loss carry-back measure, were rather focused with certain segments of the economy, such as the logistics industry and the real estate investment trust market. Local businesses that hailed from the more conventional industries were hoping for more aggressive measures in the Budget that could help generate more business to them. The sentiments of these local businesses are understandable, given their business condition in recent years. Through the maturing of our economy, the structural changes that underpinned our economic advancement over the years have somewhat dichotomised our economy to the extent that growth has primarily been generated by the advanced and high-tech sector of the economy, such as the biomedical, pharmaceutical and petrochemical industries whilst the more conventional sector of the economy, such as the property, construction, retail and electronics industries, continue to experience difficulties.”
“As President Nathan mentioned in his Address, Singapore has enjoyed four decades of stability and progress and I am confident that while there are stiff challenges ahead, under this new leadership, we will continue to prosper and progress. Mr Speaker, Sir, on this note, I support the motion.”
“After having contemplated the matter for a while, the Government has recently implemented the five-day work week for civil service as part of its overall goal of promoting a pro-family work environment. With the move towards a five-day work week for the civil service, private organisations that are not yet on a five-day week have also been encouraged to do so. In line with the Government's pro-family measures, I would like to ask the Government to consider allowing free parking on Saturdays in HDB estates to facilitate families making visits and getting together. Free parking on Sundays that was implemented several years back has been a very successful scheme in facilitating and promoting family-togetherness. So on Sundays, when we visit our parents or siblings, there is no need to worry about how many coupons to tear and when to leave to avoid a fine due to expired coupons. If the same scheme can be extended to Saturdays, it would allow greater flexibility for families to get together on Saturdays as well, without having to worry too much about parking charges or summons due to expired coupons. Sir, I believe that allowing for free parking on Saturdays over and above the existing free parking on Sundays would be a move that serves to further augment the package of pro-family measures already implemented by the Government. In conclusion, under the new leadership of Prime Minister Lee Hsien Loong, we have witnessed some unprecedented changes in policies and directions that have undoubtedly made our island nation a more exciting and vibrant place to live, work and play.”
“I would like to propose that we attach an appropriate mix of civil servants in decision-making positions from the various Government departments such as the URA, LTA, NEA to ACE or the PEP so that these civil servants can be involved first-hand with helping the private sector resolve problems encountered in their dealings with the various Government agencies or departments. This idea is to allow the civil servants attached to ACE or the PEP the opportunity to "feel" the pride of the private organisations that they are assisting and through their own experience in dealing with the various agencies, they would, hopefully, be better equipped to understand the needs of the private sector. Through such attachment and working in ACE and PEP, these civil servants would be in a position to really feel for themselves the "treatments" that are sometimes dished out by their counterparts to the private sector. Quite often, the basis of rejection of private sector initiatives is premised upon the need to uphold certain policies without due regard to the actual circumstances and merits of the case on hand. By getting civil servants involved in the process that the private sector undergoes, we can better tackle the problem where it lies. The actual details of how we should go about administering this scheme on attachment of civil servants can be separately sorted out, but the key is to address the cause of the problem, which is the point I am trying to make here. I would now move on to another part of the President's Address where President Nathan emphasised the need to balance economic pursuits with fulfilment of personal goals and family life as a key priority in the area of augmenting our population and talent.”
“I am also not here to debate on the merits of this case. Instead, I hope to illustrate the point that there could be many cases that have gone unnoticed because the aggrieved party may have decided to just let the matter rest and not pursue further. While we have Action for Community Entrepreneurship (ACE) and Pro-Enterprise Panel (PEP), which I would be the first to acknowledge had done a great deal of good in rendering assistance to the private sector, they can only play a part when problems are highlighted and escalated for attention. I believe that, for every case that was brought up for assistance, many more have gone unnoticed because some people just decide to let the matter rest and accept the outcome as final. I agree with Mr Inderjit Singh's view that, whilst the top level of the Government is driving pro-business initiatives, many in the levels below are still not in sync with such initiatives. This often results in frustration and confusion for the private sector, as businessmen are faced with unnecessary road blocks that run counter to the direction our leaders have set. Though there is a marked improvement in the civil service, where a general shift of policy from control to facilitate has taken place, more can and has to be done to align civil servants to the direction set by our leaders. At present, the main channels for the private sector seeking assistance are either through ACE or the PEP. I have a suggestion to make.”
