Committee of Supply – Head V (Ministry of Trade and Industry)

The Chairman: Head V, Ministry of Trade and Industry. Mr Liang Eng Hwa.

Growing the Economy

Mr Liang Eng Hwa (Bukit Panjang): Mr Chairman, I beg to move, "That the total sum to be allocated for Head V of the Estimates be reduced by $100".

Sir, just when we thought that the global economic recovery is gaining momentum, the Ukraine crisis was unexpectedly thrust upon us. It will have very severe implications for the world economy that is yet to recover from the pandemic shock.

Oil price has hit beyond US$100 per barrel and gas prices as well had increased by more than 50% just last one week, and more price upside moves are expected.

Both Russia and Ukraine are also major food and commodity exporters. So, the crisis will have both a demand-side and supply-side impact.

All these grim developments paint a gloomy outlook for the Singapore economy, notwithstanding the 7.6% growth we registered in 2021, on the back of a 4.1% decline in 2020. So, can I ask the Minister if we would be able to still grow at 3% to 5% growth rate in 2022 as forecasted, or that the assumptions are no longer applicable and that we are back to the drawing board to determine a new forecast?

Of major concern is the impact on inflation, with CPI expected to range between 2.5% and 3.5%, based on earlier forecast. Do we have further scope to moderate imported inflation with the stronger Singapore dollar and the other measures?

Sir, energy prices will stay high, with the Ukraine crisis likely to be a longer-term conflict between Russia and the West. But price is not our only concern. The other concern is the supply of oil and gas. In particular, whether the conflict in Ukraine will disrupt the supply of LNG to Asia. This would have implications on our energy security as LNG is our critical contingent source of energy.

Sir, while global supply of energy is beyond our control, I believe we can do more to manage our domestic demand for energy and electricity. I feel that there is enormous scope to manage down our consumption of energy and to cut wastage of electricity by both households and commercial entities.

For households, we can encourage more conscientious use of electricity, and it is often about reminding consumers on good habits. Simple steps such as setting your aircon temperature higher, more conscious to turn off appliances like TV, lights when not in use, lesser use of water heater, for example, among others; all these add up and move the needle to save electricity.

In the commercial area, there is also more that we can do to reduce energy consumption. Many of our commercial and office buildings are more than adequately brightened during after office hours and on weekends. The Government could also advise shopping areas, industries and other public spaces’ management to review their energy consumption and institute electricity saving measures.

I believe if the Government can take the lead in driving the overall energy conservation, we could achieve significant energy savings that can manage down the demand of energy consumption. This would absolutely fit into the efforts of the Singapore Green Plan as well where we aim to reduce carbon emissions. So, can I ask if the Government has any plans to mount an energy conservation campaign to encourage businesses and household to save electricity?

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Sir, amidst the uncertainties, there are still opportunities for Singapore to pursue. The COVID-19 pandemic has accelerated growth in the digital sector and highlighted that firms, regardless of industry, would benefit from developing stronger digital capabilities. How has the Government supported firms, especially local SMEs, in developing their digital capabilities?

Mr Chairman, it is not just the disruptions from external events but also disruptions from technological developments that our firms need to deal with. Nonetheless, we also have forward-thinking firms in Singapore which are the ones driving this disruption through innovating and creating new products and services. How can we spread this culture of innovation to more firms in the economy, including for more SMEs to start innovation projects? How are we supporting the firms which are interested but may need some help in developing the needed capabilities to innovate?

Sir, we need to continue to invest in our people as well so that they are able to benefit from the economic growth and, in turn, participate in or even create the innovation that we would like to see in our local firms. This cannot be left solely to the industry nor can it be driven purely by the Government. How would the Government work with the industry and workers to build a future-ready workforce?

Sir, my final point. The world has changed at a faster pace due to human-led developments like technological changes, innovations, climate change actions and so on. But the world has also become more unpredictable and less stable due to unexpected events like the pandemic, political conflicts, tensions and higher interdependent risks.

We need to remain even more agile to adjust to these expected and unexpected changes and events as well as the emerging new challenges in the overall economic environment. Against this backdrop, it is important for the Government to share how we intend to respond and position ourselves in this challenging landscape. To guide and align the different stakeholders in moving towards a common goal, can I ask the Minister for his overall vision of the Singapore economy?

Question proposed.

Access to Manpower

Ms Foo Mee Har (West Coast): Mr Chairman, an MOM report shows that job vacancies have hit a record high of over 98,000, about double the running average.

The labour crunch is further exacerbated by a mismatch in skills. A survey conducted by NTUC found that 63% of business leaders cited skills mismatch as the most prevalent form of mismatch but only 15% of these business leaders placed priority for retraining their workers to address the problem. Therefore, investing in the training and development of our workers has never been more urgent.

In Budget 2022, a sum of $100 million has been set aside to support NTUC in its efforts to upscale workers' training and businesses' transformation through the Company Training Committees (CTCs).

There is great potential in leveraging a tripartite partnership to address workers' training. The close collaboration between Enterprise Singapore and the industry and trade associations will be crucial to ensure that a sector-based training solution is developed for scalability. The framework must accommodate SMEs which cannot achieve the scale needed to form CTCs.

Over 800 CTCs have actually been formed since the initiative was launched in 2019. I would like to ask what specific outcomes have been achieved so far and the key lessons learnt so that this round of funding support may be more effective in helping companies fast-track their implementation.

