Companies must drive their own transformation, and some may have to fail, say MPs
STRIDENT calls for the government to do more to help businesses are often heard in Parliament, but on the opening day of the latest Budget debate on Monday, the tone was decidedly different.
Instead, law-makers cautioned against being over-reliant on the government for help - a recognition that businesses must drive their own transformation, even as the government takes the lead in tackling cyclical and structural challenges to the economy.
And, some businesses may have to fail, as part of the restructuring process.
The first day of parliamentary debates on the Budget saw 25 MPs rise to speak. In his first Budget speech as Finance Minister on March 24, Heng Swee Keat stressed the importance of partnering for the future - whether through more targeted economic restructuring plans, or via support for Singaporeans of lesser means.
While they noted the need for fiscal assistance in restructuring, the parliamentarians stressed the need for firms to be competitive in the absence of government help.
Liang Eng Hwa, chairman of the Government Parliamentary Committee for Finance, opened the seven hour debate with a reference to a pre-Budget poll conducted by The Business Times.
Poll results showed that 69 per cent of chief executives officers who responded thought that businesses should be self-reliant for growth.
While not rejecting government intervention to restructure the economy, Mr Liang said: "Businesses should be the trend-setters. The government can help but the government may not always make the right business call."
This would be crucial in ensuring that Singapore can successfully transform itself into a innovative economy, said Mr Liang, the goal of the high-level Committee on the Future Economy (CFE) chaired by Mr Heng and tasked to come up with a blueprint for economic restructuring.
The calls for businesses to be more self-reliant come after a raft of measures were introduced in recent years to help workers and businesses cope with economic change. Measures like the SkillsFuture framework were rolled out to help workers acquire new skills for their jobs, while the Wage Credit Scheme was introduced to help companies cope with wage increases amid a tight labour market. This year saw the government introduce more measures to help companies and specific sectors with the current slowdown, while still keeping an eye on restructuring.
The government does not shy away from spending on measures that help workers upgrade their skills or restructure industries, said Secretary-General of the National Trades Union Congress (NTUC) Chan Chun Sing. But recipients have to be accountable for how they use government monies, which is funded by taxpayers. They need to make their own effort to be more competitive.
"It is incumbent upon us - whoever who takes this money for personal upgrading or for corporate restructuring - that we have a responsibility to society, a responsibility to use this money wisely to achieve the goals that we set," said Mr Chan, who is also Minister in the Prime Minister's Office.
Contrary to common perception, the success of assistance measures, said Mr Chan, should not be measured by how big or fast they expand. Instead, it should be by how soon they can be wound down, which denotes the effectiveness of the help rendered.
Alex Yam of Marsiling-Yew Tee GRC concurred: "I only hope that business owners and industries do not become too dependent on initiatives and funds. We hope these measures are temporary and wish that they be the catalyst for Singapore's growth."
That restructuring may weed out uncompetitive businesses was also a point not lost on MPs.
"Businesses with fundamental flaws in their business models, for example those that are over-reliant on cheap labour or government subsidies, should be allowed to die a natural death," said member of parliament (MP) Ong Teng Koon.
While some measures were introduced to help specific sectors through the current slowdown, MPs said it is critical not to lose sight of longer term national priorities.
"Are there adequate assurances that sectors will not retreat into their own narrow outlook and compete for limited resources without an appreciation for national concerns?" asked labour economist Randolph Tan.
Leon Perera of The Workers' Party called for a national benchmarking system to "focus minds" on the long-term goal of raising productivity.
That would in turn ensure that those who can benefit the most from government assistance are able to receive the help they need, said Mr Perera: "Improvement in a company's productivity rank could be used as one criterion or one forward-looking condition - not the only one - to grant access to government schemes."
There was also a sense, that letting the current slowdown work its way through the economy, may help with the restructuring effort.
Said MP Lim Wee Kiak: "Let businesses learn to grapple with the crisis and come out stronger. As the Chinese saying goes: 'The plum only blooms in the harsh coldness of winter'."
This article was first published on April 5, 2016.
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