“She told me that in the case of Hong Kah Town Council, her staff can only slot into anti-junk mailboxes that are not locked by the owners. But for those that are locked by the owners, the undelivered mails will have to be sent to the post office for delivery. Obviously, the manager concerned is helping her, but it also benefits the Town Council as her rates are more competitive than SingPost's. I will not dwell on the rates, but it suffices to say that, if the parties concerned are willing to help, help can be rendered. In this case, the manager of Hong Kah Town Council has helped her and given her the opportunity to do her business there. In the case of Bukit Panjang CC, she related to me that she was asked by the manager in charge to coordinate with cleaners who are foreign workers and who are holding the keys to the mailboxes so that her staff can carry out their work. She felt disappointed as it seems to her that more trust has been placed upon foreign workers who have access to the keys to the mailboxes than a Singaporean like her. She told me that she was disillusioned and decided not to pursue further, though she was very thankful, I must add, to Bukit Panjang CC and the Hong Kah Town Council for giving her the opportunity to continue to operate her business. Nevertheless, she revealed that the scale of business made available to her now is too little to sustain a meaningful operation and she is on the verge of closing down her business. Quite a sad story indeed, but this case was brought up not for the purpose of illustrating the problems still existing in the civil service, but rather to highlight an important point, ie, some people would give up and suffer in silence when faced with a situation like the one I just mentioned.”
“Unfortunately, like what Mr Inderjit Singh, Member for Ang Mo Kio GRC, had expressed in his earlier speech, things may not have trickled down to all levels of the Government, such that some levels of the civil service are still reluctant to change. Mayor Amy Khor had also raised similar concerns about the civil service in this House earlier. As the President of the Association of Small and Medium Enterprises, I have personally received feedback from my members that invariably suggests that there is indeed still such a problem in the civil service. Recently, the boss of a very small local set-up shared with me the problems that she encountered in her business, which is in the mass distribution of mailers and flyers. She told me that she employed mainly senior citizens, about 50 of them, and was able to offer a very competitive rate for the service. However, when mailboxes in HDB estates underwent a nation-wide exercise to convert to the anti-junk design some years ago, her business was quite badly affected as, over time, more and more mailboxes got converted. I understand that it was for proper control and security reasons that SingPost was given exclusive access to the master door of mailboxes by the Town Councils across the island. As such, she was unable to access the mailboxes to make deliveries. She related to me that she had attempted to speak to the relevant agencies in her bid to turn the tide, but eventually gave up because things were not heading anywhere. Today, while she is still providing mass distribution services, her business has dwindled from an island-wide market to just serving Bukit Panjang CC on a very ad-hoc basis, and Hong Kah Town Council on the delivery of monthly GIRO statements.”
“Whether it is in good or bad times, keeping costs down must remain a top priority, given the rise of the huge economies like China and India, and the competition from lower cost countries in the region. The Government has to continue to provide assistance to businesses to maintain a low cost environment, even when the economy has picked up, and not to be too quick in revising upwards fees and charges. The Government should also not be too concerned with the private sector gaining extra leverage or greater benefit from the measures it metes out. The recent initiative by JTC to carry out a one-off nation-wide downward revision of its posted rents to what it perceived as the market rates is a positive move that shows commitment in keeping costs down on a long-term basis. This is a welcome deviation from the past where rental rebates were instead handed out during bad times, and removed when the economy started to pick up. With the JTC initiative, which has received a lot of positive response from the local business community, there will hopefully be more such similar initiatives from the other agencies. Besides lowering costs that are tangible, it is also important to look at intangible costs that may come in the form of lost time and opportunities. The civil service has gone through quite a fair bit of change over the years, and it is today more willing to engage the private sector for feedback in policy formulation. There is no doubt that the top leadership in Government sees the need for change and has initiated change to meet the needs of the new economy.”