Sir, there have also been innovative ideas being deployed to overcome our shortage of manpower. The Cheif Technology Officer (CTO), as a service scheme, was launched to offer SMEs access to a CTO to help them develop plans and technology solutions and even training programmes without the need for them actually hiring one themselves. So, it is a shared resource.

So, I would like to ask the Minister to replicate this to include other key functions, such as Chief People Officer as a service, Chief Sustainability Officer as a Service, to provide the expertise central to SMEs' transformation and pivot to new growth areas.

Companies can also tap on remote or offshore working models more systematically. This has proven to be a genuinely viable option for some areas of work, such as technology services, offered out of Vietnam and Indonesia. This will open firms to a new channel of manpower by tapping on offshore talent pool to work alongside onshore Singapore teams. This often comes with substantial cost savings. So, companies will benefit from support to navigate the offshore marketplace and for a framework to source and onboard remote talents.

Competitiveness

Ms Mariam Jaafar (Sembawang): Sir, the investments in building new capabilities, strengthening local enterprises and investing in our people signal our Government's commitment to enhancing the competitiveness of our domestic economy and helping companies to digitalise and globalise.

But it will take time for the impact of these measures to be felt in a large flow economy like ours while there are many nearer-term headwinds to global trade and economic recovery. Competition for investments can also be expected to intensify, especially in a post-COVID-19, post-BEPS 2.0 world where companies are refining their global and regional games.

EDB has done remarkably well during the pandemic years. As the world emerges from the pandemic, how does the investment pipeline look going forward? How can Singapore extract value quickly from the recently completed trade agreements?

Can the Government give an update on progress in facilitating cross border data flows and digital trade? How else can the Government enhance Singapore's competitiveness in the near term to capitalise on opportunities, both amidst the COVID-19 recovery and in a post-BEPS 2.0 world?

The Chairman: Ms Sylvia Lim. Not here. Ms Janet Ang. Not here. Mr Don Wee.

Grow Services Sectors

Mr Don Wee (Chua Chu Kang): Chairman, I declare that I am a council member of the Institute of Singapore Chartered Accountants and working with a Singaporean bank.

In 2021, close to 70% of the nominal value-added to our GDP was generated by the services industries. I would like to ask the Ministry about the measures to boost the growth of our services sector. As of last year, the two biggest contributors were wholesale trade at 17.9% and finance and insurance at 14.6%. What are we doing to keep our lead in these two sectors?

The professional services sector and information and communications sector account for 5.8% and 5.6% respectively and show much potential for further growth. Professional services, such as accountancy and consulting in information and communications technology (ICT) sectors, provide good jobs and career prospects for our Singaporeans. How will the Ministry support local enterprise developments and attract international investments in these sectors?

The Chairman: Prof Hoon Hian Teck. Not here. Mr Baey Yam Keng.

Manufacturing Industry Transformation

Mr Baey Yam Keng (Tampines): Mr Chairman, last year, MTI announced a 10-year plan to grow Singapore's manufacturing sector, maintaining its share of about 20% of GDP. This is an ambitious goal, given that it has to take place while the global economy continues to be impacted by COVD-19 and, now, the latest challenges from the crisis in Ukraine – and all within the context of a tightened labour market. Would the Ministry be able to provide an update on how we have progressed over the past year for the manufacturing sector?

Mr Chairman, manufacturing is a diverse sector covering many industries. While we want to spread our eggs across different baskets and have sufficient variety in our industries, we are still a small country and would need to focus on our strengths. Would MTI be able to share what are some industries which Singapore has strengths in and what the Government is doing to develop these industries?

To fully benefit from the growth of such Industries, we will need to ensure that Singaporeans are able to access good job opportunities in the manufacturing sector. This is not only desirable but also critical, given our tightening manpower constraints.

How will we prepare Singaporeans for high-quality jobs in the manufacturing sector, both in terms of having the relevant capabilities to land these jobs and the desire to want to enter and stay in these industries? At the same time, how will we encourage the industry to hire Singaporeans for such jobs?

The Chairman: Ms Janet Ang.

SGUnited – Higher, Faster, Stronger

Ms Janet Ang (Nominated Member): Mr Chairman, trade and connectivity have been Singapore's strategic focus to ensure we continue to be relevant on the world stage. I have four points to make in the next few minutes.

Number one, Singapore as a key node in the global trading network. Digital and green are two S-curves that will continue to disrupt economies and societies. It is right that digitalisation and green are both big agenda items in Budget 2022. Singapore is charting the way forward with these new engines of growth and MTI has taken the lead to frame and design the world's first digital economic agreement, DEA, and gotten us off to a fast start with DEAs signed with Chile, New Zealand, Australia, South Korea and, most recently, the UK. Even China has expressed interest in joining.

On the green front, Minister Grace Fu and her team played a key facilitation role at the UN Climate Change Conference of the Parties (COP26), getting the world to agree on high-level talks to operationalise Article 6, which covers cooperation among countries to meet their emissions reduction targets, including through international carbon markets.

Sir, the industry is appreciative of the Government's efforts in keeping Singapore front and centre on the global stage. Meanwhile, we are seeing the weakening of the rules-based multilateral trading system and increasing disregard for WTO rules. At the same time, we saw the escalation of unilateral and protectionist measures by many countries in their response to COVID-19. There is the war in Ukraine and its implications on supply chain disruptions and escalating energy prices, which Minister Gan Kim Yong took us through the other day.

