By Non-Constituency MP, Yee Jenn Jong
[Delivered in Parliament on 4 Mar 2015]
Madam Speaker, I will cover two aspects of the Budget in my speech.
First is on developing our local companies. Next, I will touch on developing our people for this new economy. I wish to declare that I own and operate local companies classified as SME.
Developing Local Companies
I have spoken various times in this House about the importance of developing our local companies, especially our Small and Medium Enterprises (SMEs). I have been concerned about our heavy dependence on Multinational Corporations (MNCs) and on Government-Linked Companies to drive our economy. I acknowledge that we do need to be a relevant destination for MNCs as they provide a good source of employment and economic activities, as well as bring expertise into Singapore and open our access to new markets.
We need to complement the strategy of foreign investment with growing a sufficient base of strong local companies who are global leaders in their fields. The persistent lack of ground-up home-grown global leaders is rather worrying as we become a high cost base where some MNCs will shun away from.
The recent productivity data is very telling. Productivity growth has been good for export oriented companies and those in the finance sector, but it is negative for those focused on the domestic economy. Since our restructuring drive started in 2009, total cumulative labour productivity growth till today is 13%. However, the growth had come in just the two years of 2010-2011 when we were recovering from a severe downturn. In those 2 years, with good revenue growth, even those servicing the domestic economy had good productivity growth.
I believe we can conclude a few things from the data. Strong revenue growth is needed to achieve jumps in productivity. There will be limitation in increasing labour productivity through improving efficiencies if companies cannot find big new revenue sources through change in business processes or from new markets.
Hence, I am happy to see many of the measures in this Budget, some of which I had called for previously. First is on Merger and Acquisitions (M&A). The domestic economy is serviced by more than a hundred thousand companies, of which the vast majority are small and micro companies. It is challenging to make quantum leaps in productivity on small operating scales. I had called for the M&A schemes to be greatly improved so that it will incentivise companies to amalgamate. Companies can acquire to buy market share or to absorb unique expertise that may be available in smaller companies to allow the acquirers to better compete.
Also, as we strive for companies to look overseas for revenue, it is important for our companies to have the right scale and basket of expertise to compete. Good strategic acquisition can see our companies acquire the right know-hows, market access and people to help bring about more successful internationalisation.
I hope the improvements to the M&A scheme in this Budget will just be the start. It will signal to companies to seriously consider M&A as a way to stay relevant and competitive. We should monitor closely its effectiveness to drive up M&A activities, and study what positive effects can come out of these mergers.
Some future enhancements to this scheme can include expanding the definition of M&A to also cover the purchase of operations and businesses of SMEs rather than outright share sales, as some acquirers are wary of the potential liability associated with the acquired businesses.
In conjunction with M&As, we could also encourage the acquirers to invest in automation of their acquired businesses to achieve greater productivity and to change old business models. This could take the form of more generous PIC incentives valid only in the first year of acquisition or special grants for productivity improvements.
I am also happy to see a greater push to create globally competitive Singapore companies. I will speak further on this during the COS debate.
Even as we look at encouraging our local companies to venture abroad, a strong base locally is important. In this respect, I hope to see greater confidence in our public sector projects in local companies, particularly the promising and innovative smaller companies. New promising and globally competitive Singapore companies could be formed if we have confidence in our local solutions and allow such start-ups to prove themselves locally so that tried and tested solutions can be sold abroad. We can create more test-bed projects to incubate solutions from local start-ups. Smart and Sustainable Urban Solutions has been identified as one of the five growth clusters of the future. Many of these will involve public sector projects. I believe we can see more promising local companies emerge with exciting and globally competitive solutions if we look at what our small but innovative companies can offer.
