SMEs’ “Darwinian” Feast

‘Evolve or die’ seems to be the message from the government as it ups the ante with more than $90 million for SMEs to tap on. If the Population White Paper and the Budget had signalled a culling for businesses, the latest MTI war chest will be kind to strong, progressive businesses.

In a TODAY report, Singapore Business Federation COO Victor Tay called this year’s budget for businesses “Darwinian”, and how right he was. While the grants and schemes may appear to be a lifeline, not all businesses will stand to gain from it.

To begin with, the $90 million Collaborative Industry Projects (CIP) fund for productivity projects is only for businesses in the food services, food manufacturing, retail, textile and fashion, furniture, manufacturing, printing and packaging, and social service sectors.

Granted, these sectors seem to be most affected by labour supply cuts and wage reform and hence MTI’s decision to invest in their development. But what is more interesting is the push for SMEs to work together in order to tap these funds.

The 70% CIP funding is only available to Singapore SMEs who form consortia of three or more companies. While it makes sense to tap on economics of scale, this criterion cripples less progressive thinkers and favours businesses that don’t see their industry as a zero-sum game.

In the fight for survival, SMEs will need to band together, work together and find points of synergy, just as weaker animals in nature move in herds and packs. SMEs must learn to share and collaborate to promote group survival, even as they protect their individual competitive advantages. This is progressive, innovative Silicon Valley thinking and especially lacking in traditional business models.

Another welcome move is the establishment of One-stop SME Centres where businesses can access SME programmes and information across the whole of government. Where once an SME owner had to wade through the confusing mire of Spring, WDA, EnterpriseOne, ACRA, IRAS and a host of other government channels, it will now be much easier to find the right scheme to tap.

A particularly interesting announcement is the SME Talent Programme, which funds 70% of SME link-ups with poly and ITE students to offer scholarships, awards and the promise of employment upon graduation. This could be a handy way for businesses to ensure a steady supply of new blood.

On top of these there is also the Market Readiness Assistance (MRA) grant to fund forays into international markets and the Partnerships for Capability Transformation (PACT) to encourage knowledge transfer from large enterprises to SMEs. MTI has also advertised the Capability Development Grant, coming in April, which will offer all SMEs a boost for productivity and capability development.

Will these programmes help push the evolution of Singapore’s SMEs to the next level? It all depends on the mind-sets of businesses now. Natural selection is the only way forward. As many fear, weaker, less progressive businesses will die, but for those with the will and strength to survive, there is the promise of a Darwinian feast.

I first published this article on Breakfast Network.

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