Can the Minister for Trade and Industry give this House an update on the way forward and what might be Singapore's playbook for Singapore's trade and industry? Can the Minister also share MTI and EDB's strategy to accelerate and expand Singapore as a key node in the global trading network?

To my second point – skills and talent 4.0. With the digital disruption and the impending green disruption, everyone needs new skills and competencies. I believe that companies' industry-led reskilling of the Singaporean workforce is the way to go. I have got two proposals.

One, industry training industry. Much has been talked about Industry 4.0 in advanced manufacturing. Bosch Rexroth, an industry leader, decided to locate their regional training centre for Industry 4.0 in Singapore. They partnered Singapore Polytechnic and co-launched the first course in 2020. To date, about 56 companies have participated with 165 of their staff trained and I applaud Bosch Rexroth for stepping forward to help themselves and the industry and, in so doing, get staff retrained and reskilled to be up to speed in Industry 4.0.

Another notable example would be Google's participation in Skills Ignition SG to train digital skills. We need more queen bees like this to come forward and work with our Institutes of Higher Learning (IHLs). Our economic agencies, which have the best relationships and have the most influence with the queen bee companies, are in the best position to programmatically scale up our skills and talent 4.0 initiative.

Can the Minister share how our Government economic agencies may support with carrots and sticks to strongly encourage the queen bee companies, multinational companies (MNCs) and large local enterprises (LLEs) to invest in our people to get to skills and talent 4.0? It will be a win-win for all.

The second proposal is to leverage on Trade Associations and Chambers (TACs) to strengthen the workplace learning ecosystems.

When COVID-19 broke out, SBF Foundation, together with seven TACs, launched the Industry Compassion Fund to support employees in their respective sectors, who are having difficulties. It is a charity-begins-at-home approach. During COVID-19, SBF also played clearing house for migrant workers from one company which cannot keep them to be matched with another company which needs them.

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Mr Chairman, strengthening the workplace learning ecosystems to address the issue of skills mismatch is part of the great manpower challenge for our businesses in Singapore.

Considering that TACs are aligned by industry, and they should understand best the disruptions taking place in their industry and the skills their industry needs to stay relevant, TACs can, hence, be a platform to be leveraged in strengthening workplace learning ecosystems. There has been strong support by the Government over the years to build capacity at the TACs via the LEAD programme. It is timely to give TACs a booster shot to enable them to support their members with job development, job redesign, skills matching and broadening their understanding in sustainability and digitalisation and the new trends.

TACs can also partner IHLs, NTUC, e2i and even queen bee companies to programmatically strengthen the workplace learning system uplift their skills, industry by industry. It would take a village to uplift an industry.

Grow our networks is my third point. In my Budget debate speech, I put forward the fact that SMEs need capital and credit, talent and network.

In this speech, I will speak on access to networks. Global Connect at SBF, set up by SBF in November of 2019 in partnership with Enterprise Singapore to support Singapore SMEs, to learn about overseas markets, land in those markets with business opportunities and localise their businesses for sustainable presence. This has been positively received by enterprising SMEs which recognised the need to go beyond Singapore.

According to colleagues at SBF, today, more than 3,000 companies are part of this network and 80 companies have successfully landed in overseas markets with signed distributorships or reseller contracts. These companies leverage the network to take their aspiration for internationalisation one step forward and should these companies plan to go deeper and wider, they can apply for Market Readiness Assistance Grants from the Government.

This approach, no doubt is one company at a time, but, as the Chinese saying goes, "a thousand miles begin with a single step". So, imagine my excitement to hear how Global Connect at SBF and the Singapore Food Manufacturers Association (SFMA) helped a few Singapore food brands to land in Vietnam together.

The Chairman: Ms Janet Ang, if you can wrap up.

Ms Janet Ang: Okay. So, the last point is: play the ecosystem game. What will be our competitive advantage and differentiator? Imagine green and sustainable Singapore-branded value chains where our Singapore SMEs, LLE, TLCs, MNCs and even Government-linked companies like PSA, Changi Airport, work together to innovate and transform our value chains for competitive advantage and deliver unique value.

This would require research capability, IP assets, deep industry skills, broad cross-industry expertise and financial capital to create platforms for our company —

The Chairman: Ms Janet Ang, you do need to wrap up.

Ms Janet Ang: — to work together as a winning ecosystem.

Industry Transformation Map Refresh

Mr Sharael Taha (Pasir Ris-Punggol): Mr Chairman, the Ministry previously mentioned that the Industry Transformation Map would be refreshed by this year. What is the progress of the ITM refresh?

Given that in this year's Budget, a lot of additional resource is provided to bring about transformation of businesses, how do we ensure companies develop in line with the refreshed ITMs? Will the ITM refresh consider workplace transformation and, specifically, address the upskilling, retraining and hiring of mature workers and other vulnerable workers for an inclusive transformation of the industries? Will the ITM refresh set clear direction on how to enhance our sustainability efforts, such as the use of sustainable aviation fuels, electric propulsion or hybrid propulsion, in the aerospace ITM refresh.

The Chairman: Ms He Ting Ru. Not here. Mr Saktiandi Supaat.

