Debate for Ministerial Statement for Support Measures for Phase Two (Heightened Alert) and Phase Three (Heightened Alert) – Speech by Leon Perera

Delivered in Parliament on 27 July 2021

1. Introduction

Madam Deputy Speaker, we entered a new phase of fairly severe restrictions about a week ago. These and earlier events have taken their toll financially as well as mentally on our communities. At this point, I would like to express my deepest sympathies for the family and all those affected by the tragic incident last week at River Valley High School. I cannot imagine the grief they are facing and I’d like for us to keep them in our thoughts. We need to take care of one other in this challenging time.

Madam, for the rest of my speech, I would like to address the Supplementary Budget and the current phase of this Covid pandemic mainly in the context of SMEs. By SMEs here, I mean micro-businesses and small and medium-sized enterprises. Many who run or work in SMEs have been severely hurt economically after the last few rounds of restrictions, especially after coming out of a very challenging 2020.

Madam, our SMEs employ roughly two thirds of our workforce. Many of those who run micro-businesses in particular work extremely hard. Running a company or business can be very challenging, especially in the initial stages when most start-ups fail, but also when world-shaking events like Covid-19 happen. Even in the best of times, entrepreneurs have to deal with curve balls on a regular, sometimes daily basis, as they grapple with issues related to winning and keeping difficult customers, retaining employees and ensuring cashflow. As the founder of a company, I know this first hand. The dot com bubble burst around the time my company was founded, affecting many of our clients. And about a year later, 9-11 happened, again dealing a big blow to the economy.

It is often noted that this long Covid-19 pandemic has had a very uneven impact on individuals and countries. Individuals who are better able to work from home have fared better, for example; as have countries with better access to vaccines.

What is less often noted is that Covid-19 has also worsened the inequality among companies. Those who are better able to adapt to the digital economy and to e-commerce have fared better. Those in certain industries like biomedical, ICT, food production and fast-moving consumer goods have fared, on the whole, very well during the pandemic, some seeing record profits. Others, in sectors dependent on tourism and travel as well as retail and food-service, have struggled, with whole swathes of these industries being set back or wiped out.

Yet interestingly, the Covid pandemic has also seen a burst of new start-up formation in many countries around the world, including Singapore. 63,480 new enterprises were set up in 2020 amidst the worst recession in our country’s history – versus 61,573 in 2019 and the highest such figure since 2016.

We should ensure that we create the right eco-system to enable these new start-ups, and SMEs in general, to flourish and both safeguard jobs in a competitive environment as well as contribute to job and GDP growth, alongside MNCs and state-linked companies.

In the rest of my speech, I shall outline some suggestions for nurturing our SMEs. And as I do so, I would also like to make a general observation first. It is crucial for our government agencies to take the realities of running a business, especially an SME business, into account when formulating policies. Most SMEs do not have the manpower and capacity to digest and enforce complicated regulations. Many SMEs operate on thin margins and a cash loss can have an outsized effect on their sustainability. There have clearly been gaps here. For example, when the Jurong fishery port cluster erupted, many fishmongers were tested and not told that they had to cease operations, so they went ahead and bought their seafood at the wholesale market. A few hours later they were told to stop selling, meaning that the seafood they had bought could not be sold. Another example is from the initially complex rules issued for dining-in earlier in July. How eateries were going to enforce these rules was something they grappled with. Some food-service chains simply said that they would limit dining-in to two persons to avoid the risks and costs of enforcement. Let’s strive towards fewer of such examples going forward.

Before I begin, I declare my interest as the CEO of a company, a research consultancy.

2. Keeping SMEs afloat

Firstly, a few narrowly scoped points on the Covid support packages. 


Madam, one group of businesses that seem left out are wholesalers, distributors and importers who support restaurants and F&B outlets. It does not appear that such distributors qualify for the JSS and I hope we can support them in some way. Some such firms I am aware of have already dutifully paid their suppliers for goods they have ordered in the expectation that dining-in would be allowed and are now paying an even higher cost to keep kegs and food produce in cold storage.

Next, one of my constituents also shared that his business did not qualify for JSS. The line of business listed as his secondary business activity would, by right, entitle him to JSS support. However, he was told that because it was not his primary business activity, no JSS would be paid. I would argue that some degree of JSS support should be paid, pro-rated perhaps, in cases where the company has a line of business that warrants JSS but it is not the primary line of business, provided the company can prove that they are still doing some amount of that secondary business. We should also bear in mind that the revenue split between primary and secondary business can be fairly dynamic. Madam, I hope we can take a balanced approach in administering schemes.

Rental support 

Next, we should also review the rental support given to SME tenants who rent a mixed-use property (ie. a shophouse for both retail and residential use). Due to Covid-19, there are SME tenants who have to resort to renting a mixed-use property to keep their businesses afloat. However, doing so would prevent them from obtaining the cash disbursements automatically.

