SINGAPORE: The government’s unrelenting push to hardcode the ethos of internationalisation into the DNA of businesses surfaced unsurprisingly in Budget 2020.
New initiatives – such as Grow Digital, which aims to help companies leverage digital platforms to go global, and the SkillsFuture Enterprise Credit, which provides S$10,000 per enterprise to help with out-of-pocket expenses for business transformation, job redesign and skills training – were introduced.
Existing programmes like the Market Readiness Assistance (MRA) Scheme and Global Ready Talent Programme were expanded to help companies leverage free trade agreements (FTAs) and nurture talent for internationalisation.
The government’s recognition in developing a robust external economy dates back as early as 1989 when Singapore emerged from a recession. The development of its Strategic Economic Plan, at that time, also saw the promotion of outward investments. By early 1990s, Singapore’s regionalisation strategy provided the impetus for a concerted push in helping businesses go global.
We have since come a long way.
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SPREADING THEIR WINGS
The recent Singapore Business Federation (SBF) National Business Survey (NBS) 2019-2020 revealed that eight in 10 businesses reported a presence in an overseas market last year, up 9 percentage points compared to the previous year.
As many as 82 per cent of these businesses are engaged in ASEAN, where the top destinations are Malaysia, Indonesia and Thailand. Outside of the region, China takes the lion’s share.
This is encouraging news. From growing global market share to increasing sales and profits, expanding overseas presents businesses with considerable rewards. The digital economy, better technology and improved transportation links have also made it more accessible for companies to go global.
So why are some businesses still hesitant to take the leap?
Over the years, SBF’s surveys have shown that key barriers to overseas expansion include unfamiliarity with target markets, navigating an environment where regulatory compliance, business practices and culture are different from Singapore’s, and sufficient funding to sustain their overseas endeavours. The challenge of finding the right talent has also put the brakes on their global ambitions.
SMOOTHING THE WAY
If resources are the businesses’ only barrier to internationalisation, the government, with the support of the trade associations and chambers (TACs), have put in place support packages and resources to help businesses at every stage of their internationalisation journey.
For companies who are unsure about how to embark on their internationalisation journey, SME Centres can assess their readiness and assist them in enhancing their capability to internationalise.
Help is also at hand for businesses to learn as much as possible about the target country, market, business environment and practices. Last year alone, the SBF led close to 30 business missions and overseas market workshops to Southeast Asia and beyond, and welcomed 40 incoming delegations from Africa, Europe, Asia and the Middle East.
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Businesses can also tap on the support of Enterprise Singapore’s in-market presence at over 35 international locations to generate new business leads, find business partners and acquire new technologies and capabilities.
Apart from tax deductions on eligible expenses incurred to support their internationalisation activities, businesses also receive generous funding support through the Enterprise Development Grant and the MRA scheme, to name a few.
Come April, SBF, with the support of Enterprise Singapore, will launch [email protected] to partner Singapore businesses in their internationalisation journey through market advisory services and in-market business connections – with a focus on Southeast Asian and frontier and emerging markets. Helping our businesses find the right partners and providing them with in-market assistance through a supportive local community is important to mitigate some of the challenges companies face.
That said, government and TAC support can only be useful if our businesses tap on them. Despite all the support available, there are still some companies who choose not to tap on them or go overseas at all. And no matter how much help there may be available, for some companies it just may not matter because venturing beyond Singapore is not an option they simply entertain.
NOT EVERYONE’S CUP OF TEA
A 2015 Boston Consulting Group report highlighted that SMEs in Singapore are not as aspirational about expansion as their regional counterparts.
Psychology and personality could play a part. While some relish risk, others prefer the certainty and comfort of growing domestically where supply chains are easier to manage and demand for their products and services, culture and the regulatory environment are far more predictable.
Given that SMEs have limited resources, the potential trade-off between spreading their wings abroad and deepening their roots at home could also weigh on their minds. After all, it is better to serve one market well than many markets poorly.
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Whether it’s the lack of resources or a fear of failure, there’s no denying that scaling across borders is no easy feat and may not, as a matter of fact, be the right strategy for every business.
We have more than a quarter million SMEs in Singapore. Indeed, many of them will continue to be domestically focused. Only a portion of these will have products or services that can succeed in international markets.
SO, WHAT’S NEXT?
The push for going global is unfinished business. In this regard, much had been done, and more help is at hand.
Going forward, there is scope to work with company leaders, particularly the next-generation leadership to support their overseas expansion. These young leaders may be more well-travelled and globalised than their predecessors, and may therefore find that their ambitions stretch beyond Singapore.
We can also can better nurture and foster a Singapore business eco-system overseas where our companies look after each other and collaborate to beat the competition.
Ultimately, businesses can have access to all the information, tools and means, but it is up to them to seize the opportunities.
For those companies who have aspirations to grow, they cannot let up on Singapore’s internationalisation push and should not leave undone what we know should be done. It is up to businesses to beat the path overseas together.
Ho Meng Kit is CEO at Singapore Business Federation.