Mr Speaker, I second the motion in the name of my honorable friend, Kenneth Tiong. I cannot agree more that we need both dynamic local companies and opportunities for businesses to succeed, which is why my contribution to this debate will focus on how we should wean ourselves away from the top-down, foreign investment-reliant, multinational corporation (MNC)-centric economic model, and instead build a bottom-up, domestic capital-led, small and medium enterprise (SME)-focused one. I will also weave in constructive critique on the recently-released Economic Strategy Review (ESR).[1]
Singapore’s traditional (and successful) growth model
To start, it is useful to sketch out what our traditional growth model has been. Essentially, the strategy was to accumulate of what economists call “factors of production”: to ride on increases in the labor force due to demographic change, while simultaneously building up complementary capital, both manufactured—in the form of machines, equipment, and factories—as well as human, through education.
For the former, we marshalled foreign savings: with heavy foreign direct investment from MNCs in the early years, and, since the turn of the century, inward portfolio investment from global funds and family offices. We supplemented this with domestic forced saving, from households in the form of CPF,[2] and from the state, by maintaining large fiscal surpluses.[3]
For the latter, we cranked up educational attainment: first, by rapidly educating our school-aged children, then, starting in the 1990s, by increasingly absorbing skilled workers from abroad.
We coupled this buildup of factors with fundamentals: exploiting our geographical location, we fostered an economy open to trade in goods, services, and finance. We also placed emphasis on quality institutions: an attractive, low-tax business climate, respect for property rights and rule of law, and a high-functioning civil service.
We fired on all these cylinders, which brought us, famously, from a per-capita income of around $1,600 at independence,[4] to more than $121,000 today, a massive increase. Notwithstanding how we were already ahead in the 1960s—at least relative to the rest of the developing world[5]—our growth story is undeniably impressive.
This model is not unique to us. It was successfully deployed by Japan during its early industrialization. The approach, with some idiosyncratic variations, was how the other East Asian “Dragon” economies of Hong Kong, South Korea, and Taiwan became wealthy. And starting in the 1980s, China successfully adapted the selfsame model.
Drawbacks of the original model
As successful as this traditional model was, it had, embedded within it, several pathologies. It made us obsessed with courting foreign capital, and fearful of right-minded, pro-worker policies that could reduce our attractiveness as regional headquarters. Our educational system has churned out a formidable number of excellent operators, but far fewer risk-taking entrepreneurs. And in a drive to economize on scarce land, the government’s leasehold model has fostered a rentseeking mindset in real estate, rather than treating land as a normal input to production.
But perhaps the most damning drawback is a known design flaw: in the relentless pursuit of accumulating inputs to production, we have lagged in productivity growth. To be fair, this was also the case for many of the other Dragon economies. Yet even among them, Singapore has fared the worst.[6] Just as important, these other economies—once they entrenched their high-income status—began to evolve their model toward a more internally-driven, self-sustaining, productivity-led one. We have yet to do so decisively.
Some may argue that we should make no excuses for growth. I believe that this is incomplete at best, and misguided at worst. After all, we already know how to drive rude growth: crank up capital expenditure, to the detriment of labor income and productivity. Indeed, this has been a consistent criticism of Singapore’s growth model during its rapid-growth phase from the 1960s through 1990s, and was arguably the impetus for the menagerie of productivity campaigns[7] and bodies[8] that, alas, has not overturned our nation’s productivity woes.[9]
While it is tempting for us to look to bolstering growth from tried-and-tested tools—such as building up yet more of our already-intensive capital stock—we must resist, because it is clear that disproportionately prioritizing resource allocation into hard infrastructure investment—especially in real estate—is running up against diminishing returns.[10]
A new model, built from the bottom up
What would a new model look like? For starters, we must evolve away from our traditional reliance on foreign MNCs as a driver of growth, and pivot toward SMEs as our economic engine. While the ESR speaks about both, it betrays an implicit bias toward the former. We need a conscious shift away from too much fixation with tax competition, an undervalued exchange rate, and the wooing of footloose multinationals. We must instead promote bottom-up formation and growth of our indigenous companies, and unleash the innovative and entrepreneurial spirit of our local workforce.
This means weaning our companies off a race-to-the-bottom focus on cost cutting as the only means to be competitive. Revenue and wages should instead hinge on productivity gains, not a relentless search for cheaper inputs. Margins can, and should, be driven by elevating value-add and quality. What we want is for “Made in Singapore” to be synonymous with better, not just faster or cheaper, which is best left to economies lower down the income ladder.
This is an appeal to foster growth not just for growth’s sake. It is of existential importance, especially in an age of artificial intelligence (AI). Research shows that, worldwide, small firms drive disruptive innovation,[11] and startups are the bulwark of sustainable growth, through this process of creative destruction.[12]
Yet while SMEs account for 99 out of every 100 registered enterprises here, and provide jobs for 7 in 10 Singaporean workers, they currently only contribute to half of the economy’s value-added.[13] If our SMEs are stifled because business or funding opportunities are crowded out by the big players, we will never discover our own homegrown, globally-competitive unicorn. Or if they choose to simply coast along without feeling empowered to challenge large, incumbent firms, we will never build a vibrant body of SMEs that form the backbone of the economy, like Germany’s Mittelstand, or Japan’s Taiheiyō Industrial Belt.