The DPM spoke about deepening collaboration amongst companies in our industries, industry by industry. I too believe collaboration amongst our local companies is very important for success overseas, but such collaboration has been generally weak, not just compared to Germany and Switzerland as cited by the DPM, but also against our Asian neighbours such as Taiwan, South Korea and Japan. I believe there will be scope to look at incentives to promote economic grouping and franchising. Certain industries can also benefit from shared resources such as central kitchens for the F&B industry or prefabrication factories for those in the construction sector. Even in the service sectors such as preschools, it is possible to have shared curriculum and teaching resources, and even shared facilities.
Developing our people
Next, on developing Singaporeans for the future. I wish to declare that I own businesses that supply education programmes.
The DPM had said that we must become a meritocracy of skills, not a hierarchy of grades earned early in life. That is definitely a very worthy goal to strive for.
There will be many challenges as we work towards this goal. After decades of the having schools compete with one another in ranking, many high-stake examinations to sort students into academic streams and schools, and the increasing use of scholarships in the public sector to pick talents, it will be hard to reverse the mindset of people.
We do need some competition and pressure to motivate people. There is a place for scholarships as well. How do we achieve the right balance? How do we convince parents that there are many pathways to success when they feel convinced they should spend enormous amounts of money to tuition their children to get better grades to enter what they consider are good schools?
There are no easy solutions. We need to continue the process of critical examination of our current system to see where competition may have become too excessive and where messaging may have been going against this concept of a meritocracy of skills that we wish to strive for. We need to question if education has become just about scoring the right grades to graduate so as to get the passport to move on to the next phase in life, or if we are succeeding in imparting to our students a genuine love for lifelong learning.
One of the big words used throughout the DPM’s speech is “innovation”. Innovation is not just a process. It is also a mindset. Singaporeans cannot suddenly become innovative when they enter the workforce. It should be a mindset that we instil in our children from young, throughout the education process. It is not something we can teach in a subject called innovation and expect people to be innovative. Wanting to promote innovation in schools is not new too. We have creativity as a buzzword in education since the Thinking Schools, Learning Nation thrust from 1997. How do we push for something like creativity and innovation which are not easily measurable, in a big and sustainable way in our education system where in general, people still value good grades above all else?
Yet, innovation is so critical to Singapore’s future.
We have achieved high averages in education performance internationally, as measured through test scores. I believe we will next need to work on developing innovation as a mindset in our students. It is hard to measure how we have succeeded in this, but we will need to build this mindset nevertheless.
To have a culture of innovation, our young will need to read widely, consider different perspectives, think out of the box, and venture deep into subjects that may have no clear right and wrong answers. People will have to dare to question norms and find new solutions to old problems. They will need to dream big from young.
Madam, I am glad that this Budget has put the spotlight on developing Singaporeans through Skills Future. I am all for investing in our people. It will take some time to reap the benefits as strong skills will take time to build. It has been all too tempting in the past for companies to hire instant workers from overseas to fill gaps in skills. For Singapore to succeed in the long term, we need to look inwards and invest heavily on building our people. The journey may be long and I believe we need to preserve in the journey.
The programme is called Skills Future. For too long, we have chased knowledge and assigned too high a value to the proof of knowledge earned early in life. It is apt that we should strive to deepen skills across all segments of our population. We can and should aim to move even beyond developing skills.
Knowledge is important as it lays the foundation for what one knows. Skills are even more important as they allow one to put knowledge into practical actions. But I believe even higher in the hierarchy is having strong and positive attitudes. With a positive attitude, one will take effort to acquire knowledge where it is required. The person will find ways to learn new skills where they are needed but lacking.
So we have A for Attitude, S for Skills and K for Knowledge, or ASK for short. We can build this ASK-ing spirit in our people. We will need strong attitudes in our people to aspire to be the best, to be resilient, to be hungry for success, and to want to constantly innovate.
The lifelong learning programmes that Skills Future will create should not stop at helping people acquire more knowledge and skills. While these are important, we can also include courses that transform thinking and challenge our people to have high aspirations. Working hand in hand with developing skills across all sectors, new transformative attitudes can help transform our enterprises to achieve the breakthrough that this Budget sought to spark off.
I share in the vision of this learning journey.
Thank you.