Singapore Government Press Release

Mr Mansoor Hassanbhai, President of the Rotary Club of Singapore

Ladies and gentlemen.

I would like to thank the Rotary Club of Singapore and the Association of Small and Medium Enterprises for inviting my wife and I to this Entrepreneur of the Year Award ceremony. This event recognises the enterprising spirit and achievements of our small and medium enterprises (SMEs).

Today, we have a vibrant modern economy. We enjoy good growth rates. Our per capita income is about $37,000 - a hefty increase from the per capita income of $1,300 in the sixties. Our GNP surpasses $133.7b and our foreign reserves exceed $107.7b.

Our local SMEs have contributed significantly to Singapore’s economic success. They play a crucial role at three levels. The first level is job creation. This was especially critical in the sixties when Singapore had massive unemployment. To provide jobs for our people, the Government embarked aggressively on a two-pronged industrialisation programme. It attracted foreign investments into Singapore and encouraged local industries to be set up. Vast tracts of swamp lands and other areas were turned into industrial estates to support our industrialisation efforts. By the early seventies, our industrialisation programme had taken off successfully. The problem of massive unemployment was resolved.

Since then, our SMEs have grown in numbers and in size. In 1995, there were more than 92,000 local SMEs compared to more than 87,000 in 1993. The number of people employed by the SMEs rose from less than half a million in 1993 to more than 540,000 in 1995 - an increase of 8 per cent.

The second level of contribution by our SMEs is to spur productivity growth. We have enhanced our economy by switching over from labour-intensive industries to high value added industries, which are the hallmark of our present-day modern economy. The success of our economic restructuring is due to the forward-looking and enterprising spirit of our entrepreneurs, who see the wisdom of investing in high value added industries and in improving the productivity of their workers.

In 1995, the value added of our local SMEs amounted to more than $53b compared to more than $21b in 1993. This was an increase of 152 per cent. The contribution of the SMEs to our economy is, therefore, significant.

The third level of contribution by the SMEs is their support for the MNCs. The SMEs, our large local corporations and the MNCs complement each other in our economic development. MNCs bring in the investments, the expertise and the technology. Without the MNCs, Singapore would not have come this far. However, the growth of MNCs in Singapore would not have been possible without the critical support provided by our SMEs. They provide third party support and sub-contracting work for the MNCs and large local corporations.

In the past, MNCs were attracted to Singapore by our low manufacturing costs. Now, they are attracted by our SMEs’ capability to support higher value added activities. Because of their effective support for the MNCs, our SMEs have helped to draw huge foreign investments into Singapore. Last year, foreign direct investment in Singapore totalled nearly $70b.

The local SMEs must develop in tandem with the MNCs which are moving towards higher value added activities in Singapore. The SMEs must, therefore, enhance their capability and sharpen their competitiveness so as to remain relevant to the MNCs. For example, in the electronics industry, MNCs are focusing more on their core activities such as design and development. Hence, our SMEs must develop the capability and capacity in Original Equipment Manufacturing. Likewise, with the emerging trend towards integrated logistics solutions, local enterprises must enhance their capability through more strategic use of Information Technology.

We are encouraging our SMEs to work with the MNCs to further upgrade their capability. Currently, there are about 180 local enterprises working with about 35 MNC-partners under the Local Industry Upgrading Programme. I am pleased that the more successful SMEs have gone into partnership with the MNCs in overseas ventures.

Ladies and gentlemen, the challenge for our SMEs is to respond swiftly to fast-changing trends in business and industry. Economic liberalisation and an increasingly integrated global economy will result in more intense competition as well as new investment opportunities for us. How can our local SMEs stay ahead of the competition? How can we capitalise on the new opportunities? How can we grow and expand? To be a successful entrepreneur, you need to be a strategist, an innovator and an adventurer. Let me explain.

Firstly, as a strategist. To succeed, you need a game plan or a business strategy.

You need to think and plan strategically to enable your company to grow and to compete effectively. It is particularly critical if you are venturing into new areas or are expanding the market for your products and services. A business strategy lays out the pitfalls, the hurdles, the opportunities, the market trends, and the strengths and weaknesses of your company vis-a-vis your competitors. In other words, a strategist maps out clearly the path to take for the business to grow.

In charting Singapore’s growth, we have to rethink our economic strategy time and again in order to succeed. We have moved upstream into knowledge-based and high-tech industries as we can no longer compete effectively on low labour costs. We are capitalising on the globalisation trend to develop a strong external economy. Recently, the government has identified the strategy of attracting foreign human capital to boost our competitiveness and growth prospects.

Secondly, an entrepreneur must be an innovator. To do well, you must always be thinking of new ideas - whether it is coming up new products, finding new niches or seeking out new markets . You cannot afford to remain static. This is not an option. Products get outdated quickly. Trends change rapidly. Technology advances swiftly. The entrepreneur who comes up with a better product captures the lion’s share of the market. The one who throws up a new, innovative product gets ahead of his competitors.

Take the fast food business for example. First, there was the simple hamburger from MacDonalds. Then came along the "samurai burger", the "kiasu burger" and the "towkay burger". At the KFC counter, customers are asked: "original or crispy?" Entrepreneurs must have the innovative streak in them to remain successful. That is how Singapore has survived, constantly moving into new niche areas.

Thirdly, an entrepreneur must also be an adventurer - one who explores new terrain, discovers new life and takes on new challenges. He is also a person who dares to take risks, able to endure hard knocks and is a survivor. Only then will you be able to expand your market and capture new ones for your products and services. This is the essence of our regionalisation efforts.

Regionalisation adds value to your products and services. Taken as a whole, regionalisation strengthens Singapore’s economy as it makes our marketplace larger and more diversified.

I urge more of our local entrepreneurs to go regional or international. With trade barriers coming down, there are plenty of opportunities beyond our shores.

I congratulate the winner of this year’s Entrepreneur of the Year Award and the finalists. You have clearly demonstrated the growth potential and capability of our SMEs. You have shown that our SMEs can be a force to be reckoned with. I hope your success and achievements will encourage others to follow in your footsteps. The success of our SMEs will go a long way towards developing Singapore into a global business hub in the 21st century.

I wish you a pleasant evening.