To enable this transformation, we need a domestic body of medium-sized enterprises, capable of growing to become the next wave of corporate champions,[14] and driving a 21st century innovation-led economy. We need Singaporeans to start companies, and for these companies to grow, and succeed.
Impediments to our SMEs
Singapore is no stranger to support for SMEs. The government will undoubtedly point to the veritable grab bag of schemes, such as the Productivity Solutions Grant, SkillsFuture Enterprise Credit, Enterprise Development Grant, Market Readiness Assistance, Enterprise Workforce Transformation Package, and more.
The question isn’t whether these are useful; they are. The issue is whether these catalytic grants spur SME activity sufficiently to allow them to systematically advance to the next stage of their growth, or whether there are other structural impediments that inhibit them from transforming themselves from small local firms to medium sized, international ones.
Businesses themselves report several key constraints to growth. Most notably, SMEs struggle with low levels of productivity, something that the government has itself explicitly acknowledged.[15] This is, perhaps, unsurprising, because many report an inability to attract and retain the sort of talent that would allow them to elevate their efficiency and output.[16] To be fair, our SMEs have to confront business costs among the highest in the world. And to compound the challenge, SMEs must secure financing for investment, which is especially scarce once they exit the startup stage.
Elevating productivity in small firms (and some large ones)
Our SMEs must stand ready to be the source of development innovation: the “D” in R&D. I have shared with this House previously about how—at less than 2 percent of GDP[17]—our nation’s R&D remains squarely below the global average,[18] and significantly behind that of leading innovation nations.[19] But I also explained that this was because of anemic R&D spending by the private sector, not the government.[20] Alas, among SMEs, this is even worse; the overwhelming majority of business R&D expenditure (BERD) is likely to be from large enterprises.[21] The ESR talks about R&D, but does not underscore the importance of this pivot.
I note that the Prime Minister’s Office announced, last year, a $37 billion commitment to Research, Innovation, and Enterprise (RIE) funding over the next five years. [22] This will bring our public expenditure to around 1 percent, which will indeed be among the global leaders. But we need to accelerate private R&D, not just with more public funding, but with complementary funding from private capital markets as well.
This should not, however, occur at the expense of the emphasis on basic research, which was a commitment made since RIE2015. If anything, the case remains just as strong then, as now, to direct public R&D funding toward research of a more fundamental nature, which is often undersupplied by the free market (and here I declare that a major part of my job involves basic research, although as a foreign university, we do not receive direct financial support from the government). But since the goal is to raise the total share of R&D in the economy, we should not be cannibalizing from this source, but rather provide stronger impetus for firms to ramp up their expenditures.
To be fair, tax incentives for corporations to undertake R&D are already very generous, with up to 400 percent deduction on the first $400,000 of qualifying expenditures every assessment year, supplemented more recently by up to 100 percent in refundable investment credits.[23] SMEs have also been a major beneficiaries, making up 85 percent of R&D claims.[24]
But improving productivity is not just about innovation alone. Research has shown that one important impediment to improving the efficiency of firms, especially smaller ones, is the quality of management.[25] There may be a case to expand the scope of qualifying R&D activities, for the purposes of tax deductions.[26] This is especially for activities aimed at product commercialization, enhanced internal business operations, or overseas expansion.
What is also missing is a coherent innovation pathway for all SMEs, not just those oriented toward sexy, cutting-edge fields. Founders of “old economy’ startups may not necessarily possess the technical sophistication to navigate the GoBusiness directory, or the awareness to seek out business advisers in EnterpriseSG. They may not be able to string together the myriad packages available,[27] or to even put together credible applications.
What is needed is a push rather than pull strategy, where new business registrants are automatically and routinely offered information on how they can access support from the government to roll out business development innovations, over the course of their initial years. Even better, startups can be matched with seconded experts that grow their R&D capabilities in-house, akin to A*Star’s T-Up Program.[28]
This need to ramp up applied development has become even more critical in an age of AI, since the general purpose technology offers the possibility of automating many operations and processes that business owners had previously only thought was possible with costly expert help.
There remains additional room for the state to act as well, through its indirect influence on GLCs. Despite being half of our economy’s value-added, R&D spending by domestic enterprises accounts for only $1 out of every $5 dollars.[29] Our GLCs can lead the way by dedicating more of their retained earnings toward expenditures in applied research and development, subject to a reasonable return-on-investment period. Over the medium run, they can look toward elevating their spending to more closely match that of MNCs.
Attracting jobseekers to SMEs
At the heart of the challenge of raising up our local SMEs is the difficulty of attracting (and retaining) talented workers. Singaporeans often view small-firm jobs as small-time, second-tier options, compared to a more lucrative, prestigious MNC career. The ESR report, while rightly emphasizing the importance of good jobs, remains largely silent on how the gap between SME and MNC positions may be bridged.