Access to Manpower and Talent for Businesses

Mr Saktiandi Supaat (Bishan-Toa Payoh): Chairman, a topic that never gets old is how we brace Singapore's economy for the future. To that end, the Government works closely with our Institutes of Higher Learning (IHLs), industries and the Labour Movement to equip our workforce with the skills and knowledge which companies need.

The future is exciting with emerging, high-growth areas but it is also uncertain and dynamic with demand for workers and talent which is high. We cannot guarantee what will happen in five or 10 years' time. In 2018, hardly anyone saw this pandemic slowing the airline industry to a halt, including the demand for manpower and local workers as well as retention.

So, we need to build in flexibility as we train our workforce to be future-ready. In providing continuous learning and training opportunities, perhaps we can model after our IHLs and structure courses that are more general, core modules that are applicable across groups of adjacent industries, together with specialised electives that are industry-specific and spend resources to reallocate talent with enhanced Professional Conversion Programmes (PCPs) by sector and using technology for skills matching.

How will Singapore ensure that firms, both present and future, continue to have access to the talent they need to support their expansion and operations in Singapore?

Growth, Human Resource and Costs

Mr Cheng Hsing Yao (Nominated Member): Mr Chairman, Sir, one of the key limiting factors going forward for us to achieve another economic growth trajectory is skill and knowledge-based manpower.

I am concerned that our manpower policies use a macro approach without sufficient differentiation to help the whole economy transform.

I am also concerned that our policies, such as salary threshold and dependency ratio ceilings, can only move in one direction every time they are reviewed, that is, further tightening. Recovery or growth will be uneven across different sectors. Singaporeans can choose their jobs from different sectors of the economy.

When a company wants to hire a Singaporean, it is competing with companies within its industry as well as with companies in other sectors. The larger, better capitalised companies in growth sectors have an advantage in drawing talent. Take the example of digitalisation: when traditional sector companies want to go into digitalisation, they will need relevant IT professionals. However, with the growth of the tech sector in Singapore, IT professionals are in short supply.

Singapore has become an important technology hub today and draws tech companies to headquarter and expand their activities here. This is the result of many years of building up the infrastructure and ecosystem. We should support the tech sector's growth to its fullest. However, as the tech sector grows rapidly, it will hollow out relevant manpower from other sectors. This applies not just to IT professionals but also finance, marketing and compliance ones.

Companies in more traditional sectors may not be able to compete for the limited pool of Singapore talent in terms of pay or prospects. Without the relevant IT professionals, these companies may have to slow down and suspend their transformation or digitalisation plans. This, in turn, will make them even less competitive. I expect that when the need for decarbonisation gains pace, professionals in those fields will also be in short supply.

It is counter-intuitive, but the less competitive and more traditional sectors should be given more flexibility to tap into foreign labour, with the condition that it is only for fields where there is a severe shortage of Singaporean talent and only for professionals who will help the companies innovate, raise productivity, digitalise or decarbonise.

Providing funding and technological support is useful, but to do the work, companies still need the warm bodies and brains. The cost of the manpower must also be sustainable for these companies.

I would like to suggest that the Government consider a more differentiated and dynamic approach for foreign labour policy that takes into account the inter-sectoral competition for talent and provide more leeway for less competitive sectors to tap into foreign labour to help them transform and innovate.

Ms Jessica Tan Soon Neo (East Coast): Mr Chairman, can I take my two cuts together?

The Chairman: Yes, please.

Industry Transformation and Opportunities

Ms Jessica Tan Soon Neo: In Budget 2022, Minister Lawrence Wong highlighted that we have a window of opportunity for us to invest in building new capabilities to establish leading positions in key market segments. What are the growth and emerging sectors and how can companies seize opportunities in these sectors?

Last year, the Industry Transformation Maps (ITMs) were refreshed as part of a new plan over the next five years and included three new thrusts: incorporating the recommendations of the Emerging Stronger Taskforce, closer integration with research and innovation, and greater focus on jobs and skills. What is the progress of the ITMs? Can MTI share that?

The pandemic has also heightened the need for companies to digitalise and accelerate the pace of adoption of digital and technology solutions. The current pandemic has shown that businesses that had invested and adapted digitally were more prepared for the disruptions and changes in operations.

What investments has the Government made and will make to encourage and groom Singapore companies, especially SMEs, to transform and adopt digital or tech solutions to be competitive? And what support will the Government provide to firms to do so? My second cut on enterprise development.

Enterprise Development

Helping companies grow outside of Singapore has been a strategy for many decades. In recent years, with the disruptions, market shifts and, most recently, the pandemic, businesses do need to build new capabilities to compete globally. Increasingly, the market opportunities are across sectors and industries. When companies venture overseas, apart from access to new markets, market insights and regulations, businesses require access to capital, supply chains and talent.

Against this changing landscape, how will local enterprises be supported to grow and build capabilities to compete globally? How will we foster stronger partnerships between MNCs and SMEs to help our enterprises collectively seize new opportunities in the global economy?

The Local Enterprises Funding Platform was part of last year’s Budget. The objective was to help selected large Singapore firms transform and expand internationally. What is the progress of this initiative?

In Budget 2022, Minister Lawrence Wong announced a new initiative, the Singapore Global Enterprises, to provide bespoke support to promising larger local enterprises in areas of innovation, internationalisation and partnerships with other companies. How is this different from the Local Enterprises Funding Platform?

