The Government has strongly hinted that goodies for Singapore companies in the upcoming Budget will be focused on helping them help themselves.
And this includes encouraging them to go overseas in search of bigger markets.
The call for companies to go overseas is not new and there have been numerous measures in past Budgets to help firms venture abroad. In fact, the lead government agency to help companies internationalise was renamed IE Singapore in 2002, about 13 years ago, to focus on growing Singapore's external economy.
According to IE Singapore, local companies invested a total of $535.5 billion overseas by the end of 2013. For China alone, home-grown firms - excluding the locally incorporated units of multinationals and government- or Temasek-linked companies - accounted for about 20 per cent of the $102.8 billion worth of direct investments recorded in 2013.
This works out to about $20.56 billion cumulatively over the years.
IE Singapore assistant chief executive Satvinder Singh said this was a "stellar track record" for Singapore's small and medium-sized enterprises (SMEs), relatively speaking.
So, the renewed push is not so much about Singapore not having done well in the internationalisation story. Rather, it is about getting the companies to seize the opportunities in the current global downturn.
Finance Minister Heng Swee Keat earlier this month said the Government will prioritise the task of helping SMEs continue to restructure amid the significant changes going on in global and regional economies.
And finding new markets through internationalisation is one way for the companies to grow. That, in turn, will grow or at least, help to retain jobs for workers.
"The opportunities are becoming more attractive and our companies are in a better position to act now," said Mr Singh.
"And it is also the right time for the companies to acquire capabilities, solutions and technologies from the United States, Europe, and even China and India," he added.
Mr Singh said he thinks companies in Singapore can consider buying over these solutions, integrate them with their current businesses, and grow to become champions in the region.
NO GLOBAL CHAMPIONS YET
But even though significant amounts of money have been invested overseas, one thing market players say is that few global champions have yet to emerge.
"There are not enough Singapore companies going overseas," said Singapore Business Federation (SBF) chairman Teo Siong Seng.
He noted that in 2010, the Government set a target to produce 1,000 globally competitive companies, with revenues exceeding $100 million, by 2020. But SBF has counted only 300, so far, and it thinks that the target probably cannot be reached.
Building a strong base of local enterprises with a global reach is what is needed to keep Singapore going.
SMEs NEED MORE FUNDING
The local boys, unlike the government-linked companies, are simply not strong enough to go overseas, SBF's SME committee chairman Lawrence Leow told The Straits Times.
The domestic market does not allow local SMEs to grow to a certain size before they can venture abroad, he added.
The business groups here have suggested that the problem of limited resources is what's hindering the local enterprises from going abroad.
So, in this year's Budget wish list, they have asked for better financial support in terms of subsidies, grants and financing. Association of Small and Medium Enterprises president Kurt Wee said the Government could introduce broad-based expansion grants and overseas incubation services for all companies wanting to set up shop overseas.
But such support should not be selective, or be focused on a specific industry.
"There's a notion that going overseas is not for everybody, which I don't quite agree with," Mr Wee told The Straits Times. "It really depends on the company," he added.
He cited the example of a small workshop in Singapore specialising in making car licence plates. Despite serving a small niche market, it has been able to secure a contract to produce car licence plates for a foreign country through its joint-venture partners.
"The Government must take bold steps to help us, or we will remain very small forever," said Mr Leow.
DREAM BIG, GROW BIG
SMEs too, may need to think big if they wish to successfully grow their business beyond Singapore, as one observation is that many local enterprises have yet to understand the concept of scaling.
Singapore's small market size has not exposed businesses here to the level of competition that is common in places like China.
For example, a business with 30 outlets in Singapore may look like an operation of respectable size but the situation is very different in bigger markets overseas. To penetrate the Chinese market, small retail players may have to think in terms of opening at least an outlet every week to gain scale.
However, this could be considered too ambitious a move for many SMEs.
A report by Boston Consulting Group released last year pointed out that SMEs in Singapore need to shift their mindsets and move out of their comfort zone, or they risk missing out on the vast opportunities in emerging Asia.
The business consultancy firm found that Singapore SMEs are not as aspirational about expansion as their regional counterparts.
For those not lacking in ambition, the higher risks and uncertainties that come with doing business in foreign markets could prove to be obstacles. After all, they are used to doing business in a relatively benign environment in Singapore.
A MINDSET PROBLEM
Besides a lack of funding, another obstacle, some observers say, is the SME bosses' mindset of expecting the Government to help them in every aspect.
Take, for instance, one item on the Singapore Manufacturers' Federation's Budget wish list. It is asking for the Government to cover the airfare and accommodation costs for the overseas mission trips that SMEs take to survey potential markets. This is surely carrying a request for help to the extreme.
Earlier this month, a group of 51 companies visited Iran in search of investment opportunities there.
The visit came just six weeks after the recent lifting of global sanctions on the oil-rich nation. Interest in the business mission was so overwhelming that SBF had to turn away many companies that wanted to go on the trip.
But while there was huge interest in going on the trip, the Singapore companies did not go with anything specific, and no deals were announced.
So much so that, some Iranians later asked if the Singapore companies were serious about wanting to do business with them.
Indeed, the Iranians were practically meeting one delegation a day since their markets were re-opened. The recent visits by the Chinese, South Koreas and Italians all resulted in deals and commitments that were worth billions of dollars.
As for Singapore companies, "we did not come with anything specific," said SBF vice-chairman Shabbir Hassanbhai, who was the deputy leader of the trip.
For now, Singapore companies appear to be content at looking to engage Iran by taking baby steps, until there is more clarity in the policies, commercial laws and most importantly, the banking system, said Mr Hassanbhai.
But his view is that businessmen with "fire in their bellies" should move in quickly to get a tremendous head start as a first mover in the newly opened Iranian market.
So, it boils down to whether Singapore companies are bold enough to make the move to venture out of familiar territory.
If they do so, then more help packages from the Government are on hand to smooth their way. But if they prefer to remain in their comfort zones, more help will do little to move the needle.
This article was first published on March 16, 2016.
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