SMEs embracing productivity can benefit the whole economy: Tharman

One example is Q.B. Food Trading, one of the few food manufacturers here that has used robotics to grow its production volume. The Government's role is to provide support to such progressive firms, said the Deputy Prime Minister.
By Imelda Saad, Channel NewsAsia, 24 Sep 2014

Economic restructuring is painful, but local firms can thrive by upgrading their production processes and looking for new markets, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.

He made this point on Wednesday (Sep 24) after visiting Q.B. Food Trading, a local food processing company that has grown through its use of robotics. The adoption of automation has helped the company grow its production volume by 60 per cent, from 40,000 portions of cheese a day to more than 60,000.

Post by Ministry of Trade & Industry.

The investment in machinery - amounting to about S$1 million - was partially funded by SPRING Singapore's Capability Development Grant, which helps Small and Medium Enterprises defray up to 70 per cent of qualifying project cost.

The company said this has been a worthwhile investment. Said managing director Quah Wee Keong: "Without this robotic line, I suppose I wouldn't get more orders. We would be stagnant. It helped us a lot."

Q.B. is one of the few food manufacturers in Singapore that has utilised robotics, traditionally used by the automotive and engineering sectors. The company currently exports to countries in the region, including Malaysia, Indonesia and Cambodian and there are plans to expand its exports into new markets

The Deputy Prime Minister said the food manufacturing industry here has the potential to grow further, by upgrading its processes and riding on Singapore's safe and trusted brand name.

Singapore's food manufacturing industry is highly fragmented - made up mostly of home-grown businesses. 96 per cent are Small and Medium Enterprises. The sector employs more than 27,000 workers and rakes in S$2.3 billion, accounting for just under 10 per cent of the GDP. Mr Tharman's visit was organised as part of the Way to Go Singapore! campaign, which is a national outreach effort to rally Singaporeans to embrace productivity. 

PROGRESSIVE FIRMS DESERVE SUPPORT

Four years ago, Singapore set a productivity growth target of between 2 and 3 per cent over 10 years. But after a spurt in 2010, growth has been slow. It fell 2 per cent in 2012, and was flat last year.

Still, Mr Tharman is optimistic. While progress has been slow overall, "if you look at the sectoral and industry level, changes are happening", he said. "The macro-level statistics are weak because of the construction sector. Because some of the sectors that were growing rapidly were lower-productivity sectors. But if you look at changes within each sector and not at the overall economy, you see the changes that will eventually be reflected in better macro statistics."

Industries are transforming themselves, noted Mr Tharman, and that means two things - some firms are gaining market share and other firms are losing out. "That's what industry restructuring is at the end of the day. And our job as Government is to provide as much support as we can to the progressive firms - those who are willing to invest, those who are willing to do things in a different way."

CREATING VALUE WITHOUT INCREASING MANPOWER

Sectors that have performed well include the aerospace and precision engineering industries, while the services and construction sectors are among those that can improve further, said Mr Tharman.

"It's not identifying sectors that are laggards that is the issue. It's about helping them to get to that next step, and we are working very hard to achieve that, by taking an industry-wide perspective, by introducing centralised services." he noted. "Whether it's centralised dish washing or linking up the food manufacturers with the retailers for greater efficiency, we try every way in which we can create value without growing manpower. "

ASPIRE'S ROLE IN PRODUCTIVITY PUSH

Recent initiatives by the ASPIRE (Applied Study in Polytechnics and ITE Review) committee and the release of Singapore's new Continuing Education and Training Masterplan tie in with the country's productivity push, he said.

“At the end of the day what we have is the advantage of being trusted and reliable. Secondly we have our people," Mr Tharman said. "Our people are a critical strength and we have to develop our people to be able to make the best way of new machinery plus, think of ways of combining machines."

This is what Q.B. has done, he pointed out. "It's not just off-the-shelf you know! Nothing is off-the-shelf. It requires some ingenuity, some experience - not just the ingenuity of the entrepreneurs and the owners or the people at the top, but the people who are really having to think through the production process and make adaptations and improve them over time. Q.B. is an example of an SME that is doing it and it shows how many more SMEs can in fact really take ownership of the productivity goal for their own survival, for their own growth and that's how our whole economy benefits."

Mr Tharman, who also chairs the newly announced SkillsFuture Council that will bring the ASPIRE and Continuing Education and Training efforts together, said details on the council's makeup will be released in a week's time.