The Chairman: Mr Shawn Huang, take your three cuts together.

Enterprise Development

Mr Shawn Huang Wei Zhong (Jurong): Thank you, Mr Chairman. On enterprise development, over the years, the Government has provided much financial and non-financial support to SMEs. Amongst the myriad of options, from capability development and marketing, to internationalisation capabilities at various stages of their development, many SMEs have provided feedback they are appreciative of the robust support but, due to the numerous offerings, they have found it difficult to navigate all available options.

As such, to better assist our SMEs to better access the assistance provided by the Government, how can Government schemes be streamlined so that they are more accessible to businesses, especially SMEs?

Our heartland enterprises are the heartbeat of our community. For decades, our heartland enterprises remain relevant as they provide us with much-needed daily essentials – fresh food as well as important services, such as hairdressing. However, digitalisation and e-commerce have changed the landscape substantially. This is made more difficult as last-mile delivery becomes more common and affordable. Our heartland enterprises have limited resources to keep up with digitalisation. As such, how can we support heartland enterprises to digitalise and build new capabilities?

Manpower and Talent

For manpower and talent: as the world is experiencing a wave of digitalisation, deep tech and scientific advancements, there is a global competition for talent. The ability of companies and Singapore to compete globally is highly dependent on the amount of talent Singapore is able to access.

This is highly dependent on our Singapore workforce as well. Our workforce must be relevant and have the skills to face the challenges of today and the future. This is only possible if we continue to be diligent in maintaining our skills and update our knowledge and professional capabilities with the latest technologies, solutions and processes. This requires a concerted effort on all fronts and in different phases of our manpower and talent development.

How will Singapore ensure that firms here continue to have access to talent they need to support their expansion and operations? What is the Government doing to build a future-ready workforce? How is the Government supporting SMEs to improve the training and upskilling of local workers so that they stay relevant and competitive?

Economic Recovery

On economic recovery, Mr Chairman, I would like to declare my interest as adviser to SIA's Staff Union (SIASU).

Our airline industry has been deeply affected. Our local tourism industry is far from recovery levels. Many working in the tourism sector continue to face many challenges, with reduced incomes and much uncertainty in the months ahead. What is the Government's plan to support the recovery of the hardest-hit sectors in tourism, given the prolonged impact of COVID-19 on the inflow of travellers?

Ms Rahayu Mahzam (Jurong): Over the last two years, an average of around 3,840 firms were deregistered each month, similar to the period 2017-2019, before the COVID-19 pandemic.

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On the other hand, an average of more than 5,000 new firms were registered each month over the last two years, reflecting an increase in the total number of businesses operating in Singapore, despite the impact of the pandemic.

An annual Business Survey conducted by Singapore Chinese Chamber of Commerce and Industry (SCCCI) showed that a majority of Singapore companies, mostly SMEs, view rising costs, availability of suitable manpower, adaptation to COVID-19 safe management measures and transforming or pivoting to growth areas as top business challenges.

In the same survey, 67.5% of respondents experienced rising manpower costs, including the cost of foreign workers, while 63.1% were unable to recruit local staff with the needed skills and 49.5% said that it has become more difficult to get foreign workers.

Banks and finance companies in Singapore have committed to help ease the financial strain on SMEs arising from the need to make principal repayments on their loans during this period, in view of the temporary cashflow constraints that many face. MAS worked with financial institutions in Singapore to offer options for SMEs in need, to lower their short-term repayment obligations for their loans and to stay insured, despite facing financial difficulties.

The Government has in place a suite of measures to support business transformation and help companies upskill and reskill their workforce, including the Enhanced Training Support for SMEs, that provides subsidies to sponsor employees to attend training courses funded by SkillsFuture Singapore.

Businesses can also leverage the SkillsFuture Enterprise Credit to invest in their workforce development. Meanwhile, the Enterprise Leadership for Transformation supports leaders of promising SMEs in developing their capabilities. It has been a challenging period, but businesses are looking to find new opportunities to transform and grow.

While the overall economy has grown significantly in 2021, we know that the growth has been uneven. In particular, consumer-facing sectors, such as retail trade and Food and Beverage services, continue to face challenges due to the pandemic. These SMEs provide important services to the community and hire large numbers of Singaporeans. How will the Government support SMEs overall, and specifically, in sectors with more challenging business conditions?

Besides providing the grants and assistance schemes, we would also need to make sure SMEs are aware of the support that is available to them. While we acknowledge the many new or enhanced schemes and targeted support that have been rolled out in the last couple of years, SMEs may be overwhelmed by the information out there and unsure which schemes they are eligible for. How would SMEs be able to find out more about the support that is available and access such support?

Supporting the Growth of Local Companies

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Chairman, Sir, our economy remains vital to Singaporeans’ livelihoods. There are four key areas that I would like to focus on: one, the progress of the Fair Tenancy Code of Conduct; two, our Business Hub status; three, opportunities and support for our businesses in our region post-COVID-19; and four, deepening our ecosystem and collaboration amongst MNCs and local companies.

While Singapore’s economic recovery has been led by trade-related and manufacturing sectors, this does not fully reflect all sectors and there are still sectors that continue to operate below pre-COVID-19 levels. This uneven recovery amongst businesses can potentially lead to wage disparities. Consumer facing businesses continue to feel the prolonged impact of the COVID-19 pandemic.

