Singapore ended 2020 with what is expected to be the worst recession on record with a contraction of 5.8%, according to the government’s preliminary estimates.
The downturn saw more companies tapping on government help to try and transform so as to pull through the crisis. However, the broad-based support measures will be more selective going forward. According to government agency Enterprise Singapore (ESG), some 15,300 companies had leveraged on its support last year to embark on projects to raise productivity, innovate and inter- nationalise.
These companies had mainly come from the lifestyle, trade and connectivity and modern services sectors (see chart 1). The latest number is a 54% surge from 2019, ESG — an agency parked under the Ministry of Trade and Industry (MTI) — notes in its annual year-in-review on Feb 5.
“Many enterprises recognised that the global environment has changed and they would need to operate differently with better products and solutions, in order to compete in this new environment,” ESG’s chief executive officer Png Cheong Boon says of the jump.
Civil engineering operator Hocklim Engineering is one com- pany that benefited from the support rendered by ESG. The com- pany, together with the Housing Development Board (HDB), had worked to prevent landslides and soil erosion on slopes during heavy downpours with its GeoBarrier System. The reliability and deployment efficiency of this mechanism was improved with the support of HDB and the Nanyang Technological University (NTU), who were its research partners.
Hocklim has since secured contracts of over $1 million, with its first deployment being at the Bidadari housing estate. With this, it has pivoted from a traditional contractor to a civil and geotechnical engineering company.
Hocklim is among some 14,800 enterprises that underwent productivity improvements and capability upgrading projects last year. Such projects were the most widespread in 2020 and was up 78% from the number recorded in 2019, ESG reports.
Aside from this, more firms also made attempts to boost innovation, with 600 enterprises embarking on such projects compared to 550 in the year before. Such efforts included the development of new products and solutions to tap on the opportunities created during the pandemic, said Png.
He points out the development of Covid-19 Fortitude test kits
by local firm Mirxes, in collaboration with A*STAR and Tan Tock Seng Hospital, as an example. To date, some 5.3 million pieces of this test kit — which can detect the presence of the SARS CoV-2, which causes the coronavirus — have been deployed in over 45 countries.
In another instance, homegrown agritech company Archisen had embarked on developing novel crop recipes for iron and calcium fortified lettuce. Such a move will strengthen its crop science R&D capabilities and competitiveness in the longer-term, says Png. It also fits well into helping Singapore edge closer to its ‘30 by 30’ goal of having 30% of its nutritional needs produced locally by 2030.
Overall, the take up in projects last year is expected to generate $18.4 billion in value-added to the Singapore economy as well as create 22,000 professional, managerial, executive and technical (PMET) jobs in the next three years, notes ESG.
In 2020, the agency had also worked with financial institutions to disburse loans amounting to $18 billion for 21,000 enterprises. Of these, 87% of the recipient companies were micro and small enterprises which mostly came from wholesale trade, construction, manufacturing, professional services and retail sectors.
The agency had also helped 23,500 enterprises to upgrade, digitalise and achieve business continuity. It has also supported some 3,600 retailers and 19,000 food and beverage establishments to build capabilities and sell online through e-commerce and delivery booster packages.
However, the government body notes a slowdown in companies’ internationalisation efforts in 2020 as only 1,600 enterprises — down 38% from 2019 — had embarked on such activities. Family-owned local Peranakan eatery HarriAnns is an anomaly that chose to expand overseas during Covid-19. Following a recent collaboration with a five-star hotel, the company will now provide localised cookies as well as their signature bottled kaya spread in countries such as Malaysia, Indonesia, Thailand, Hong Kong, China, the Philippines and Sri Lanka.
New normal
Singapore’s Minister for Trade and Industry Chan Chun Sing notes that the immediate focus, especially at the height of the pandemic, was to help enterprises stabilise operations and stay
afloat. More business leaders have come to realise that things will not return to pre-Covid-19 days.
“This is an important distinction as it determines the steps that our businesses will take going forward,” said Chan at the same press conference on Feb 5. “Those who realise that there is no return to the pre-Covid days will double down on their transformation efforts to ensure that they remain resilient and competitive in the new economy”.
Going forward, Chan acknowledged that while the government has responded swiftly and decisively to support businesses and workers through the course of the pandemic, Singapore’s resources are ultimately finite and must be used judiciously. “This means that while we will continue to support our businesses, we will not be able to do so indiscriminately,” he adds.
Chan’s comments come days before Singapore’s Budget 2021 which will be announced by Deputy Prime Minister and Finance Minister Heng Swee Keat on Feb 16. Analysts’ wish lists on what is to come include more targeted support for harder-hit sectors and additional support for low-income households.
As for how it will support businesses, the government is looking to help enterprises seize new opportunities in new markets through new products, services and processes. “So it’s not sufficient to play defensive by trying to preserve existing enterprises and current jobs only,” says Chan. The faster Singapore helps its companies and workers seize the new opportunities, the better the prospects for companies and wage growth for people, he added.
Chan also warns that as the economy shifts, there will be some pain. “We would have to exit some of the old business models because they are no longer relevant in a Covid world or a post-Covid world, and we’ll have to move forward and re-allocate the resources to help businesses to seize those other opportunities that are growing,” he adds.
Sourcing for opportunities
The government has identified a few sectors with good growth prospects. They include advanced manufacturing, agritech, ed- tech and the sustainability trend. Last month, Chan announced a target to grow Singapore’s manufacturing sector by 50% over the next 10 years. At present, the sector contributes about 21% or around $106 billion of the city-state’s total gross domestic product and accounts for about 450,000 workers or around 12% of the workforce.
Chan acknowledges that this is an ambitious target given the increasing challenges in relying on foreign labour to supplement the local workforce. As such, Singapore will need to innovate and produce higher-value products rather than look to lower the cost of production of labour, the minister adds.
ESG chairman Peter Ong says the manufacturing sector can be developed through Industry 4.0 technologies such as robotics, Industrial Internet of Things (IoT) and additive manufacturing. These can subsequently be applied and adapted to other growth sectors such as agritech, biotech, sustainability and urban mobility, he said. Such cross-deployment has already taken off at the Singapore Aquaculture Technologies — a smart floating fish farm — which is leveraging IoT and artificial intelligence to better control processes and optimise resource inputs such as feed, energy and oxygen. Through technology, the company sees an improvement in fish health and its production capacity.
Meanwhile, the government reiterates the existing and new opportunities in neighbouring countries. For example, Singapore companies can try and benefit from the ongoing efforts aimed at strengthening China’s domestic market, innovation ecosystem and development of mega regions such as the Guangdong-Hong Kong-Macau Greater Bay Area and Yangtze River Delta region, says Ong.
Southeast Asia, on the other hand, presents a different set of opportunities such as in the technology-related sectors. This comes, as the digital consumers in the region was forecast at 310 million by the end of last year, a number that was initially anticipated only in 2025, an August 2020 report by Facebook and Bain reveals
Ong notes that companies like LittleLives have already been riding on this wave. LittleLives provides school management system solutions that handle administrative processes and document records such as the student portfolio and digital attendance. So far, its solutions are used by over 1,200 schools in Asia, including 770 centres in Singapore.
In light of these targets and goals that ESG and Chan have set for Singapore, it seems like the city-state may have an eventful 2021 that will hopefully help lift it from the throes of the recession it is in.
However, all this depends on the effectiveness of the Covid-19 vaccines and the extent of the spread of the coronavi- rus and new strains in other countries around the world.
