Speech at Developing Lean and Future-Ready SMEs Forum

Mr Teo Ser Luck, Minister of State for Manpower, Raffles City Convention Centre

Dr Robert Yap

President, Singapore National Employers Federation

Chairmen of Trade Associations and Chambers;

Distinguished Guests;

Ladies and Gentlemen

Good morning. I am happy to know that more than 250 small and medium-sized enterprises (SMEs) are here today. Your presence signals the commitment to transforming your businesses to be manpower-lean and future-ready.

Need for SMEs to Advance

1. Today, there are 190,000 enterprises in Singapore. 99 per cent of these are SMEs and they employ about 70 per cent of the workforce. However, SMEs contribute only about half of Singapore’s Gross Domestic Product (GDP) in 2014. Thus, there is still quite a lot of scope for SMEs to enhance their capabilities in raising productivity levels.
2. Singapore’s workforce composition is already at the ratio of two local workers to one foreign worker. Our workforce growth is projected to decline to around 1 per cent per annum by 2020. The need to transform is becoming more urgent than ever and SMEs that fail to plan for the transition to this new business environment are not likely to make it. This is why we are strongly urging SMEs to go for productivity-driven growth, rather than labour-driven growth, and have put in place various initiatives to support companies to adopt manpower-lean approaches to spur growth.
3. Our economy is at a critical point. We have relied on manpower-intensive means to boost our industrial and service output. However, this is not sustainable in the long-run as our workforce cannot continue to grow at the same pace as in the past decade. With a more educated workforce striving for higher career aspirations, SMEs must also be able to provide meaningful careers to attract and retain Singaporean talent. To do so, you need to be a progressive and innovative employer who is at the forefront of engaging in best practices and implementing the use of automation.
4. Many prominent companies today, such as retailer Atlas Sound and Vision and F&B operator Tung Lok Group, have embarked on manpower lean best practices and today are able to reduce operating costs with an increased profit margin.
5. The Government supports SMEs through various initiatives and programmes. These include programmes by the Singapore Workforce Development Agency (WDA) targeted at SMEs, such as the Enterprise Training Support scheme and P-Max programme. In October 2015, Minister for Manpower, Mr Lim Swee Say, unveiled the Lean Enterprise Development (LED) Scheme, to help progressive SMEs transform and thrive in the new manpower-lean landscape. These support measures are aimed at helping SMEs achieve stronger business growth in a manpower-lean way and at the same time and offer better careers to our Singaporeans. We will continue to support all those who want to embrace change and are committed towards greater progress, better innovation and higher productivity.
   
   TACs as LED Multipliers
6. The LED Scheme is a multi-agency effort that integrates various existing Government grants like SPRING’s Capability Development Grant, IDA’s Enhanced iSPRINT and WDA’s manpower-lean training initiatives through a one-stop application channel. It serves to assist progressive SMEs willing to take the first step towards becoming manpower lean. Under the LED Scheme, the Ministry of Manpower (MOM) is prepared to consider transitional foreign manpower support for SMEs during the implementation of innovative restructuring projects that optimises the usage of manpower. This will enable companies to transit to new business structures and processes more easily and with lesser constraints on manpower with a view towards more manpower-lean operations in the long run.
7. Since the launch, the LED Taskforce led by SPRING, WDA and NTUC received many indications of interest and applications for the scheme. However, many firms have also shared that they would require more assistance in developing impactful and comprehensive proposals, as they may not have the know-how or contacts to do so, even if they were willing to transform.
8. We recognise the challenges that smaller firms face – many are busy running day-to-day operations, and need some help to shift focus and map out the longer-term changes. Today, I am pleased to announce that the LED Taskforce will appoint nine Trade Associations and Chambers (TACs) and industry partners to help SMEs develop manpower-lean processes, build a strong Singaporean core in their companies and nurture a higher skilled workforce.
9. The nine partners will be known as the LED Multipliers. With their strong membership base and position as industry champions, they have excellent insights into the challenges faced by SMEs and are well placed to assist their members. As LED Multipliers, their strong network and outreach capabilities will help to raise awareness and a better understanding of how the LED Scheme can help companies. For example, as a nexus for their industry, they can cluster like-minded companies with common issues and solutions to embark on a single LED project. They can also guide pioneers and early adopters in developing quality LED proposals through business remodelling, technology adoption, and building skills and talent.
10. Over the next two years, the LED Multipliers will drive the adoption of LED projects and aim to benefit about 400 progressive companies. This will set the stage for mass adoption in the future. I am confident that the LED Multipliers will able to inject fresh perspectives and new ideas as well as help companies to put together holistic proposals to be submitted to the LED Taskforce. I would like to see more SMEs coming forward to adopt the LED Scheme with the assistance of the LED Multipliers, and speed up the transformation process.
11. On this note, I wish all of you a fruitful forum.

Thank you.