Some home-grown firms are spending more than ever on research and development (R&D), never mind the common perception of struggling small and medium-sized enterprises.
In 2014, SMEs' R&D expenditure rose 38 per cent to a new peak of S$800 million, according to data obtained from the Agency for Science, Technology and Research (A*Star).
This means that smaller firms led 2014's growth in private-sector spending on R&D - which surged to an all-time high of S$5.2 billion. This was up 16 per cent from the S$4.5 billion registered the year before.
"Of course, a 38-per-cent increase (in SMEs' R&D expenditure) sounds very large to me, because relative to gross domestic product growth, it's huge," said UOB economist Francis Tan.
Indeed, the Singapore economy expanded just 3.3 per cent in 2014, and 2 per cent the year after.
But for companies such as Biomax Technologies and Addvalue Technologies, R&D expenditure isn't seen as a nice-to-have; it's a need-to-have. The ability to come up with new solutions, they say, distinguishes them from the competition - and enables contract wins that ultimately lift their bottom line.
Biomax - founded in 2009 - has developed systems that can convert organic waste (animal manure, food waste, slaughterhouse remains) into organic fertiliser within 24 hours.
"I think we spent almost three-quarters of a million dollars on R&D in 2015 alone," said its co-founder and chief technology officer Phua Chum Mok.
"Farmers will say: 'My grandfather has been using this brand (of fertiliser) for so long, I'm not going to change to yours for the sake of changing.' So for us, we really have to prove to them that our fertiliser is better."
Apart from conducting tests on its fertilisers, the company also engages in R&D activities to come up with new products. For example, while the company has already invented industrial-sized machines capable of processing up to 22,000 litres of waste, it is now prototyping a smaller-scale version that can be used by hotels and households.
Addvalue, meanwhile, estimates that it spends at least S$600,000 per R&D project. It manufactures satellite communication equipment for customers such as Inmarsat, Singtel, and Satcom Global.
Since early 2015, two A*Star scientists have been seconded to Addvalue, to help with research on the future of satellite communication systems, as well as the design of new antennas for commercialisation.
Addvalue's chief technology officer and chief operating officer Tan Khai Pang told BT: "State-of-the-art antennas today are pretty big. In order to have a big magnitude of improvement, we are investigating new materials and technologies that can make antennas more efficient but also smaller.
"That will enhance our competitiveness in the market (and enable us to) compete aggressively when bidding for a project. So we expose our engineers and acquire new skillsets as a result of that process."
While he acknowledged that "R&D spending is always a big problem to any SME", he stressed that it is precisely that expenditure that has kept Addvalue growing.
The sharp increase in SMEs' R&D spending could be due in part to greater government support for technology adoption.
For example, A*Star in 2013 launched the Technology Adoption Programme (TAP), which helps to match firms with suitable technology providers and gives guidance on implementation during the pilot phase. Since then, TAP has assisted more than 1,000 SMEs with over 1,800 adoptions.
"All companies who took part in the programme benefited from an increased productivity of at least 20 per cent," A*Star told The Business Times.
Releasing preview figures from its latest National Survey of Research & Development in Singapore, A*Star said all sectors polled posted an increase in R&D expenditure in 2014, except Engineering.
"The only field that saw a dip in spending is Engineering which fell slightly by around 5 per cent, from S$758 million in 2013 to S$723 million in 2014," it said.
Fields which saw increases included Infocomms and Media, up 68 per cent to S$494 million; Biomedical Sciences, up 25 per cent to S$636 million; and Electronics, up 11 per cent to S$2.3 billion.
Electronics makes up the largest proportion of the private sector R&D spending pie.
This article was first published on March 21, 2016.
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