Added to this, COVID-19 has also highlighted structural issues faced by consumer facing businesses. A notable structural challenge is one of tenancies. As many operate in spaces by way of tenancies, an unbalanced relationship and onerous tenancy conditions have exacerbated challenges faced by SMEs.

Nevertheless, during the COVID-19 pandemic, various industry associations, such as Singapore Business Federation (SBF), Sumitomo Mitsui Banking Corporation (SMBC), American Society of Mechanical Engineers (ASME), Restaurant Association of Singapore (RAS), Singapore Retailers Association (SRA), Singapore Tenants United for Fairness (SGTUFF), Real Estate Developers' Association of Singapore (REDAS) and REIT Association of Singapore (REITAS) had come together to develop the code of conduct for fair tenancies.

Such a code of conduct provides a fairer tenancy agreement outcome for all parties which sets the basis for business survivability and sustainable growth for both landlords and tenants.

Therefore, there are four questions that I would like to raise pertaining to the Fair Tenancy Code of Conduct. First, I would like to seek updates on the rollout and implementation of the code of conduct for fair tenancy and can I confirm that all Government landlords have adopted this framework? Second, what are the challenges and feedback received by the Fair Tenancy Industry Committee? Third, is MTI reviewing any parts of the code of conduct after gathering feedback and if so, which parts are under review? Fourth, I would like to request a timeline towards legislating this code of conduct into law.

To support businesses and jobs, Singapore must continue to function as a business hub. We must continue to strive hard and be on the lookout for opportunities so that Singapore remains relevant to the global economy. However, with increased protectionism, competition from other global cities and travel restrictions, there is a need for the Singapore economy to build on our resilience and capability to catch the eye of opportunity providers.

Therefore, how has Singapore’s performance been as an investment destination amidst the COVID-19 pandemic? Furthermore, how can Singapore better distinguish itself as a more favourable business hub and enhance our competitiveness, especially in a post-BEPS 2.0 world? What are the anticipated headwinds for Singapore and how are we positioning ourselves?

Asia’s economy continues to be of great value to Singapore and likewise, there is great potential from emerging markets which we can tap. As a global Asia node, how is Singapore supporting our firms to capture opportunities in these markets and how has the support differed, compared to pre-COVID-19 times when the situation was different?

Also, what is MTI's assessment of our regional economies, especially the rise in public and household debts due to COVID-19, and how should our businesses, especially consumer facing businesses, account for these growth plans? What are the concrete steps that Singapore is taking to strengthen our overall trade, economic and digital linkages with other relevant economic partners?

The various support grants that MTI has provided for enterprises, such as the Enterprise Development Grant have been timely to support local enterprises in their transformation. In addition to developmental grants, how do we foster stronger partnerships with MNCs and SMEs to help our enterprises collectively seize new opportunities in the global economy that is increasingly competitive?

What are the strategies to deepen our ecosystem of businesses and collaborations to provide Singapore a competitive advantage in the global economy? Lastly, how can we translate these strategies into increased productivity in SMEs as they face manpower and cash flow challenges?

Overall, as Singapore continues to recover and build new engines of growth, we must ensure that we exit this pandemic with an inclusive recovery in all sectors and industries.

Trade Associations and Chambers – Industry Transformation

Mr Raj Joshua Thomas (Nominated Member): Sir, I declare my interest as President of the Security Association Singapore (SAS). Sir, the Finance Minister had, in his Budget statement, as well as his reply speech, mentioned the important role that trade associations and chambers (TACs) can play. In addition to the roles the Minister had mentioned, I would like to make the following suggestions as to what more they can do and how MTI could support them.

First, TACs can coordinate shared services for their members that would help them get favourable rates and enjoy economies of scale. This includes legal, accounting and human resource services, but also consultancy in core capabilities and internationalisation. In this regard, Enterprise Singapore could consider adapting the Enterprise Development Grant in a way that would allow TACs to coordinate mass funding for their members in the eligible areas.

Second, TACs could be harnessed to administer appropriate Government schemes. A good recent example is how the SG United Training scheme is administered by the Singapore Business Federation. The sectoral TACs can similarly take charge of sector-specific schemes, within parameters worked out jointly with the relevant Government body and with funding to support the costs incurred in administering the said programmes. The TACs' closeness with their industry’s companies will be useful in that it is easier for them to explain how each scheme works and increase these companies’ participation in beneficial programmes and grants.

Third, regulatory authorities can consider devolving some regulatory functions to TACs, where appropriate. Such devolution is most easily achieved with professional certifications and if we push the envelope a bit more, even licensing. For example, instead of regulating the facilities management sector, the Building and Construction Authority has worked closely with the Singapore International Facilities Management Association to establish accreditation schemes for firms and facility management professionals. Similarly, as debated in Parliament last year, my own association administers the Security Consultants Accreditation Programme.

Finally, I would like to thank MTI for the TAC Growth Model Toolkit that was launched recently. This, Sir, is a very excellent resource and reference document for TACs that can help them chart their development.

On a related note, while TACs may get some funding from the Government pursuant to the LEAD grant, it should be the aim of all TACs to not only grow their operations and the services they offer to their members, but also to make sure they have the financial wherewithal to stand on their own two feet. In this regard, I would like to ask MTI if it will consider extending grants to TACs that are traditionally offered to SMEs to help them build revenue making activities.

