28 Oct 2015 12 Jan 2016

Knowledge Partner

Singapore Business Federation (SBF)

Position Paper for a Vibrant Singapore

Conference on the “SBF Position Paper for a Vibrant

Singapore”

Outline of Presentation

2

About the SBF Position Paper 1.

Overall Environment & Backdrop 2.

Recommendations 3.

Conclusion & Next Steps 4.

Outline of Presentation

3

About the SBF Position Paper 1.

Overall Environment & Backdrop 2.

Recommendations 3.

Conclusion & Next Steps 4.

About the SBF Position Paper [1/4]

• Work on the paper started in June & concluded in

December last year

• Intent of the Paper

– To present & reinforce issues that are essential to support

business & economic growth for the immediate to long-term to

the newly formed Govt

– Business community to work with the Govt to enable a more

prosperous & inclusive S’pore

• Paper focusses on high level recommendations due

to short project timeframe

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About the SBF Position Paper [2/4]

• Paper involved more than 70 business leaders

contributing enthusiastically to the effort

– 23 members in the Steering Committee

– 47 more members in the 3 Focus Groups

• Involving

– A wide range of industries

– Small & large companies

– Major Trade Associations & Chambers (TACs) & business

groups

– Academics & Economists to add rigour

– SPH for media advice

– PwC as Knowledge Partner

– And more …

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About the SBF Position Paper [3/4]

• This is the 1st time SBF is presenting such a paper to

Government

• Effort was prompted by

– Difficult situation on cost, manpower, labour productivity &

other issues

– More challenging internal & external environment

• Paper addresses

– Immediate-term issues: Urgency to look into cost & manpower

issues

– Medium to long-term issues: Deep review of our economic

strategies to formulate new responses to overcome our

constraints as a small country with limited resources

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About the SBF Position Paper [4/4]

• Paper endorsed & supported by 29 major TACs:

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– AmCham

– ABS

– ASME

– AustCham

– EuroCham (includes

14 European National

Chambers based here)

– JCCI

– RAS

– SAAA

– SCCCI

– SHA

– SICCI

– SICC

– SMCCI

– SMF

– SNEF

Outline of Presentation

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About the SBF Position Paper 1.

Overall Environment & Backdrop 2.

Recommendations 3.

Conclusion & Next Steps 4.

Overall Business & Economic Outlook [1/2]

• Singapore has achieved economic miracle over last 50

years

• However, future will be more challenging

– External challenges

• Fragile & uneven economic growth

• Weak global demand

• Rapid changes in technology that will disrupt many businesses

• A world that will be increasingly volatile, uncertain, complex &

ambiguous

– Internal challenges

• Rapidly aging & shrinking local workforce

• More inward looking citizenry

• Close to zero labour productivity growth

• Rising business cost compared to many OECD & regional countries

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Overall Business & Economic Outlook [2/2]

• S’pore’s social spending is set to increase

• Business & economic growth required to fund this

increase to enable more inclusive S’pore

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Megatrends that will shape S’pore’s economic

strategies & businesses’ strategies going forward

• Demographic & social change

• Shifts in global economic power

• Rapid urbanisation

• Climate change & resource scarcity

• Technological breakthroughs

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Outline of Presentation

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About the SBF Position Paper 1.

Overall Environment & Backdrop 2.

Recommendations 3.

Next Steps 4.

Broadly structured as

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18 Detailed Recommendations

3 Strategies

3 Strategies

For the Immediate Term

Strategy 1: Assist businesses to transit through this difficult

period into the new restructured economy for sustainable

growth

For the Medium to Long-term

Strategy 2: Create an economy that is not constrained by

our geographical boundaries

Strategy 3: Develop Singapore as a strong home base for

nerve centre, thought leadership, innovation & growth

activities

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I. For the Immediate-term

Strategy 1 – Assist businesses to transit through this

difficult period into the new restructured economy [1/4]

I1. Identify key reasons for cost increase & study how to

manage them

– Important to ensure that S’pore do not price itself out of the market

– Cost drivers need to be studied

– Compliance cost needs to be reduced

– SBF & TACs open to work with Govt on necessary cost studies

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I. For the Immediate-term

Strategy 1 – Assist businesses to transit through this

difficult period into the new restructured economy [2/4]

I2. Review manpower-lean policy & refine the foreign

manpower policies

– S’pore cannot profess to be global city if access to talent is limited

– Businesses also need time to adjust

– Refine our foreign manpower policies

• Sectoral flexibility

o Consider larger FW quotas as a transitional arrangement for sectors

− Jobs that S’poreans do not have the skills yet

− Industries that S’poreans do not wish to work

o While our locals skill up & industries work to make the jobs more

attractive (e.g. through re-looking value chain & jobs redesign)

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I. For the Immediate-term

Strategy 1 – Assist businesses to transit through this

difficult period into the new restructured economy [3/4]