Bridging this gap must, first and foremost, recognize that smaller firms often struggle to round up sufficient financing for investment, compared to larger ones.[30] Relieving internal and external access to finance—for the purposes of easing cashflow that would unlock hiring—is first-order, if we wish to improve the viability of young, dynamic companies.
There are already schemes that support small business investment. For example, the Enterprise Development Grant (EDG)—aimed at projects—and Productivity Solutions Grant (PSG)—targeted at IT equipment—ostensibly relieve financial constraints. The EDG even recognizes human capital development projects as a core capability. Our PSG should do the same, since productivity is boosted as much by human capital as it is by IT equipment. While one may argue that Workforce Development Grants (WDGs) do much the same thing,[31] the WDG appears overly restrictive, reliant on a pre-approved consultant panel, and isn’t available on an ongoing basis.[32] I believe the scope should be more flexible, and allow SMEs to bolster compensation and benefits to better match starting salaries offered by MNCs.
Beyond salaries, jobseekers may be attracted to SMEs because of the promise of greater work variety and flexibility, and greater exposure to business roles and functions. Internship and apprenticeship programs, including those from polytechnics, universities, and the Graduate Industry Traineeship (GRIT),[33] should actively look to enfold SMEs into the slate of potential employers. The Career Conversion Programme should not be limited to the wholesale trade, but be expanded to encompass a wider range of SME sectors.
That said, application and reporting requirements for these programs are often onerous, stretching the already-thin resources of small businesses. While I accept the need for prudence in managing public funds, we should not turn SMEs into another government bureaucracy. There should be a simplified application process for grants, and reporting requirements should focus on fraud audit, rather than extensive documentation for compliance.[34]
Moreover, funds are provided on a reimbursement basis. But any small business owner—especially one that is just starting up—knows that one of the principal challenges they face is sustaining cashflow. We should also disburse support up front, and trust SME owners to deploy these grants wisely.
Of course, supporting SMEs with young talent can occur ever earlier upstream. SMEs in search of skilled workers often seek out interns. Unfortunately, many young would-be graduates remain unmatched to potential SME employers.
This is not for lack of trying. Most tertiary institutions already include a job exposure stint. Most polytechnic diplomas include a compulsory internship in their final year, as do ITEs, where they are known as industrial attachments. Many institutions also offer work-study programs.
But takeup, while increasing over time, remains very low. In 2024, ITEs supplied about 1,300 students, while AUs sent around 800.[35] Despite the success in translating attachments into actual jobs—placement rates are around 70 percent for polytechnic graduates—participation by SMEs remains low; around 3,000 firms have joined such programs,[36] less than 1 percent of the around 370,000 registered SMEs here.
One factor behind the low take-up rates could be the requirement that companies that hope to partner with tertiary institutions codesign and codeliver bespoke curricula.[37] This can be an insurmountable hurdle for smaller companies with limited resources and understanding of how to go about doing so. It may be better to take the cue from the German approach—where more than 1 in 10 companies participate in their equivalent program[38]—and expand the scope of potential applicants, by allowing interns to also be hired using employer SkillsFuture funds, and accepting simpler application criteria from SME employers.[39]
Yet even when directed toward hiring talent, there is little structure to ensure the systematic transfer of skills, such that the benefits of human capital are spread across the firm. This is especially the case for foreign talent. There is room to place greater emphasis on local capability development, built into schemes such as the Pioneer Certificate Incentive or Development and Expansion Initiative,[40] to embed skills transfer to Singaporean employees. Larger grants,[41] in particular, should be paired with a clear proposal and timetable for ensuring skills transfer, including the possibility of a sunset of foreign employment passes after a designated duration, if no additional transfer is taking place.[42] And when local employees are sent for skills upgrading, employers of micro and small enterprises[43] can be partially reimbursed with makeup pay to cover costs of temporary hiring or overtime, similar to makeup pay when NSmen fulfill their reservist commitments.
Relieving business costs
If one speaks to SMEs, the subject of crushing manpower and rent inevitably emerges. This is especially the case in traditional services, like retail and F&B. Unlike tech, pharma, or finance—where marginal costs are typically much lower—they cannot easily scale up their operations as a means of defraying costs. Unlike manufacturing or wholesale—which can relocate to cheaper locales—firms in these sectors are often forced to absorb the large fixed costs of commercial rent, which rank among the highest in Asia.[44] And unlike accommodation or professional services, these sectors also struggle to pass on their sky-high manpower costs.[45]
There is no easy answer to this, not least because such sectors do not lend themselves easily to productivity improvements, which is the standard mechanism for offsetting high costs. But if we wish to have a diversified and interesting commercial landscape—not just one where malls are filled with just tuition centers and big box stores, and restaurants are dominated by fast food chains, rather than local delights—then we must take seriously the need to grant some relief to independent operators.
