S'pore economy evenly spread

SINGAPORE'S economy is evenly spread - between small and large, foreign and local - and benefits greatly from the mix, said Trade and Industry Minister Lim Hng Kiang yesterday.

With the aid of a slew of charts, Mr Lim told Parliament that growth has been driven by a combination of all segments - local and foreign small and medium-sized enterprises (SMEs), and foreign multinationals and large home-grown enterprises.

'Our economy in fact is as diversified as it can be,' he said. 'One-quarter of the value-add comes from foreign (multinationals), one-quarter comes from local big companies, one-quarter comes from foreign SMEs and one-quarter comes from local SMEs.'

Mr Lim cited the data in defence of Singapore's growth model, arguing that the country did not just dwell on a strategy of attracting multinationals to set up shop at the expense of neglecting its sizeable SME population.

His comments came in response to some MPs asking whether this so-called system of attracting multinationals in an 'all are welcome' approach can still be considered relevant.

Mr Inderjit Singh (Ang Mo Kio GRC) noted on Monday that the resources allocated to growing SMEs were a 'far cry' from what was invested in the multinational strategy, resulting in weaker local enterprises.

Mr Lim told MPs yesterday that in certain sectors like manufacturing, local firms and, in particular, SMEs, dominate. Then for precision engineering, for instance, the sector has a combination of both foreign and local SMEs. But there are reasons for the foreign multinationals to have a stronger presence in sectors such as electronics, chemicals and biomedical sciences, Mr Lim said.

'If we want to be able to promote the diversification of our manufacturing sector and if we're not prepared to embrace foreign multinationals in our strategy, then we must be prepared to lose out in very important competitive sectors such as biomedical sciences or petrochemicals, where our local companies do not have a strong presence.'

In fact, foreign firms must be counted upon to give the country a leg-up in certain new sectors like renewable energy, environmental engineering and digital media.

Mr Lim cited the renewable energy sector and referred to the likes of Norway's Renewable Energy Corp and Finland's Neste Oil, and said these firms will be the 'queen bees' that can allow Singapore to build up its capabilities in this budding industry.

'If we're to wait for our own local companies to build up to scale, to size, then we may lose out in the opportunities of this sector over the next few years,' he said.

Even in sectors where there are strong local firms, foreign players can also contribute, Mr Lim added.

This can be seen in the financial service sector, which contributes 11 per cent to gross domestic product and has very 'strong potential and good prospects'.

'Despite our very traditional role as the commercial and financial hub for this region and with the strong presence of local players, we still need significant foreign banks and financial institutions,' he said.

Mr Lim cautioned that it is important for Singapore not to 'appear protectionist' when it extends assistance to local firms to help them grow. 'Some countries have argued for national champions and under that guise, they have adopted protectionist policies. Singapore clearly cannot win in such a strategy,' he said.