• Enterprise flexibility

o Expand Lean Enterprise Devt Scheme (LEDS) to provide

differentiated treatment

− Allow more FWs to companies prepared to train local workers, undertake

job re-design, or unable to find local workers with necessary skills

− Provide FW levy rebates to reward companies that reduce FW

dependency

− Expand LEDS beyond SMEs

– Transitional flexibility should not negate future productivity gains

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I. For the Immediate-term

Strategy 1 – Assist businesses to transit through this

difficult period into the new restructured economy [4/4]

I3. Review the FW Levy System

– Govt to recalibrate levy quantum taking into consideration the latest net

inflow of FW

o Levy for S Passes can be removed

o Levies for higher skilled workers can be reduced

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II. For the Medium to Long-term

Strategy 2 – Create an economy that is not constrained

by our geographical boundaries

• Current dominant FDI attraction strategy has resulted in land &

labour constraints becoming more acute

– Operating cost & cost of living have increased

– Playing field tilted against domestic entrepreneurship & SMEs

• Proposal is not different from “2nd Wing Strategy” introduced by then

SM Lee Kuan Yew 25 years ago

– But needs to be elevated as a dominant strategy

• Under this strategy

– Companies to expand overseas with home bases anchored here

– Companies leverage digital economy to expand markets & opportunities

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II. For the Medium to Long-term

Strategy 3 – Develop S’pore as a strong home base for nerve

centre, thought leadership, innovation & growth activities

• Important to

– Anchor businesses here as they expand overseas

– Provide good jobs for S’poreans

• Scope to take reference from megatrends & our strengths to develop

new & valuable activities & growth clusters

– Trusted Payment Hub

– Know Your Customer Hub

– Food Quality Certification Hub

– Good Rule of Law & Integrity

– High level of Service & Quality

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [1/7]

R1.1 Create the economic infrastructure to upscale local

enterprises & encourage them to expand overseas

– Will involve new mind sets, skill sets, institutions (new, adapted or merged),

programmes & more extensive on-the-ground interactions with foreign

govts & their agencies

– Govt to provide more opportunities for local enterprises in major

procurement projects

– Appoint champion public agencies to lead devt of key industry sectors

• Build depth of industry knowledge

• Mandate to grow enterprises beyond our geographical boundaries

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [2/7]

R1.2 Appoint a Minister to provide political leadership for a

whole-of-govt (WOG) approach to develop local enterprises

– Currently overseen by multiple agencies under different Ministries with

different approaches

– Despite the attention, we are not producing more Globally Competitive

Companies (GCCs)

– Minister should be supported with an institutional structure of public

officers

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [3/7]

R1.3 Invest a larger part of our reserves in more direct ways, &

on a more active & wider scale, in our local enterprises

– May involve setting up a new devt institution

• With domain knowledge in the key strategic industries that S’pore can excel in

• With long-term financing capabilities not available in market

• Investment & corporate advisory services

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [4/7]

R1.4 Promote platforms that allow companies to collaborate

with each other

– Current situation where local enterprises are mainly sub-contractors &

suppliers of MNCs & Temasek Portfolio Companies (TPCs) does not build

depth & breadth of industries

– Govt to promote more platforms to encourage companies to collaborate to

develop proprietary solutions & technology in mutually beneficial

arrangements

• Enable local enterprises to move to stronger positions from which they can

grow

– Large established S’pore companies to act as flag bearers & consider local

enterprises as partners when they venture overseas

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [5/7]

R1.5 Facilitate the creation, acquisition & use of intellectual

property (IP) as a competitive edge

– Asian enterprises significantly lag their developed countries counterparts

in terms of % contribution of IP to total enterprise value

– Scope to explore

• Creation of an outfit similar to the Korea Technology Finance Corporation

(KIBO) for valuation of technology

• S’pore International Commercial Court (SICC) as body to adjudicate

recognition of cross-border IP in the region

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [6/7]

R1.6 Look into how our securities market can be made more

vibrant & liquid

– Important for a business capital to provide enterprises good access to

capital

o However, our securities market has not kept up with our growth

– There is a need for the Govt to look at obstacles, for e.g. by

o Removing the restrictions that prevent our pension funds from investing in our

local stock market (without a change in the system’s risk profile)

o Exploring a further market platform in between Catalist & SGX Mainboard that

would appeal to “middle class” companies

o Exploring private securities exchanges as supplements to our public securities

exchanges

o Developing a vibrant & liquid bond market

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II. For the Medium to Long-term

R1 – Govt to review approach to developing & upscaling

local enterprises [7/7]

R1.7 Develop differentiated policy options based on new

archetypes of local enterprises in place of “SMEs”

– Govt to consider classification proposed by IPS which captures the roles

local enterprises play in society & the economy, with varying dynamics,

needs, challenges & growth potential

– Govt schemes & assistance can be rationalised & made more targeted

• Greater social dimension for micro & single outlet enterprises

• More economically-driven & deliberate exposure to the market for growth &

medium-sized enterprises

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II. For the Medium to Long-term

R2 – Govt to adopt a more pro-active approach to

promoting entrepreneurship [1/2]

