By Jeremy Chan
Size matters in business, but just as an ocean has enough space for the largest whale down to the tiniest fish, the global marketplace is large enough to accommodate companies at both ends of the size spectrum—and everything else in between. In fact, the balance of collaboration and competition among enterprises can help drive innovation and progress.
However, given their smaller pool of resources, small- and medium-sized enterprises (SMEs) may need help to find their respective niches in a crowded ecosystem. Since SMEs make up the vast majority of enterprises in Southeast Asia, their performance directly impacts the region’s economic health.
“SMEs are the lifeblood for the ASEAN economy,” said Ms Jane Lim, Assistant Chief Executive, Sectoral Transformation Group, Infocomm Media Development Authority (IMDA) of Singapore, speaking at opening of the SME track at the Singapore FinTech Festival and the Singapore Week of Innovation and TeCHnology (SFF x SWITCH). “In Singapore alone, SMEs employ two-thirds of our workforce, and half of our GDP is contributed by SMEs."
Room to grow
The situation is not so different in India, where SMEs contribute as much as 45 percent of India’s GDP, said Mr Praveen Khandelwal, National Secretary General of the Confederation of All India Traders. He was a panellist at the ‘Remapping Trade Routes: The Impact of Trade Volatility on SMEs, Platforms and Supply Chain Management’ discussion which took place during SFF x SWITCH.
Joining him on the panel were Mr Amlan Roy, Head of Global Macro Policy Research and Senior Managing Director at State Street Global Advisors; and Mr Winston Nesfield, a partner at Strategy& (part of the PwC network). The panel was moderated by Mr Robert Tay, Cluster Director, Modern Services, IMDA.
Mr Roy noted that “you shouldn’t think of SMEs as unorganised in emerging markets”, adding that they contribute a lot to innovation and have great potential to disrupt traditional modes of production. This is in part because SMEs are more closely attuned to their customers than big businesses, said Mr Khandelwal, joking that “SME means ‘subject matter expert.’”
Yet, SMEs typically receive less tax incentives than big businesses. Coupled with cash flow and manpower challenges, SMEs often struggle to scale their operations, especially into new markets. Mr Khandelwal therefore urged governments to develop platforms and frameworks to give SMEs a much-needed shot in the arm. “Across the globe, SMEs should be the priority of any government, and supportive policies must be carved out for sustainable growth,” he said.
Helping the meek become mighty
In Singapore, digitalisation is viewed as a key strategy to help SMEs become more productive, overcome their resource constraints, and branch out into neighbouring markets. Ms Jane Lim highlighted how 75 percent of SMEs in ASEAN see digitalisation as an opportunity, but only 16 percent feel they are getting bang for their buck in digitalising.
Governments can help companies adopt digital technologies and maximise their return on such investments. An example from Singapore is IMDA’s SMEs Go Digital programme. Local SMEs can receive technology consultancy services through the programme, adopt pre-approved digital solutions and even receive funding for their digitalisation efforts, Ms Lim said.
Meanwhile, for SMEs looking to venture abroad, or plug in to a bigger marketplace of digital solutions, IMDA and the Monetary Authority of Singapore have established Business sans Borders (BSB)—an open and global connector of SME-centric platforms —that will help enhance SME access to a much larger ecosystem of buyers, sellers, logistics services providers, financing, and digital solution providers.
Mr Nesfield believes that the value of platforms such as BSB extends beyond just connecting problem owners and problem solvers across geographical boundaries. “If you get lots of value chain activities—funding operations, matching of buyers and sellers on one platform—then you’ve created a very valuable data asset,” he explained. “So, the question is, who has access to that asset? And then, who can use that to innovate products and services?"
While there are no straightforward answers to those questions, Mr Khandelwal emphasised that platform owners need to work closely with platform end users to ensure that everyone’s objectives are aligned. “SMEs and other stakeholders should be operationally involved in beta testing these platforms,” he quipped.
With platforms and policies in place, coupled with mechanisms for responsible data sharing, new trade routes—digital analogues of the Silk Road of old—could emerge, benefitting businesses everywhere. “These are things that the Singapore government, together with support from trade associations and chambers, are looking at to help our SMEs access a bigger world of opportunities, to grow and thrive together,” Ms Lim concluded.
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