Some SME owners who are renting mixed-use properties find the process complicated to manage, sometimes due to language differences or unfamiliarity with government applications. They have also raised their concerns about how costly it would be for them to get hired-help just to assist them to submit their claim with supporting documents. I hope we could look into providing an automatic service for the SME tenants renting mixed-use properties, especially during this Covid-19 crisis, to reduce their financial burden as well.

3. Are SME schemes working? 

Track record of schemes

Next, I would like to speak on the need to keep track of SME schemes. A significant amount of public money goes into SME schemes. Workers’ Party MPs have filed many Parliamentary questions over the years keeping track of the outcomes of these schemes.

Madam, when our economic agencies disclose data on schemes, these are usually effort indicators – such as how many companies were helped, the median quantum of support and so on. But what would be more meaningful is to analyse the outcomes of these schemes – what marginal impact the schemes made to business success.

I know this is not easy to measure – there is the problem of differentiating between correlation and causation, for example – but solutions to measurement problems can be found. Publishing such outcome measures should be done from time to time.  A case in point is the Productivity and Innovation Credit (or PIC) scheme, which was discontinued in 2018. Did it really help increase productivity?

One-stop portal

Next, we should improve the user experience for our grant applications for SMEs. In a previous speech in this House, I called for a one-stop portal for all citizens and companies to transact with the government on assistance schemes. One such portal now exists –

However, it appears that not all the SME schemes across the whole of government can be accessed on this portal. I recall a number of letters to the Straits Times Forum explaining issues which users faced on this portal. One such letter, dated 30 June this year, referred to an endless cycle of questions and answers because replies by email or phone call were not entertained.

Before leaving this subject, I should note that many SMEs still feel that the process for applying for grants and support is too administratively time-consuming and difficult. According to the UOB SME Outlook 2021 survey, small SMEs wanted more assistance to apply for existing grants and schemes and placed this wish as one of their top three for Budget 2021.

4. Nurturing entrepreneurship beyond Covid-19

SME Scholarships

Next, I would like to speak on the need to nurture entrepreneurship and small businesses for the long run. This starts with the very lifeblood of SMEs – people. 

Partly because of stubborn mindsets and partly because of competition from MNCs and the public sector, SMEs are not sufficiently attracting, retaining, developing and investing in their talent. This is a vicious cycle that reduces their ability to offer quality goods and services, as well as survive into the future. SMEs without talent do not do well and not doing well means they are discouraged from investing in their talent.

There are government scholarships that allow scholars to take on roles in SMEs rather than in GLCs and other major companies. For example, some IMDA scholarships allow for this. Is this something the government is putting effort into developing? Co-marketing these scholarships with boutique SMEs that are leaders in their own right could be a way to push students to explore the breadth and depth of our SME ecosystem.

It could well be that SMEs scholarships are not as attractive to many young Singaporeans as other types of scholarships, such as PSC scholarships or GLC scholarships. To widen the potential talent pool for such SME scholarships, can we give the option to PSC scholars to transfer the second part of their bond to an SME? This may attract some PSC scholars who realise that they would rather develop their career in the private sector.

Also, as times have changed, more young people are realizing that SMEs and start-ups can offer exciting employment opportunities and this could be something we build on. There have been hit drama series produced in Korea, America and elsewhere about the fast-paced world of start-ups. There may be fresh opportunities these days to market SME scholarships to youth if we are bold and creative in designing such marketing.

Shared services 

Next, on the talent deficit that many SMEs face, I would like to talk about the role of shared service providers. Many SMEs struggle to hire people to fill vacancies, especially in fields like finance, HR, administration and accounting, as the pool of locals qualified for such work is limited and there is competition from MNCs, GLCs and big professional service firms. SMEs can outsource this work but outsourced service providers often charge high fees. Some SMEs form relationships with individual freelancers to do such work on a part-time or flexible basis. But not all SMEs have access to such freelance workers. 

I would like to suggest that the government look into nurturing players that provide shared services such as finance, HR, accounting and administration at low costs to SMEs. Such a shared service industry would potentially be a strategic industry for our SME development.

And having such firms providing such services at low prices on an on-going basis would be more helpful to SMEs than many of our existing schemes which prioritise the partial funding of one-off consulting work.

If we have a good pool of such players, SMEs can outsource much of this back-office work to them at reasonable costs, thus enabling entrepreneurs to focus more on their core business and core competences.

Our economic agencies should treat the development of the low-cost shared service industry as an industry development priority.  Technology can be leveraged to provide low-cost services.

Business Succession Planning

Next, I will speak on what more can be done for business succession planning, including exits via entrepreneurs selling their business. I asked a Parliamentary Question about what the government is doing on this front in 2017.

