SINGAPORE: Smaller firms here are facing a “red ocean” as foreign competitors with deep pockets and their own suppliers set up shop in Singapore, warns Ang Yuit, president of the Association of Small and Medium Enterprises.
Ang likens the saturated market to a sea bloodied by cut-throat competition, making it imperative for small local players to venture overseas.
Rising business costs and labour shortages, two top challenges identified by small and medium enterprises (SMEs), are not expected to ease.
“Landlords are not going to reduce rent because there’s always someone else taking over,” said Ang.
“Your staff are not going to be okay with reduced salaries because someone else is going to pay them more.”
A new wave of Chinese investors tends to arrive with savvy technology tools like robotics and an intact supply chain.
In the past, foreign investors might engage local businesses for part of their orders, but that has changed.
“The Chinese are very integrated. Their ordering system is from China, they may even have their system providers sitting in China, remotely servicing them,” said Ang.
These investors may spend on construction and renovations as they set up, giving a quick boost to the economy, but in the longer term, he believes their presence will weaken local SMEs.
Chinese investors have been raising the stakes here in recent years, led by geopolitics and enhancements to the China-Singapore Free Trade Agreement completed in 2023.
China’s Commerce Ministry noted that in 2018, cumulative investment from China in Singapore was US$50bil. By 2022, it had risen almost one-and-a-half times to US$73.5bil.
Ang, who is serving his second year as the association’s president after 12 years as vice-president, said it is time for SMEs to cross the seas.
In 2025, the Association of Small and Medium Enterprises aims to have at least five projects bringing together smaller players that could not make the cut for market readiness assistance from the government, nor get a lift from government-linked companies, for a stab at the global pie.
Fresh from an exchange trip to Harbin, Ang cited an offer from the Chinese city’s provincial government to offload its maize in bulk.
A typical SME may not have the appetite for it, he said, “but if we aggregate enough of them, they collectively may have the capital and the channels”.
Ang, a mechanical engineer by background and chief executive of web consultancy The Adventus Consultants, said possibilities extend from bidding for projects in the Middle East, to sharing the upkeep of a business development executive in a foreign market.
He added: “Currently, the most we do is trade shows, but I think that the association’s got to go beyond networking sessions, get people to come together, win deals and bring in revenue.”
Besides ambition, SMEs must put aside any competitive streak and warm to the idea of a collective bid, he said.
The Association of Small and Medium Enterprises, founded in 1986 and partly government-funded, has more than 6,000 members but also serves non-members.
Not all SMEs want to grow, Ang said, adding that some exist just to hoover up government grants.
“I’m highly critical of business owners like that. They set up that company to help on the surface, but all they are doing is enriching themselves.
“Then there are others who feel that I survived today, or this year, that’s enough, really.”
On why Singapore has failed to produce a private company with global success like TSMC, Ang pointed to Fraser & Neave and Asia Pacific Breweries, two local firms bought out by foreign groups after building global brands such as 100PLUS and Tiger Beer.
“I think there’s a mentality to monetise, and do something with that cash,” Ang said.
Other than being squeezed by competition from businesses run by government-linked entities such as Temasek and union-backed NTUC Enterprises, Singapore entrepreneurs also tend not to see beyond the borders.
“But I think that can be changed. If we keep sensitising our people beyond the shores of Singapore, and see Singapore as a capital of Asean.”
Like its peer trade groups, the association has sent its wish list for the 2025 Budget, that will be announced on Feb 18.
It listed five categories: human capital, digitalisation, sustainability, internationalisation, grants, and incentives and schemes.
Going beyond cost subsidies is high on the list. It is hoping for increased funding that supports innovation such as artificial intelligence use.
Halving the costs of using Microsoft Copilot, for example, does not make a Singapore SME more competitive than another foreign SME with the same tool, Ang said.
“It is that additional workflows that you build on top of basic work that makes your SME more productive.”
The other wish, for Enterprise Singapore to streamline grant application processes, is a repeat call that failed to materialise in the 2024 Budget.
It has also asked for upfront wage payments instead of reimbursements for temporary staff standing in for employees on parental or maternity leave to improve SME cashflow, and a S$1,000 annual subscription credit for three years to firms with at least three employees to give them flexibility in choosing software providers.
The association hopes SMEs will be allowed to cancel projects without grant clawbacks, but with reduced future grants, to encourage honest vendor feedback. — The Straits Times/ANN