The Chairman: Mr Derrick Goh. You can take your three cuts together.

Strengthening Trade Associations and Chambers to Help SMEs

Mr Derrick Goh (Nee Soon): Thank you, Mr Chairman. On the strengthening of TACs to help SMEs, even as the Government has catered for significant resources to help SMEs in our pursuit of a digital and green economy, SMEs still see transformation as a cost, rather than a strategic investment or advantage. Intensifying outreach to proactively engage SMEs was a point that Minister Gan Kim Yong made in his speech at the Budget debate recently.

To accelerate our SMEs' growth in the new economy, there is room to do more to spark that mindset shift and marshal them towards the right resources, shape role models in different industries and to sustain partnerships in their transformational journey. In these aspects, I believe that the trade associations and chambers of commerce (TACs) can step up to play a bigger role and better define a role in partnering the Government.

With their extensive networks, TACs can be an effective bridge between agencies and our businesses and are able to galvanise members as agents of change. TACs can also play a role in encouraging knowledge sharing amongst their members, so that businesses can learn about successes and pitfalls faster in their journey for growth. Therefore, can MTI share how it can better incentivise and equip TACs to encourage them to step up their efforts in this area?

Measures to Further Support SMEs

In the next cut on measures to further support SMEs, Mr Chairman, the economic improvement in Singapore in 2021 is a testament to both the effectiveness of the Government's support measures for our SMEs, as well as the resilience of our local businesses. Although we are not yet out of the woods in this pandemic, our SMES can be cautiously optimistic as the world progressively opens up.

That said, there are concerns, given significant economic headwinds. Higher energy prices and supply chain disruption continue to push business costs up. Locally, our tighter wage policies relating to foreign labour have been structured to help our local workers and can also, therefore, translate into higher expenses for SMEs. The recent crisis in Ukraine has compounded these worries, as it has exacerbated the rise in energy cost.

Oil prices are now expected to stay way higher than US$100 a barrel and business prospects looks a lot cloudier, when it looked a lot brighter, just a few weeks ago. While the business support packages in Budget 2022 are generous and with digital transformation, productivity and trading schemes, can the Minister explain what short-term measures will the Government further provide for SMEs to cope with the yet higher energy prices?

Will the Government consider further extending the availability of the Temporary Electricity Contracting Support Scheme (TRECS) to all SMEs which wish to subscribe, given that it is reviewed monthly? Against the backdrop of a prolonged energy crisis worsened by the Ukraine situation, which is still unfolding, will the Government consider further extending TRECS beyond May?

Beyond navigating higher business costs with funding support, the Government can also consider boosting non-financial measures to help our SMEs recover and grow. More than handouts, SMEs are eager for opportunities to get back on their feet.

Sir, the most inspiring stories of grit can be found in our worst-hit sectors such as our SMEs in the MICE industry.

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Mr Dylan Sharma, Vice President of the Singapore Association of Convention and Exhibition Organisers and Suppliers, or SACEOS, told me about pivots that MICE SMEs took and described that online became their lifeline. While the industry deeply appreciates the Government's support schemes that enabled many to stay afloat, the association has given feedback that the demand aggregation (DA) procurement mechanism used by VITAL to improve Government procurement efficiency has locked out SMEs even though Mr Sharma himself and his company are on the panel. Those who are not on the panel of vendors, he describes, are unable to compete for Government jobs for the few years related to the DA contract.

As the digitalisation of procurement processes has made it efficient, can the demand aggregation model be reviewed to improve openness so as to enhance business competition for Government contracts? On this note, what other non-financial measures can MTI further implement to support SMEs in their recovery?

Supporting SME Digital Transformation

Mr Chairman, digitalisation is an imperative for SMEs to thrive in our new economy. Nonetheless, I mentioned in my Budget speech that what weighs on the minds of SME owners is the certainty of cost increases against the uncertainty of the benefits related to digitalisation. While the Government has embarked on the journey to provide a nurturing ecosystem for SMEs to digitalise, there are still inertia and doubts that deter SMEs from taking that first step.

I recently spoke with Mr Jimmy Goh, the owner of an SME 500 Awardee Sin Chwee Mini Mart who successfully digitalised his father's 30-year-old traditional seafood business with the help of an SME Centre. His feedback was about the heavy reliance on outsourced solution providers, noting that SMEs owners like him are not technologically savvy and have to go through a lot of trial and error. SMEs, therefore, worry about potentially getting locked into contracts and losing control of key business data as well as IT systems.

How can MTI provide better assurance to SMEs with such concerns?

The Association of Trade and Commerce also fed back that some SMEs feel that support can be a lot more holistic because, as beginners, they may not be clear of the holistic roadmap for a successful digitalisation, such as the need for online marketing after developing a sales channel. SMEs hence found themselves underestimating the costs and time required to build a digital channel.

On this note, how can MTI provide more comprehensive support for SMEs to digitalise?

Digitalisation and Innovation

Mr Desmond Choo (Tampines): Chairman, digitalisation and innovation are no longer just the mainstays of larger companies. They are essential for any company to survive and thrive in the new economy. While larger companies have the expertise and resources to do so, SMEs find it much more challenging. SMEs also hire the bulk of our workforce. Thus, their growth is critical to the Singapore workforce. This is even more so as the world becomes smaller and global competition ever closer to home.