One simple strategy is to cap the maximum quantum that rents may increase every year, perhaps to the historical increase of around 3 percent per annum. This is a limit on the rate of increase, not the level; market rents will still prevail in the long run.[46] Such restrictions on accelerating rate increases is standard fare in locations as diverse as Canada, China, France, Germany, and many states in the U.S..[47] Even limiting this practice to government or agency landlords—such as HDB or JTC—would be a major step forward.
To protect against abuse—where recalcitrant landlords may simply terminate the lease and secure new tenants at a much higher rate—this policy should be accompanied by corresponding legislation that offers statutory renewal rights for leases held by small commercial tenants, similar to Australia, Japan, South Korea, and the UK.
Of course, these strategies are but temporary band-aids for the longer-term, structural solution we require, which is to rationalize our land pricing policy, by discounting land set aside for public housing. I had explained in this House, back in 2023, why our self-referential land valuation model may embed bubble expectations, leading to overvaluation of the cost of land and, by extension, rental and house prices.[48] I reiterate my call to reconsider how we value land purchased by HDB. My Sengkang colleagues, Louis Chua and Abdul Muhaimin, will elaborate how we can reform our model of residential and commercial land pricing in their respective speeches.
It may also be time to revisit the dependency ratio ceiling (DRC) for certain sectors. Let me assure this House that I understand the premise behind the DRC: to preserve jobs for Singaporeans. While I am fully on board with this premise, it has become clear that the high quotas for locals do not function well for certain sectors, especially in F&B, where Singaporeans continue to shun open positions that are advertised at attractive wages. After all, differentiated DRCs already exist between manufacturing and services, and in sectors such as construction, process, and shipyards.[49] The more calibrated approach I suggest will help relieve manpower costs in sectors where operators are tempted to game the system by registering phantom workers and family members, just to hire the requisite manpower.
Promoting investment and business formation
Entrepreneurship features prominently in the ESR report.
On its face, our entrepreneurship system appears healthy. New business density—the number of new businesses created, adjusted by the working-age population—stands at 11.6, far above the global average of 3.4, and the industrialized-economy average of 4.5.[50] More than 52,000 new companies were registered in 2024, more than those of Japan, the Netherlands, Switzerland, and Taiwan, which are all economies far larger than ours.[51]
But peer under the hood, and cracks appear. We form less than half the number of businesses compared to Chile and Hong Kong, economies that are significantly smaller than ours.[52] And we also lag in key metrics of entrepreneurial behavior and attitudes—entrepreneurial intentions, fear of failure, or perceptions of entrepreneurship as a good career choice—where we are frequently among the bottom rung of countries.[53]
The COVID-19 pandemic, for all its problems, did carry one silver lining: it prompted a surge in home-based business formation,[54] which has allowed aspiring founders to envision how they may launch a business in a modest way.
For many entrepreneurs, the jump from a home-based business to a proper commercial operation is steep. Once they move into a shop or stall, they must deal with rental deposits, renovation costs, equipment, licensing, utilities, manpower, and other fixed costs, even before they are assured that the business is viable. Tenancy terms and fit-out requirements—which are often significant in our local context—add more to such costs, even before the business has had a chance to attract customers.
This changes the nature of entrepreneurship. Instead of allowing people to start small, learn from customer feedback, make mistakes, and grow gradually, the system forces them into an early bet: either stay small and informal, or take on a full commercial commitment. That is especially difficult in sectors where margins are thin and competition is intense. So potentially good businesses may never get started, not because the founders lack ideas or effort, but because the first step into the formal market is too expensive.
HDB’s Home-Based Business Scheme[55] allows residents to carry out small-scale business activities from their homes, subject to conditions. The SFA also provides guidance for home-based food businesses, including food safety requirements.[56] These efforts are welcome, but we can go further. MND can look to make available more affordable short-term stalls and shop spaces for first-time entrepreneurs. They can also consider offering smaller modular units, with lower renovation and deposit requirements, and allow tenancy periods shorter than 3 years, or easier contractual conditions for potential exit.
Financing SME investment
SMEs need to build not just their human capital, but also their installed capital. In a joint adjournment motion delivered in February by myself and my honorable friend Louis Chua, I had spoken about how the capital raising cycle for companies here confronts a missing middle, especially in the late, pre-IPO stage.[57] This evidently applies to SMEs, and the suggestions I offered then—to deepen liquidity by redirecting Temasek’s mandate toward locally-based companies, promoting greater listing and trading activity on the secondary Catalist board, and fostering more bottom-up ownership by roping in family offices and retail investors—remain worthy of consideration.
These gaps are not unknown to this government. The ESR report acknowledges that “companies still find it difficult to secure growth-stage capital,”[58] and Temasek already participates in SME coinvestment, via Heliconia.[59] What is needed is basic, bolder, but broader-based access to financing for small firms, catalyzed by the public sector.
In my view, promoting alternative forms of private capital—such as venture debt and private credit[60]—are helpful, but ultimately secondary. Rather, our primary focus should be to ensure that the traditional channels—private and public equity—are functioning as intended.