“It is a good scheme but, with the over-riding concern of keeping operating costs low to enhance the competitiveness of our local industries, I have a concern to share. As JTC is currently the only active provider of industrial land on a rental basis, the other being HDB, which is relatively passive, it has always struck me as to how JTC can ensure that the land rents that it charges its lessees are competitive. As it now stands, there is strictly no basis of comparison available with regard to the rates charged by JTC. I am concerned that if JTC land rents are indeed not competitive - and I reiterate the word "if", as I am not aware of any definitive way to ascertain this - then it would translate to higher costs for the lessees. In the current economic climate, where the neighbouring and competing economies offer relatively cheaper land, the need to keep this aspect of business cost in check is important. Sir, I would like to suggest that the Government review the existing rules on Government Land Sales (GLS) for industrial land, including the applicable tax laws, with a view towards liberalisation that would allow industrial landowners to rent out land in its undeveloped state on a land rental basis similar to JTC's. At the moment, private landowners are prohibited from leasing out industrial land in its undeveloped state. I envisage that this would be a good way to open up the industrial land rental market, which makes up a substantial portion of all industrial properties in Singapore. Land cost is a significant component, and I have used the JTC land rental scheme to illustrate the need for the Government to continue to review areas where improvements can be made to help local businesses enhance their competitiveness through lowering operating costs.”
“In essence, through the lead taken by the relevant agencies, such as IE Singapore, we can help our local businesses create a "cluster effect" in the foreign market, perhaps similar to those so successfully created in Kunshan and Dongguan by the Taiwanese businesses. Nurturing our local businesses into global players will be a process that involves time and resources, but the effort will be worth the while, as a stronger indigenous business sector will augur well for our economy in the long run. Domestically, efforts at maintaining a pro-enterprise environment is important, and we have to continue to review areas where costs can be lowered to help businesses remain competitive. JTC comes across to me as a very good example in this respect. JTC has played a key role as the main industrial landlord in Singapore. It has impressed me with its forward-looking approach in meeting the industrial space needs of the new economy. Over the years, it has also adopted a very innovative approach towards self-renewal, and has reviewed and expunged rules and policies that it deemed to be inhibiting businesses or that were unnecessary. Recently, JTC also initiated the Private Sector First scheme that encourages private sector participation in projects that were once only the exclusive purview of the public sector. The Private Sector First initiative that gives priority to the private sector to undertake projects administered by JTC is indeed one to be lauded. Besides the provision of industrial space, JTC also operates a land rental scheme that leases out land to companies to erect factories and buildings. The land rental scheme has served well the needs of industrialists by offering them the option of not having to commit to a substantial upfront capital investment on land.”
“The relevant agency may seek the assistance of their foreign counterparts in these markets to allocate suitable sites that can come with attractive investment incentives, such as low capital commitment and tax advantages. For example, in many parts of China, the local authority is very keen to draw in Singaporean firms and see the setting up of a Singaporean business village, and they are prepared to offer, as carrots, attractive incentives, such as concessionary arrangements on land use and tax relief packages. The tax savings in China can be substantial when one compares the special tax incentive schemes in selected areas and the Special Economic Zones, such as Zhuhai and Shenzhen, where the tax rate is actually 15% at the moment, with the tax rate of 33% for locations outside these selected areas and zones. So, it will be advantageous to negotiate on a cluster arrangement, where greater leverage can be gained through a larger scale of firms, to achieve the desired outcome, notwithstanding the fact that the cluster may take time to build up before it is able to achieve the full effects. The benefits of co-locating in clusters are obvious. An individual business may be small when alone, but big when aggregated with other businesses in a cluster, and it will stand to benefit from the more favourable package that the cluster can command. Co-locating in clusters also provides synergies amongst local businesses and, when the need arises, it will be easier to seek assistance from fellow Singaporean counterparts within the same cluster.”