Budget 2022 focuses significantly on helping SMEs to boost their productivity by automating business processes. Six hundred million dollars have been set aside to help them.

There are two key challenges to adoption for SMEs. First, talent is needed to digitalise and automate business processes. With the escalating costs of talent acquisition, even eager SMEs might find their ambitions curtailed. In the longer run, having talent within the company allows for more robust implementation. How can the Ministry help to accelerate the training of such talent within companies?

In the interim, another option is to establish a common core of such talent that companies can buy services from. Such consultancies are already commonplace but need to be amalgamated and subsidised for SMEs' adoption.

Despite the vastness and accessibility of information, identifying opportunities in the digital economy that suit the SMEs is even more difficult than ever. Because of the exponential increase in opportunities and also threats, deciding on business opportunities is more complex than ever. Companies suffer from either choice paralysis or analysis paralysis, or both.

One of the more common curation tools used to be trade visits or trade delegations to overseas markets. In this new digital economy, this will neither be necessary nor desired. Can the Ministry share how they are helping our firms to identify new opportunities in the digital economy?

The Budget also focuses significantly on R&D. Digitalisation and innovation are complementary but distinct processes. Both are essential in today's knowledge economy.

Singapore's total business R&D expenditure lags behind other economies, with most of the nation's R&D efforts driven by MNCs.

We are investing more into R&D, seeking to boost the private sector's collaboration with 80 research centres islandwide. Can the Ministry share how we can support enterprises in reaping the benefits of R&D outcomes? The value from innovative ideas generated from R&D must be captured in a timely fashion and commercialised for businesses to fully benefit from R&D efforts. This post-R&D step is a vital one.

In the short run, support for enterprises to tap on the opportunities presented by digitalisation and innovation is crucial. In the long run, we must seek to assist enterprises to grow their innovation capabilities independently to ensure continued R&D efforts even where Governmental support is not provided.

Can the Ministry share how it has been assisting our enterprises to grow their capabilities independently in the near future?

Enhancing Consumer Protection

Mr Melvin Yong Yik Chye (Radin Mas): Mr Chairman, I would like to first declare my interest as President of the Consumers Association of Singapore (CASE).

In my Budget Debate speech, I spoke at length about the choices that consumers can make to alleviate the rise in our cost of living. But all our efforts will be in vain if we fail to clamp down on unscrupulous businesses which take advantage of the inflationary environment and engage in unfair practices.

I have three suggestions to strengthen the Consumer Protection (Fair Trading) Act or CPFTA.

First, we need to be able to take faster action against errant businesses. Under the current regulations, CASE may invite errant businesses to enter into a Voluntary Compliance Agreement (VCA) to cease its unfair practices and to compensate affected consumers. As the name suggests, such agreements are entered into on a voluntary basis and businesses which refuse the VCA are then referred to the Competition and Consumer Commission of Singapore (CCCS) for investigation.

Since the last CPFTA amendments in 2016, CASE has referred 10 businesses to CCCS for investigation and CCCS has successfully obtained three injunction orders against these errant businesses.

But, Sir, it took CCCS about 20 months to obtain an injunction order to stop these businesses and to stop their unfair practices. This long lead time can lead to: one, a continuation of the unfair practices; or two, allow the errant business time to wind down their companies. If unaddressed, this will severely undermine public confidence in our consumer protection regime.

Sir, we should enhance the CPFTA to ensure timely action can be taken against errant businesses. For egregious cases, MTI should empower CCCS to impose financial penalties on errant businesses without having to first obtain an injunction order from the Courts.

Second, the Courts must be able to order errant businesses to compensate the affected consumers during an injunction application by CCCS.

Currently, even if CCCS successfully obtains an injunction order against an errant business, affected consumers are still required to separately file their cases at the Small Claims Tribunal to seek compensation and this can be an onerous process for some consumers.

I propose to amend the CPFTA to provide the Courts with the discretion to compel errant businesses to compensate affected consumers. This is already practised in countries such as Australia, and I believe that doing so will provide consumers with quicker financial relief.

Third, we should expand the ambit of regulated contracts under the Consumer Protection (Fair Trading) (Cancellation of Contracts) Regulations to include beauty-related contracts.

Complaints against the beauty industry took the top spot in 2021, with many consumers complaining of pressure sales tactics and misleading claims. Despite our best efforts, such unfair business practices continue to run rampant.

Including beauty-related contracts under the ambit of regulated contracts will provide consumers with a crucial five-day mandatory cooling-off period. This allows consumers the necessary time and space to consider whether they truly want to go ahead with the purchase, especially those that involve large prepayment amounts.

Sir, I urge the Ministry to consider my three suggestions to strengthen the CPFTA so that we can better protect consumers amidst the backdrop of global inflation.

Committee Against Profiteering

Mr Sharael Taha: Mr Chairman, how will the Committee Against Profiteering be implemented and how will it address concerns of businesses perceived to be profiteering from the GST increase? How can the committee identify the singular cause of price increase and hence, identify businesses profiteering from GST in light of increasing costs of supplies, rental, labour, energy, in addition to the stepped increases in GST? How can we ensure the committee is effective in protecting our residents?