Many small and micro-business owners may toil away for years to build a business with a significant product, customer base, employee base and brand. Yet many struggle with business succession planning. Nowadays it is common to hear that the children of family business owners do not want to take over the business. And it is hard for family business owners to be able to find acquirers. Many such business owners may not have the skills to identify acquirers and pitch their business to acquirers. At the same time, many would be unable to avail themselves of the services of M&A advisory firms or investment banks, as these usually handle deals above a certain size threshold and the SME’s valuation may fall below that threshold. All of this means that many SME owners may be unable to ensure the continuity of their business nor be able to monetise the value they have created. Instead, many end up simply winding up the business – and we have seen quite a few examples of this happening during this long Covid pandemic. The other group of people who would lose out from this would be the long-time employees of such firms which close down.

Would the government look into providing low-cost services to SMEs that cannot engage M&A advisory firms, to help match them to potential acquirers? A basic form of match-making could be set up via an online portal which allows potential buyers and sellers of small firms to express their interest, for example.

I would also note in passing that in some countries with a vibrant SME landscape, other institutions than the state play the role of providing general strategic advice to SME owners on matters that include business succession planning. Such institutions include regional banks in Germany, Switzerland and Japan and the giant chaebol in Korea, some of whom who take an interest in the SME suppliers in their eco-system. In Singapore, such traditions are by and large absent which is the context for why I am making these suggestions.

Business Centres overseas

Another point I would like to make relates to SMEs starting up overseas. Can Enterprise SG provide small hotdesking facilities and business centres in its key overseas centres to support SMEs going abroad for the first time? Some foreign countries’ embassies and High Commissions provide such facilities for SMEs from their home countries in key global cities.

Such facilities would enable SMEs to rent a desk or a small office for a limited time, as they explore an overseas market or start their presence. While such facilities are available commercially in most global cities, having Singapore SMEs use the same facility and having that co-located with the office of Enterprise Singapore and other Singapore government agencies in-country would facilitate networking with government and collaborations among Singapore firms in that overseas market. Subsidised rental rates could also be provided to ease market entry. Access to such facilities should, of course, be limited to SMEs and not extended to large firms.

EXIM Bank for SMEs

Next, I would like to talk about financing the growth of SMEs.

Back in 2010, the Economic Strategies Committee (ESC) mooted the option of establishing an EXIM bank but the government concluded that gaps in trade financing could be addressed by expanding the suite of trade and internationalisation finance schemes under what was then International Enterprise (IE) Singapore, without the setting up of an EXIM bank.  Since then, Enterprise Singapore has launched various internationalisation finance schemes where the Government co-shares risks with participating financial institutions to support our SMEs. 

However, I am not sure if all our SMEs feel that it is easy to secure financing, especially for overseas expansion. It should be noted that even with the government sharing a high proportion of the risk, banks may prefer other options to deploy their capital then lending to SMEs, as they still bear some risk.

Surveys still show that many SMEs believe that there are gaps in our financing eco-system. For example, according to the UOB SME Outlook 2021 survey, smaller SMEs with turnover of less than S$10 million stressed a greater need for financial support to ease short-term cash flow issues and desired easier access to funding and grants. Larger SMEs with turnover of between S$10 million and S$100 million wanted easier access to funding and grants; and collateral-free loans for business transformation.

While existing financing schemes have certainly helped some of our SMEs, it would be worth considering if the creation of an EXIM bank for SMEs could help us to reach greater outcomes in SME growth.

Having an institution that has the sole mandate to lend to and boost our SMEs, rather than relying on schemes driven by commercial banks who will, understandably, pursue primarily commercial priorities, can help us better address SME’s financing needs. Hence, I believe the establishment of an EXIM bank for SMEs is an idea worth revisiting.

Intellectual Property

Next protecting the intellectual property of SMEs is critical to fostering innovation in the SME sector. However, anecdotally, there is still a perception in some quarters of the business community that for very IP-dependent kinds of work, such as creative or consulting work for example, large government agencies may take ideas contained in the proposals submitted to them by companies and either adopt those ideas internally or pass those ideas onto cheaper vendors to execute, without the permission or knowledge of the company submitting the proposal that contained those ideas.

It is sad to think that some companies have this perception of their own government agencies but I have come across this perception in conversations with SME owners. SMEs who feel that this may have been done to them would mostly not be inclined to complain or take legal action, due to the costs involved as well as their fear of antagonizing the government.

I would like to ask if all government agencies are given strict guidelines to not treat ideas contained in proposals in this manner? 


In conclusion, madam, the Covid pandemic provides an opportunity for us to leverage the burst of start-up formation by creating an eco-system that enables these start-ups to thrive and scale-up as far as their ambitions can take them, driving job creation and creating a 3rd engine of value creation that may be more rooted in Singapore than MNCs are. Other successful economies around the world have thriving SME sectors, showing that these can co-exist with open economies and large global MNC sectors. Our very own equivalent of the German “Mittelstand” (or mid-sized companies sector) can form one of our pathways to the post-Covid future.