The Startup SG Equity Scheme offers between $2 and $12 million in coinvestment, and EnterpriseSG has invested more than $560 million over the course of the past decade.[61] But the scheme is deliberately limited to technology startups, with a relatively high bar for qualification.[62] While such selectivity may be prudent, this kiasu mindset can be stifling; the scheme is only available after a qualified private investor has stepped in. The scheme is simultaneously too little, and too late.
But where the lapse truly bites is in the later stages of the capital life cycle. When it comes time to list, many simply choose elsewhere. This is in stark contrast to other jurisdictions, where SMEs often display a bias in listing at or close to home.[63]
The problem boils down to a chicken-and-egg one: firms want to list where they can secure the highest valuations, which in turn results when liquidity is abundant; yet this liquidity is missing from the SGX, which can only be resolved if more firms choose to list here. The result is a moribund secondary board.
But if listing on Catalist—or at least, colisting—is stipulated by exercising ownership rights in the firms that the government coinvests in, then this route becomes more feasible. Heliconia may even privilege an SGX IPO over other capital exit routes, such as management buyouts or secondary sales. This, together with more active trading by an anchor investor such as Temasek in our local markets, will inject the necessary liquidity that can potentially revive the market. At the same time, such investment mandates should be explicitly tracked, especially with regard to not just returns, but whether the investments directly contribute to activity and employment in the economy. This is similar in spirit to Ireland’s Strategic Investment Fund, which has such a “double bottom line” mandate.[64]
Sending our SMEs abroad
We must realign the way we view our role in the region. The ESR report stresses that Singapore-based firms must internationalize (Thrust 4), yet defaults to emphasizing how we need to double down on our hub status (Thrust 3). While the two aims are not mutually exclusive, an overreliance on sustaining our intermediary role can diminish the urgency of how we need to be sending our capital and companies out into the region.
In a speech shared with this House last month, I spoke about how we need a more structured framework for encouraging our PMETs to spend a year or two in their firms’ affiliates or subsidiaries located in our major ASEAN capitals. The Global Ready Talent Programme[65] must not be limited to those early in their careers, but should be expanded to include mid-career professionals, too. Too many Singaporean middle managers have been passed over for lack of regional exposure, despite their otherwise excellent performance in the workplace. Our PMETs can no longer rely simply on relative differentials in their training, skills, and industry to distinguish themselves, and all the more so with regional talent rapidly catching up.
To ease this transition, we should minimize the inherent costs of relocation. The government currently provides subsidized primary and secondary education for one Singapore international schools, located in Hong Kong.[66] We should expand this network to have one SIS in each ASEAN capital, offering subsidized fees for families that are equivalent to what they pay at home.[67] Syllabus coordination should be fully aligned with what is taught at the respective grade level, to make the return of a child to their home institution much more seamless.[68]
While sending firms often assist with housing, this may not be the case for smaller companies that do not possess the necessary capacity or expertise in their human resource operations. But the state is in the position to exploit such economies of scale. The government can consider making acquisitions of land in these capitals—which in many instances remain relatively affordable—and building residential housing, meant for temporary rental to Singaporean households that are relocating for several years. Internationalizing SMEs that meet certain threshold criteria for size and profitability can then qualify their staff for these rental units.
The Workers’ Party has also consistently stressed how an export-import bank can play an crucial role in promoting internationalization for promising SMEs.[69] This has become even more important in a global geopolitical landscape that is veering toward nationalistic objectives, and where cross-border projects with substantial externalities, such as green initiatives, may be otherwise underfunded. It is especially important for SMEs, given how the structure of cross-border financing remains largely catered to MNCs.[70]
Conclusion
Sir, let me close. To be clear, what I am calling for here is not a wholesale overhaul of our GLC-heavy, MNC-led, and foreign capital-reliant model, which has, to date, served us well. Sidelining these actors would amount to killing off the golden geese that have established themselves as cornerstones of our corporate and industrial landscape; foreign affiliates contributed $368 billion to our economy in 2024, which accounts for more than half of all enterprise value added.[71] Our GLCs have also been increasingly competitive on international shores, projecting the economic influence of Singapore Inc, worldwide. This is excellent, and local companies should continue to look toward foreign markets as their source of growth.
Nor am I proposing that we abandon foreign investment and shut the door to cross-border financial flows. That would hollow out our capital base, which amounted to $14 billion in fixed asset investments in 2025 alone.[72] No modern economy—much less a globalized one like ours—operates without due attention to international players.
What I am calling for are policy and institutional shifts that will usher in a changed mindset for how we should view our homegrown companies in an already wealthy, advanced economy. This shift will place small but especially medium-sized firms at the beating heart of the nation’s economic model, away from the interests of large, foreign-based MNCs or even our GLC behemoths. We must be unafraid of how small changes to corporate taxes on large firms or strengthened protections for marginalized workers might scare off investment financing—of which we have plenty of our own—or stand in the way of domestic champions emerging.
What we need is creative destruction: an industrial policy that rebalances the playing field between the large and the small, and one that eventually sheds the existing model for a better one. This destruction must be led by local, upstart firms as the source of disruptive innovation, not because business costs are so high that only larger players possess the economies of scale or are able to access the financing necessary to survive. By destroying, we will simultaneously create an economy ready for the 21st century.
