SINGAPORE - Strengthening the capabilities of enterprises to innovate and scale up was a major theme in the Committee on the Future Economy (CFE) report, which sets out Singapore's economic direction for the next five to 10 years.
Minister for Trade and Industry (MTI) S Iswaran, who co-chairs the 30-strong CFE, emphasised that developing such capabilities for local enterprises is key to sustaining Singapore's economic growth.
One recommendation of the CFE is to provide "high-growth" enterprises with more customised support so they can take wing overseas and emerge as leaders in their fields.
In response to further queries by The Business Times, the MTI said such high-growth businesses will be selected based on their potential to scale up.
"These enterprises should broadly have a compound annual growth rate (CAGR) above the industry average, demonstrate a clear competitive advantage or value proposition, and have strong leadership with a desire to pursue growth and a clear growth strategy."
The Economic Development Board (EDB), IE Singapore and Spring Singapore will work together to help such enterprises to scale up.
The MTI added that those which meet the criteria will get support on both financial and non-financial fronts; forms of aid could range from grants to tax incentives to access to the global network.
The CFE also recommended that partnerships between large and small businesses be encouraged.
Mr Iswaran said that as the business environment gets more uncertain, such collaborations can increase innovation and mitigate risks in new ventures.
For example, larger Singapore-based enterprises could adopt corporate-venture strategies with promising startups.
Through such instances of twinning, the larger enterprise can gain access to relevant new technologies, while the smaller one can benefit from funding and access to scaled-up corporate capabilities and networks.
The report said: "SMEs in particular tend to improve their potential to scale up through such collaborations."
Teo Siong Seng, chairman of Singapore Business Federation (SBF) and member of the CFE committee, noted that already-successful instances of such collaborations have emerged, for example, through the existing Partnerships for Capability Transformation (PACT) scheme, which matches SMEs with large organisations.
"We have seen this take place not just locally, but overseas as well. For example, when larger companies go abroad for a tender, they invite smaller companies to follow them or to share their experiences. We are trying to encourage more of this to happen."
In the past year, financing for enterprises has increasingly become a challenge, an issue that the CFE report also addresses.
One recommendation is for enterprises to turn to the private sector for more growth capital.
It said: "The government should consider how to encourage private-equity (PE) players to invest more growth capital into Singapore-based firms looking to regionalise…
"We should review the regulatory framework for finance companies to enhance their role as SME (small and medium-sized enterprises) lenders."
The financing ecosystem for startups should also be enhanced.
The report suggested that this be achieved by strengthening the venture-capital ecosystem with a simpler regulatory framework, facilitating crowd-funding as an alternative source, and widening the network of angel investors in Singapore.
For unlisted companies, one recommendation is for the government to facilitate the creation of a private-market platform for Asian enterprises to access financing through a wider network of investors.
A version of this was mooted by the SBF-led SME Committee in its Budget 2017 recommendations earlier this year; it cited the New Third Board in China, which has attracted many companies and investors.
As for listed companies, the CFE report recommended that the government permit dual-class shares, as long as "appropriate safeguards" are introduced.
Aside from looking at more funding sources, the CFE identified strengthening Singapore's Intellectual Property (IP) ecosystem so as to provide support for innovation and technology adoption.
This would entail enhancing capabilities to commercialise IP, growing the community of IP and commercialisation experts, and developing a standardised IP protocol to be adopted by all public agencies and publicly-funded research performers.
More should also be done to support the growth of startups, and one way to do this is to attract and groom entrepreneurs, said the CFE.
In particular, one recommendation calls for Singapore to remain open to entrepreneurial talent from around the world, especially those who are able or prepared to collaborate with local companies.
This ties back to Spring Singapore's chief executive Poon Hong Yuen's remarks earlier on this month.
In its Year-In-Review briefing, he had said that instead of just having a startup ecosystem for local entrepreneurs, the agency is looking into bringing in foreign entrepreneurs as well.
He said that startups that are taking off tend to have at least one foreign founder, who is "hungrier and can run faster".
Turning to digitalisation as a way for enterprises to transform and stay ahead of the curve, the CFE said SMEs, in particular, need help in adopting such technologies.
This can be done through encouraging the information and communications technology (ICT) industry to better cater to SMEs' requirements for digital solutions; this can also be achieved through government support for pilot projects for new technologies and national-level digital platforms and infrastructure to increase the pace of adoption.
Mr Teo said SMEs may not be aware of the technologies out there or have the wrong idea that they need to spend a lot of money.
The solution, he said, is to show examples of successful companies who have managed to change.
"If you can show SMEs how digital can help companies grow and overcome shortages of manpower and space, it would encourage people to do it. It's important to drive home the message that it is not a matter of high-technology or just for the Y generation… The digital economy is already happening, so we must show them that it can be done."
This article was first published on Feb 10, 2017.
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