Catalysing Industry Transformation at Every Level: Ministry of Trade and Industry

ISSUE #61

It is paramount that our companies continue to invest in productivity and transformation.

Impetus for Productivity-Driven Growth

The world has experienced significant shifts in the economic landscape since the global financial crisis and the external environment remains challenging. Domestically, Singapore is also experiencing slower workforce growth and will need to devise strategies to make better use of its limited resources, in order to allow companies to remain competitive and effectively seize new growth opportunities. Against this backdrop, the Economic Strategies Committee chaired by Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam identified the need for Singapore’s economy to shift towards productivity-driven growth, and recommended that Singapore aim to sustain productivity growth of 2-3% per year over a decade (i.e. 2009-2019).

We are on track to meeting this target. Labour productivity (measured by value-added per actual hour worked) grew at a Compounded Annual Growth Rate of 2.7% from 2009 to 2015. However, we are now in a new economic paradigm where slower growth worldwide may be the norm. In July, the International Monetary Fund cut its global economic growth forecasts for this year and next. The global economy is projected to expand by 3.1% and 3.4% in 2016 and 2017 respectively, down from the 3.2% and 3.5% forecasts made in April 2016. With an export-driven, trade-dependent and globally connected economy, Singapore will be affected by these challenging conditions and future productivity gains may be more impacted.

Nonetheless, productivity-driven growth remains important as it is the only sustainable way for wages to grow in the longer term. To position ourselves for the future, Singapore must continue to push ahead with its restructuring efforts, and it is paramount that our companies continue to invest in productivity and transformation.

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Transforming Enterprises

Today, there is a wide range of schemes administered by various government agencies to support companies of various sizes in various sectors. A new Business Grants Portal will be launched in the fourth quarter of 2016 to help companies more easily access government schemes for capability building, training and international expansion. When fully developed, the portal will offer more than 20 grants from IE Singapore, SPRING and Singapore Tourism Board, as well as other agencies.

We have also launched the S$400 million Automation Support Package to support companies keen to adopt automation more widely. The extensive use of automation can help companies achieve significant improvements in productivity, but often involves substantial financial outlays that companies may find difficult to commit to. The Automation Support Package would help to defray part of the costs, enabling more companies to become manpower-lean.

Transforming Industries

Beyond enterprise-level measures, we have also committed more resources to catalyse transformation at the industry level. Different industries have different needs that would be met in different ways. For example, the Jurong Town Corporation (JTC) is developing the Food Hub @ Senoko, a dedicated shared facility, to help food manufacturers in Singapore lower operating costs. Besides cost savings, tenants can also tap on a full suite of cold room, warehouse and distribution services that the Food Hub will offer. With their warehousing and logistics functions taken care of by a third party operator, the Food Hub’s tenants will be able to focus on their core functions and undertake activities to enhance competitiveness, such as research and development, branding and improving production processes, and expansion to new markets.

The JTC Food Hub was developed in close collaboration with the Singapore Food Manufacturers’ Association and the Singapore Manufacturing Federation. It is a good example of how Trade Associations and Chambers (TACs) can contribute to our overall economic restructuring efforts. TACs are well-placed to reach out to many companies, and have intimate knowledge of the needs and potential of their specific sectors.

To help TACs strengthen their in-house capabilities and enhance outreach efforts, we introduced the Local Enterprise and Association Development-Plus (LEADPlus) programme. This will provide wider funding support for TACs to attract talent, develop their capabilities, and strengthen their processes and services. The government will also second up to 20 public officers over the next five years to TACs under this programme.

Apart from strengthening TACs’ capabilities, we will also partner them to drive 30 Collaborative Industry Projects (TAC -CIP) over the next three years. Leveraging their deep understanding of specific sectors, TACs can support firms to build capabilities and lead the development of industry-wide solutions for common challenges. This programme is expected to benefit over 3,000 SMEs.

The government will also adopt a more integrated and sector-focussed approach towards industry transformation. A tripartite Council for Skills, Innovation and Productivity (CSIP) was established in May 2016. Chaired by DPM Tharman Shanmugaratnam, the Council comprises members from government, industry, unions, and educational and training institutions. Collectively, they represent different sectors and bring together a broad range of expertise. One of the CSIP’s key objectives is to achieve synergies between skills, innovation and productivity efforts for each sector. In this regard, it will oversee the development of Industry Transformation Maps (ITM) for more than 20 sectors in the economy.

Each ITM will comprise a growth and competitiveness plan, and will integrate existing sector-specific initiatives and schemes. These include programmes to upgrade productivity, develop skills, promote technology adoption and innovation, and help companies expand overseas. They will be developed and implemented in partnership with companies, industry associations, business chambers, and unions.

To support our industry transformation efforts, we also encourage more foreign firms to establish and deepen strategic activities in Singapore. Singapore’s strategic location, regional connectivity and insights on markets will enable us to continue to play a valuable role for companies keen on tapping the region’s growth. There are also many opportunities for business collaboration in areas of mutual interest.

Driving Sector-Focused Skills Development

As companies embark on the journey to build new capabilities and raise their productivity, we must strengthen our workforce by helping Singaporeans to upgrade their skills, so that they can undertake better and higher qualified jobs in the future. Several key SkillsFuture initiatives have been implemented since the second half of 2015, such as the SkillsFuture Earn and Learn Programme, SkillsFuture Study Awards and SkillsFuture Mid-Career Enhanced Subsidy.

The CSIP will continue to drive the national SkillsFuture movement to develop an integrated system of education, training and career progression based on skills mastery. As a next step under the CSIP, SkillsFuture will see the implementation of sector-focussed skills development to support productivity- and innovation-led economic growth. This is important as transformation at the industry and enterprise levels will only be successful if our companies have access to a highly trained and qualified workforce with deep skills and expertise in their respective fields.

Taking Singapore’s economic development to the next level

Moving forward, Singapore must seek continuous growth and adapt to new technologies to remain competitive and relevant. The Committee on the Future Economy has been hard at work this year, canvassing for views and ideas from both public and private sector representatives to chart the direction for Singapore’s future economy. ITMs will also be rolled out progressively to strengthen enterprises and industries, while also focusing on lifelong learning and skills upgrading.  Together, we can take Singapore’s economic development to the next level and create good jobs for Singaporeans.

 

By the Singapore Ministry of Trade and Industry

 

Article published in the FOCUS Magazine “Principles of Productivity” – Issue #3 2016