“MEH” – this is my response to the recent Singapore Budget 2019. Here are three reasons why it failed to impress me (or evoked much emotion at all).
1. Confuse and… conquer?
In the Singapore Budget speech, our finance minister highlighted the need to build “Deep Enterprise Capabilities”. Sounds great? I was still uncertain about what it actually meant.
There seemed to be allusion to technological expertise and innovation. I read the budget speech a few more times, but was unable to come to a concrete conclusion. Perhaps some budget should be assigned to the “Speak Good English Movement” to promote their activities.
2. Lack of impact
Over the last five years, the government has consistently stated its plans and efforts to better support business in Singapore, in particular SMEs. While I applaud and appreciate these efforts, I do not see the impact.
We hear SME owners sharing their frustration and disappointment at the rejection of their grant requests on a regular basis. Others have mentioned that they have been approved for grants, but the amount is a token sum. These statements seem to be in stark contrast to the successes portrayed in the Singapore Budget speech.
According to SPRING Singapore’s Annual Report 2017 – 2018, it has supported 40,000 SMEs in building new capabilities. At first glance, it seems quite respectable as this is about 20% of our total SME base of about 200,000. However, my mind starts to ask other questions such as:
– How many companies applied for support?
– How many companies were successful?
– What is the breakdown of the successful companies in terms of size and industry?
Without the above data, I think it would be hard to compare and measure if there has been an impact on SMEs.
3. Encouraging dependence
I find it both ironic and worrying that the annual budget is such a hot topic among local SMEs. As a business, the norm is to plan your activities independently based on your own goals and objectives.
However, in Singapore, we seem to have a breed of business who plan their business around government plans. I am not referring to those who see our Government as a client, but rather those who focus on grants. I have met numerous business owners who will not do anything for their business unless there is a government grant. This makes me wonder if the business owner is running the enterprise or the government.
What the Singapore Budget got right
The government will expand the SMEs Go Digital programme, said Minister for Finance Heng Swee Keat.
The SMEs Go Digital programme was launched in Budget 2017. Since then, around 4,000 small-and-medium enterprises (SMEs) have adopted pre-approved digital solutions.
Mr Heng said accountancy, sea transport and construction will now get their own industry digital plans (IDPs). More sectors will be added later. These plans are meant to guide SMEs on relevant digital technologies and skills training programmes. As of end 2018, IDPs have been developed for seven sectors: environmental services, retail, food services, wholesale trade, logistics, security, and media.
In addition, the government will expand the number and range of “cost-effective (and) pre-approved digital solutions”. This will be so SMEs can take on digital solutions in the area of artificial intelligence (AI), and cybersecurity.
Source: Business Times
Our Government is right to encourage SMEs to become digital and global businesses and I applaud them for their foresight. However, I believe such transformation requires a different set of tools.
Focus on the LEADERS
Majority of the current generation of business leaders made their money in a local environment with little competition from overseas providers.
Most of the SME bosses we know used to work for larger companies. After they mastered “corporate secrets”, they decided to venture out and create a “copy” of their past employer’s business. Unfortunately, their experience has not equipped them with the ability to future proof their business.
We should have more focus on upgrading the business leaders and their ability to drive and inspire change within their organisations.
The MNCs spent considerable money and effort developing grooming their leadership and the SMEs should not be any different.
Replace GRANTS with LOANS
I have previously heard SME owners refer to grants as “free” money and this attitude is worrying as it shows a cavalier attitude to this source of funds. The SME owner may not have to pay it back, but that does not mean it can be used anyhow. SME owners are more wary of loans though, as they know that they will have to pay it back. As such, to impose a more “responsible” mind set upon SMEs owners, I believe loans are the way to go.
One of the main thrusts for Singapore Budget 2019 is increasing SME access to finance. However, some conservative institutions may still consider SMEs as a high risk market.
While this is a reality, I do not think it is an insurmountable issue. The Grameen bank has been funding village women in Bangladesh and has displayed a possible model. Let’s tweak this model to support our SMEs and wean them off “free” money.
If you’re an SME owner thinking of transforming yourself and your business for the digital future, contact us now.