[1] ESR Committees (2026), Economic Strategy Review: Securing Growth and Good Jobs in a Changing World, Singapore: Ministry of Trade and Industry.
[2] Strictly speaking, the monies in the Central Provident Fund are not directly channeled toward investment, but serve as collateral for Special Singapore Government Securities, which is the vehicle for such financing. However, this arrangement was only formalized in 1992, via the Government Securities Act, and CPF had already been collected since the 1955, when the Board was constituted.
[3] Since government surpluses are the result of (necessarily) coercive taxation—and other forms of public revenue—exceeding expenditure, the difference essentially amounts to forced saving.
[4] Data for nominal GDP per capita in 1965 was $516.50 in U.S. dollars, which, at the prevailing exchange rate of 3.06 SGD per USD, amounts to $1,581.
[5] In the global distribution of income, Singapore was in the 70th percentile at the time, compared to fbeing in the 99th percentile today.
[6] The contribution of total factor productivity to growth among the Asian Dragons is typically only a small fraction (at best, about a quarter), compared to shares of closer to half or more in advanced economies, even during their high-growth phases. For Singapore, the contribution is close to zero. See Young. A. (1995), “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience,” Quarterly Journal of Economics 110(3): 641–80.
[7] Woon, K.C. & Y.L. Loo (2018), 50 Years of Singapore’s Productivity Drive, Singapore: World Scientific.
[8] The National Productivity Centre was established in 1967, before turning into the National Productivity Board in 1972, then the Productivity and Standards Board in 1996, and then the Standards, Productivity and Innovation Board (SPRING) in 2002, before becoming Enterprise Singapore in 2018.
[9] As measured by total factor productivity (TFP), which is productivity after accounting for observable factors of production, such as physical and human capital accumulation. While estimates vary, economywide TFP estimates for the period 1966 through 1990 range from 0.2 to 2.2 percent, which are low given the average growth rate of around 8 percent over the period. For the higher-end estimates using a dual approach, see Hsieh (2002), “What Explains the Industrial Revolution in East Asia? Evidence From the Factor Markets,” American Economic Review 92(3): 502–26. Other authors have come to a similar conclusion using more recent data; see Bhaskaran, M.. & N. Chiang (2020), “Singapore’s Poor Productivity Performance,” Academia.sg, Nov 20. The government’s own estimates, using an unusually low labor share (high capital share) and implausibly large real returns (distorted by the collapse in equity prices during the 2008 crisis) give rise to an (over)estimate of 3.1 percent over the 1997–2009 period, but . See MTI (2010), “Singapore’s Productivity Puzzle: Estimating Singapore’s Total Factor Productivity Growth Using the Dual Method,” Economic Survey of Singapore, 3rd Quarter, Singapore: Ministry of Trade and Industry. My own estimates for the period 1966–2015 are 0.6 percent.
[10] This is the case whether measured in terms of the inverse of the incremental capital-output ratio (the ratio of the investment rate to the growth rate)—where estimates for Singapore are significantly below the global average—or in terms of the marginal product of capital. See IMF (2016), Staff Report for the 2016 Article IV Consultation, Washington, DC: International Monetary Fund and Caselli, F. & J. Feyrer (2007), “The Marginal Product of Capital,” Quarterly Journal of Economics 122(2): 535–68.
[11] Acs, Z.J. & D.B. Audretsch (1988), “Innovation in Large and Small Firms: An Empirical Analysis,” American Economic Review 78(4): 678–90. This is elaborated on in Acs, Z.J. & D.B. Audretsch (1990), Innovation and Small Firms, Cambridge: MIT Press.
[12] Aghion, P. & P.W. Howitt (1992), “A Model of Growth Through Creative Destruction,” American Economic Review 60(2): 323–51. For a book-length treatment of how creative destruction is a key source of endogenous growth, see Aghion, P. & P. Howitt (1997), Endogenous Growth Theory, Cambridge: MIT Press.
[13] NTUC, MOM & NTU (2026), The Pulse of SMEs: Skills Development, Meaningful Work, Empowerment, Singapore: National Trades Union Congress.
[14] Arguably, the first wave comprises our internationalized government-linked corporations (GLCs), such as DBS, Keppel, Olam, PSA, Singapore Airlines, Singtel, ST Engineering, and Surbana, among others.
[15] Hansard (2026) 6(22): Mar 2.
[16] Bin Yahya, F., Z.Y. Chang, Y.H. Ng & M.W. Tan (2016), Supporting a Dynamic SME Sector: Challenges Faced by SMEs in Singapore, Singapore: Institute of Policy Studies and LKY School of Public Policy.
[17] The data are from 2023, the latest edition of the survey of Research, Innovation, and Enterprise (RIE). See NRF (2023), National Survey of Research, Innovation, and Enterprise in 2023, Singapore: National Research Foundation. We are overdue for an update, especially since prior RIE surveys had previously been published annually. This is even more puzzling given how the A*STAR website documents that the survey is conducted under the Statistics Act, which suggests that data should have been collected in the meantime.