R2.1 Continue to foster a more entrepreneurial mindset &

culture

– Encourage entrepreneurial thinking early in schools by

• Introducing programming, engineering & robotics much earlier in primary &

secondary schools

• Introducing activities or programmes that ask students to identify opportunities

&/or understand consumers

• Continuing to expand placements, internships, industry attachments &

overseas experiences to open minds

– Showcase success stories of businesses (including family businesses) &

start-ups & continuously update the repository

– Inculcate a mind set change for S’poreans to be more tolerant of business

failures, & learning from such failures

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II. For the Medium to Long-term

R2 – Govt to adopt a more pro-active approach to

promoting entrepreneurship [2/2]

R2.2 Help local start-ups go global so that they can be

sharpened by competition & thrive in global markets

– Existing initiatives largely directed at launching & growing start-ups here

– Make the money given to them smarter, to expose them to global

competition & scale up

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II. For the Medium to Long-term

R3 – Govt to promote flow of talent to identified sectors

& inculcate the right attitude in our workforce [1/4]

R3.1 Offer more public scholarships that deploy talent & rotate

public officers to local enterprises

– Scholarships to channel talent to enterprises that have less share of good

talent today

– Rotation will enable more talent to be shared with private sector

• Also enable officers to understand the private sector better

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II. For the Medium to Long-term

R3 – Govt to promote flow of talent to identified sectors

& inculcate the right attitude in our workforce [2/4]

R3.2 Inculcate the right attitude & values to our workforce

through our education system

– Economic reality needs to be taught in our schools

• No one owes anyone a living

• There must be greater appreciation of the working world

• There must be more realistic expectations & wider definition of what

constitutes a good job

– Parents’ mind sets also need to be changed

– Business & Govt should celebrate & recognise skilled workers (e.g.

electricians, caregivers & nurses) & demonstrate that these jobs can be

amongst the good paying jobs in future

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II. For the Medium to Long-term

R3 – Govt to promote flow of talent to identified sectors

& inculcate the right attitude in our workforce [3/4]

R3.3 Focus on inculcating values & fostering right attitude in

SkillsFuture, rather than technicalities of schemes

– We recognise the overarching benefits of SkillsFuture

• But these are long-term solutions that cannot meet short term needs

– Focus should be on instilling the necessary values & promoting skills

mastery

• Not be dominated by the monetary value, qualifying criteria & details of the

schemes

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II. For the Medium to Long-term

R3 – Govt to promote flow of talent to identified sectors

& inculcate the right attitude in our workforce [4/4]

R3.4 Educate & groom more international managers who are

capable of operating across different cultures & geographies

– Address current lack of such talent needed to

• Run the nerve centre operations in S’pore

• Help our local enterprises expand overseas

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II. For the Medium to Long-term

R4 – Govt to adopt a more pro-business approach in

policy formulation & the devt of enterprises [1/2]

R4.1 Review the organisation of Government & its approaches

– Simplify Government to enable better co-ordination & efficiency

• Reduce the number of agencies

• Be manpower-lean

– Review Government rules & regulations to

• Avoid over-burdening businesses & diverting their attention away from their

main focus of value-creation

• Lower costs & protect consumers rather than specific segments of the

community

• Look into segregating revenue generation from regulatory & promotional roles

to enable simplification of regulatory regime

– Over prescriptive rules & risk aversion not suitable in an increasingly

volatile, uncertain, complex & ambiguous world

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II. For the Medium to Long-term

R4 – Govt to adopt a more pro-business approach in

policy formulation & the devt of enterprises [2/2]

R4.2 Collaborate with businesses more

– To address increasingly complex operating environment

– Examples where there can be more collaborations

• Growth clusters of the future

o Identifying the sectors, how existing businesses can play a role & provide

platforms to grow

• Trade Pacts

o Greater need for business inputs & collaborations on review, outreach &

utilisation. New generation Trade Agreements impact more businesses.

Compete with many countries using FTAs for market access.

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Outline of Presentation

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About the SBF Position Paper 1.

Overall Environment & Backdrop 2.

Recommendations 3.

Conclusion & Next Steps 4.

Conclusion

• Paper makes several recommendations to Govt

− Does not elaborate on what businesses can do to complement &

augment effort as Paper is addressed to Govt

• Paper does not argue for more Govt involvement in future

– But makes the case for Govt & businesses to work more

collaboratively

• Businesses must quickly grasp that they are responsible

to themselves, their employees, customers, owners & the

wider community

– No one owes us a living

– We must compete & collaborate to make things happen

• Paper argues for bold leadership again

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Next Steps

• SBF will also be planning a series of activities this year in

collaboration with Govt & other partners to gather further

inputs for the Committee on the Future Economy.

Possible topics of focus include

– Overcoming immediate-term challenges

– How can family businesses be successful?

– How can we encourage businesses to expand overseas more?

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For more information on the paper & to give

your views, visit

sbfpositionpaper2016.org.sg

If you would like to volunteer to help our

companies, email

positionpaper2016@sbf.org.sg

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Thank You

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THANK YOU