Singapore firms need X-factor to thrive globally: Heng Swee Keat
SINGAPORE (The Straits Times/ANN) - Finance Minister also cites firms' poor record in raising productivity, deepening talent pool
Unless Singapore firms bring "something special" to the table, they will struggle in the fiercely competitive global marketplace, said Singaporean Finance Minister Heng Swee Keat yesterday.
That was just one of the blunt home truths Mr Heng laid out when addressing a conference of Asean business leaders. The Association of South-east Asian Nations (Asean) is a grouping of 10 countries located in South-east Asia.
He also pointed to Singapore's poor results in raising productivity and how it has failed to develop deeper talent pools so it can better compete with heavyweights like China.
Mr Heng made it clear that Singapore and Asean companies should regionalise to tap the advantage of access to big markets.With Singapore's economy maturing, firms need to seek growth beyond the home market by building a niche.
"I've always believed that you cannot internationalise without some real capabilities," said Mr Heng, who was speaking at the Asean Conference, jointly organised by the Singapore Business Federation, United Overseas Bank, Rajah & Tann Singapore and RSM Singapore.
"Over time, you must expect that unless you bring something special to the table, you will not be welcomed at the table."
Products from developed markets commonly emerge from companies with a better business model or that are built with superior technology, he noted.
"If you look at the rapid growth in China, many of their products have now attained that level. So we must be humble about this, and we must learn."
Mr Heng also pointed out that while Singapore's growth rate is expected to be lower than in previous decades, that does not mean firms will find opportunities curtailed.
"The Swiss economy's growth rate is also not high, but Swiss firms are all around the world, and they are selling world-class products. I hope that our businesses can play that role," he noted.
Mr Heng also raised a more deep-seated issue, the perennial challenge of raising productivity.
He said there are still companies that are "quite behind" in boosting their output levels to match those from corresponding companies in the same industry from advanced countries.
Mr Heng cited retail and construction sectors as industries in need of restructuring.
He noted that in advanced countries with high productivity posted by the construction sector, the worksites are extremely organised. Cement is delivered like clockwork, for example, otherwise it would dry up in the mixer in about four hours.
"Here in Singapore, if you look at some of the worksites, they are quite a mess."
Mr Heng also urged companies here to work on developing their workers and collaborate with talent from all over the world, noting that countries such as the United States and China continue to have a distinct advantage in having large talent pools.
The call for restructuring comes as Singapore has to be conscious of how free trade can sieve out winners and losers, while ensuring that people are not left behind.
"Free trade will give us a bigger piece of cake, but some people may end up with nothing to eat even though the cake is bigger," he said.
"If you look at... many parts of the world, where people are against free trade, it is that the losers felt very aggrieved that the system has not served them well.
"This is something which all countries, including Singapore, must be very conscious of, and we have to ensure that our people benefit from free trade, because it (creates) a far bigger pie than if we were to close our economy."
Mr Heng recalled that when China joined the World Trade Organisation, the country emphasised both reform and liberalisation.
"I think that encapsulates many of the things that we need to do. When we open up, we have to reform," he said.
Mr Heng said trade friction will ultimately be very disruptive to the global economy, and "self-defeating" if it escalates into a trade war.
"You have the immediate consequences of trade wars, and more seriously in the long term, we undermine this multilateral framework... to ensure that we have rule-based systems for which countries big and small will participate in the global economy," he said.
"I hope that good sense will prevail."