[18] Hansard (2021) 95(23): Mar 2.
[19] The top 6 gross R&D expenditure shares worldwide are that of Israel (6.4 percent), Liechtenstein (6 percent), South Korea (4.9 percent), Taiwan (4.1 percent), Sweden (3.6 percent) and the United States (3.5 percent). See World Bank (2026), Research and Development Expenditure (% of GDP), Washington, DC: The World Bank and NSTC (2026), R&D Expenditure as a Percentage in GDP, Taipei: National Science and Technology Council.
[20] Hansard (2023) 95(85): Feb 23.
[21] Of the 9.0billioninbusinessR&Dspendingin2023,morethanhalf(4.9 billion) was in the electronics sector, which is dominated by MNCs and large GLCs. A conservative estimate of SME BERD would place the share at around 10–20 percent. See NRF (2023).
[22] Yap, W.Q. (2025), ”Singapore Commits Record $37 Billion to Drive Research, Innovation and Enterprise Over Next Five Years,” Straits Times, Dec 5.
[23] Lee, L., T.L. Tan & P. Lau (2026), “Singapore: Corporate–Tax Credits and Incentives,” Worldwide Tax Summaries, Singapore: PWC.
[24] IRAS (2026), Research & Development (R&D) Tax Measures, Singapore: Inland Revenue Authority of Singapore.
[25] Bloom, N. and J. Van Reenen (2007), “Measuring and Explaining Management Practices Across Firms and Countries,” Quarterly Journal of Economics 122(4): 1351–408.
[26] Qualifying R&D presently requires meeting three conditions: (1) have an objective of producing new knowledge, products or processes, or improving existing products or processes; (2) be novel or entail technical risk; and (3) inivovles a systematic, investigative, and experiment (SIE) study. See IRAS (2026), Research and Development Tax Measures, Singapore: Inland Revenue Authority of Singapore.
[27] The assembling of business advisors will likely need to be top-driven for this context.
On the supply side, the costs of engaging credible consultancies would often also be infeasible for a small firm, since the initial stages on understanding context would already be resource-intensive. Consultancy services offered may also be better-aligned with the firms’ if there is skin in the game on the part of the firm, via “performance-linked” or “success-based” outcomes. And since not all engagements will be successful in driving productivity gains, it is imperative that the consultancies have the right to choose their clients as well.
[28] The program was launched in 2003, but to date, only an average of 20 firms have participated annually (based on the 2011–18 cohorts). Those that participated were very successful in increasing R&D activity: by more than 8 percent (relative to synthetically-constructed nonparticipating firms), and spending 65 percent more. This then translated to 44 percent higher revenue and 22 percent higher employment. Tham, I. & Y.X. Neo (2025), “Impact Evaluation of A*Star’s Technology for Enterprise Capability Upgrading (T-Up) Programme,” Economic Survey of Singapore 2024: 80–7.
[29] Hansard (2026) 96(27): Apr 7.
[30] Fazzari, S.M., R.G. Hubbard & B.C. Petersen (1988), “Financing Constraints and Corporate Investment,” Brookings Papers on Economic Activity 19(1): 141–95.
[31] SWDA (2026), SkillsFuture Workforce Development Grant (Job Redesign+), Singapore: Skills & Workforce Development Agency.
[32] The WDG(JR+) is capped at $150,000 per enterprise.
[33] SWDA (2026), Graduate Industry Traineeships (GRIT) Programme, Singapore: Skills & Workforce Development Agency.
[34] There are additional ways to limit abuse, by further restricting spending to certain types of products and services where the risk of would be relatively low. These include spending on cloud accounting software systems and HR management systems. The same approach might be adopted for subscriptions to commercially-available AI models.
[35] Hansard (2025) 95(151): Feb 5.
[36] Ng, T. (2024). “Poly, ITE Graduates from Work-Study Courses Earn More; 10 New Courses Launched in 2024,” Straits Times Jul 17.
[37] Davie, S. (2024), “SIT’s Work-Study Programme, Built Over 10 Years, Records Success with 900 Partner Companies,” Straits Times, Aug 17.
[38] Data are from 2001 The German scheme is known as the Dual Vocational Education and Training system, and is led by employers, rather than educational institutions or the government. See Cedefop & BIBB (2023), “Vocational Education and Training in Europe—Germany: System Description,” in Cedefop & ReferNet (eds.). Vocational Education and Training in Europe: VET in Europe Database, Detailed VET System Descriptions, Thermi: European Centre for the Development of Vocational Training.
[39] For instance, the criteria may be simplified to sending a SkillsFuture officer to the SME to determine that the day-to-day work qualifies for practical, on-job-training, rather than requiring that all submissions for the SkillsFuture Enterprise Credit occur with an approved training partner.
[40] EDB (2025), Learn About Our Incentives and Facilitation Programmes, Singapore: Economic Development Board.
