Singapore is not choosing between small and medium-sized enterprises (SMEs) and multi-national companies (MNCs) as it needs both.
Similarly, it is not choosing between domestic demand and external markets as they are needed, too, said Minister for Transport and Second Minister for Finance Jeffrey Siow.
"We are not in a zero-sum situation. In fact, the growth of our local companies and our MNCs mutually reinforce each other," he said during the debate on a motion on the future of Singapore's economy filed by Workers' Party MPs Kenneth Tiong (Aljunied GRC) and Associate Professor Jamus Lim (Sengkang GRC).
Speaking on Aug 5 afternoon as he seconded the motion, the Sengkang MP had called for a pivot away from MNCs as the driver of Singapore's growth, to promote SMEs as Singapore's economic engine.
He raised this "bottom-up, domestic capital-led" approach as the solution to lagging productivity growth and a lack of risk-taking entrepreneurs.
"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-add," Assoc Prof Lim pointed out.
"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," he added.
But the WP MP also clarified during his closing that he is not calling for a "wholesale overhaul" of Singapore's GLC-heavy, MNC-led and foreign capital reliant model, which, he noted, has served Singapore well.
$2b grant to SMEs annually
Siow disagreed with the characterisation that Singapore's economy model is imbalanced or that it needs to be fundamentally reoriented.
"They have portrayed Singapore as a place where MNCs create wealth, and there's some Faustian bargain where SMEs are held down, and Singaporeans receive the benefits through redistribution," he said.
Instead, the Government's economic strategy has always been built around Singaporeans, he added.
"Our people are at the centre of everything we do. Economic growth has never been an end in itself. It is a means to an end – to create better jobs, higher incomes, and better lives for Singaporeans.
"By that measure, Singapore's economic model has delivered, for generation after generation of Singaporeans."
The minister pointed out that in a more difficult global environment, Singapore has to compete harder for foreign investments, while working harder to support local companies.
He noted that the Government provides nearly $2 billion in direct grants for local SMEs every year to help them build stronger capabilities, embark on new projects and compete successfully in global markets.
Referring to what Bishan-Toa Payoh GRC MP Saktiandi Supaat said earlier about MNCs generating "positive spillovers", Siow agreed that MNCs can bring in resources, capabilities and technology that local SMEs do not yet have.
"Many of our local companies grow and succeed because of their relationships with MNCs, not in spite of them," he stated.
Concluding his speech, Siow said that Singapore has to be clear about what needs to change, and what should stay the same.
"We are not choosing between SMEs and MNCs. We need both.
"We are not choosing between domestic demand and external markets. We need both," he said.
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editor@asiaone.com