[41] This stipulation only for larger grants ensures consistency with the point, made earlier, that documentation needs should not become too onerous for small firms.
[42] Additional mechanisms include fixed-term EPs when tied to foreign investment initiatives, and improved tracking of transfer outcomes. See Hansard (2021) 95(38): Sep 14.
[43] While Singapore has not official definition for micro and small enterprises, these are often taken to be companies that either have less than 10 employees or around $2 million in turnover (micro) or up to 50 employees or $10 million in turnover (small).
[44] Singapore ranks third highest among East Asian cities, after Tokyo and Hong Kong (it is also lower than Dubai and Riyadh in West Asia), and was 10th worldwide in 2026. See Brooks, S., C. Chilton, R. Webb, D. Harding & N. Tuan (2026), Global Occupier Markets: Prime Office Costs–Q1 2026, Singapore: Savills Singapore.
[45] Joshi, M. & R.H. Lim (2026), “Business Cost Conditions in Singapore’s Manufacturing and Services Sectors,” Economic Survey of Singapore 2025: 27–34.
[46] Evidence suggests that the imposition of controls on the level of rent is likely to negatively impact rental supply, while also introducing frictions to tenant mobility. See, for example, Diamond, R., T. McQuade & F. Qian (2019), “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco,” American Economic Review 109(9): 3365–94.
[47] Hansard (2023) 95(105): Jul 3.
[48] Hansard (2023) 95(81): Feb 6.
[49] The DRC for manufacturing is 60 percent while that for services is 35 percent. There are also special carve0outs for construction and process (83 percent) and shipyards (75 percent ). See MOM (2026), Foreign Worker Quota and Levy Requirements, Singapore: Ministry of Manpower.
[50] Singapore data is for 2024, while aggregate data are for 2022. The 2022 equivalent for Singapore is 11.3, which is similar to the reported number above. See World Bank (2023), New Business Density (New Registrations per 1,000 People Aged 15–64), Washington, DC: The World Bank.
[51] Notably, however, Singapore falls behind that of Hong Kong (145,000) See World Bank (2025), Entrepreneurship Database, Washington, DC: The World Bank.
[52] Notably, their working-age populations are larger; Chile’s is 3 times larger (13.6 million to 4.5 million), while Hong Kong’s is about 10 percent larger (5.0 million). See World Bank (2026), Population Ages 15–64, Total, Washington, DC: The World Bank.
[53] Data are for 2014, the latest year available for Singapore. Global Entrepreneurship Monitor (2026), Entrepreneurial Behavior and Attitudes, London: London Business School.
[54] Yeo, N. (2025), “From Brownies to Manicures, Home-Based Businesses are Thriving. But Can They Survive Long Term?”, CNA, Jan 3.
[55] HDB (2025), Home-Based Business Scheme, Singapore: Housing and Development Board.
[56] SFA (2026), Requirements for Home-based Food Businesses, Singapore: Singapore Food Agency.
[57] Hansard (2026) 96(15): Feb 3.
[58] ESR Committees (2026), p. 6.
[59] Temasek (2010), Temasek’s Participation in Co-Investment Programme, Singapore: Temasek Holdings.
[60] Lim, P. (2025), “Singapore to Start S$200 Million Long-Term Investment Fund for Enterprises with Longer, Complex Growth Trajectories,” Business Times, Mar 6.
[61] EnterpriseSG (2026), Startup SG Equity, Singapore: Enterprise Singapore.
[62] Specifically, general technology firms avail themselves of up to $2 million in coinvestment, while deep tech firms (those that propose differentiated and proprietary processes, products, or technologies) qualify for up to $12 million.
[63] Sarkissian, S. & M.J. Schill (2004), “The Overseas Listing Decision: New Evidence of Proximity Preference,” Review of Financial Studies 17(3): 769–809.
[64] NTMA Annual Report (2019), Ireland Strategic Investment Fund, Dublin: National Treasury Management Agency.
[65] EnterpriseSG (2025), Global Ready Talent Programme, Singapore: Enterprise Singapore.
[66] Hansard (2022) 95(75): Nov 9.
[67] Hansard (2023) 95(88): Feb 26,
[68] Returning Singaporeans are assured either a place in a school with vacancies near their home (through the Assured School Placement service), and merit-based placement (through the School Placement Exercise for Returning Singaporeans). But this is not seamless, insofar as foreign international schools do not adhere to the local syllabus. See Hansard (2022) 95(77): Nov 29.
[69] Hansard (2012) 88(18): Mar 2; Hansard (2016) 94(14): Apr 7; Hansard (20c22) 95(74): Nov 8; Hansard (2026) 96(20): Feb 26.
[70] Khanna, V. (2024), “The Case for an Exim Bank for Singapore,” Straits Times, Feb 28.
[71] SingStat (2026), Foreign Affiliates in Singapore 2024, Singapore: Statistics Singapore.
[72] EDB (2026), “EDB Continued to Secure High Value Investment Commitments in 2025 Amidst a Volatile Global Operating Environment,” Press Release, Singapore: Economic Development Board.
