Mr Michael Yap, Chief Executive National Computer Board Speech - IT Singapore SME Award 1999 Ceremony

Mr Michael Yap, Chief Executive
National Computer Board
Speech - IT Singapore SME Award 1999 Ceremony
Singapore, 21 May 1999

Distinguished guests, ladies and gentlemen, good afternoon.

1. I am happy to join you at this inaugural SME Awards Ceremony by IT Singapore. The Awards recognise SMEs that have successfully exploited IT in their business.

2. SMEs form a significant part of Singapore's economic landscape. There are 92,000 SMEs in Singapore. Collectively, they make up 92% of all establishments, and employ 53% of the workforce. Yet, SMEs contribute only 34% to Singapore's GDP. This contribution may look small. Very often, we inevitably fail to give SMEs the due recognition that they deserve. For many MNCs today were SMEs of yesteryear. SMEs are the incubators of our future economic giants.

SMEs' Challenges

3. The truth is the physical world is rather harsh to SMEs. They face a number of challenges in doing business. For example, it is difficult for them to reach out to new customers and new markets because of the high cost of advertising and business promotion. They are also constrained by their physical size. Being small and unknown, they may not be able to secure the trust and confidence from potential customers.

New E-world Emerging

4. However, good news beckon. There is a new world emerging. This is the e-world, brought on by the rapid explosion of the Internet. The Net is driving dramatic changes in the way businesses operate and compete. It is causing a fundamental shift in the way businesses are conducted, and the rules of competition are being redefined.

5. The global playing field is becoming more even, and the barriers to entry are coming down. Small players can now plug into the global market place, along with the big names. Many of the top e-companies, such as Amazon, eBay, Yahoo!, e*Trade, had their beginnings as small companies not too long ago. They did not start as big players. Yet today, many of them have market capitalisations that are even larger than that of all our local banks combined.

6. The Net has made for greater parity in relationship. Being small is no longer an overpowering constraint in the Net-centric world. Small companies which are able to tap niche opportunities can now have major impact on MNCs. It is a fact that many MNCs are looking to partner with the nimbler small companies, for that extra competitive edge.

Opportunities for SMEs

7. The e-world has opened up endless new possibilities for SMEs. Because e-commerce transcends physical boundaries, geography will no longer bind a company's aspirations or the scope of its market. SMEs can therefore effectively reach both local and international customers. High value services can be delivered at relatively low cost. Using e-commerce, SMEs can also scan the international community in search of new partners and suppliers without having to incur time and travel expenses. Companies can further build their own brand names in the electronic world at lower cost. Using the Net, SMEs can provide the same types of customised quality services to their customers that have henceforth been difficult to do.

8. In Singapore, we have invested in the necessary infrastructure to make e-commerce possible. We built Singapore ONE - a high bandwidth and high speed Internet network which can support any end user application today. We enacted the Electronic Transactions Act in August last year, and have also put in place systems for secure Internet transactions. A number of e-commerce services companies have set up business. They offer bureau, leasing and hosting services to companies who want to conduct e-commerce. All these initiatives are aimed at helping companies to get their e-commerce business up and running quickly and easily.

9. However, we still face a major challenge in building up a critical mass of e-commerce users. In a recent survey commissioned by the NCB to gauge the state of e-commerce in eight industry sectors, only 9% of companies said that they were already buying and selling on the Internet. Sixty-three per cent (63%) said that they were not aware of, or did not see a need, to engage in e-commerce. Some of the reasons cited included initial start-up costs and on-going operational costs. The survey showed that the bigger companies are the ones embracing the new technologies more readily.

10. This shows that there is a huge untapped potential and missed opportunities among SMEs to leverage on e-commerce. We are committed to help companies further exploit the opportunities offered by the Internet. The NCB extended the Local Enterprise Computerisation Programme (LECP) in November last year, to include funding for e-commerce activities. The scheme funds up to fifty per cent (50%) of the cost of acquiring e-commerce applications and services for the first 500 SMEs that adopt e-commerce. To date, about 170 companies are benefiting from the scheme.

11. The NCB, together with industry partners and relevant trade associations, also conduct regular e-commerce awareness seminars for SMEs. In addition, several sector-wide e-commerce projects have been implemented to accelerate the adoption of e-commerce across specific industry sectors. Examples include BookNet for book retailers and ShopNet for grocery stores.


12. The necessary pieces, our IT infrastructure and various assistance schemes, are in place to power SMEs into the electronic world. Our aim is to help SMEs make better use of new IT capabilities to generate new businesses, and new ways of doing business.

13. E-commerce, in particular, is a formidable force. In the old world, we talked about the "big eating the small". In the new Net-centric world, it is increasingly a case of the "fast eating the slow". SMEs, being small and nimble, have the inherent ability to adapt quickly to change. And change will continue to take place - not just incremental differences, but in quantum leaps. In fact, it is not unforeseeable that companies in many industries will need to use e-commerce to increase their productivity five-fold, in other words, a 500 per cent increase, just so they can continue to survive in the next five years. Not having an e-commerce server in the business may eventually have the same impact as not having a telephone line today.

14. In closing, I would like to leave with you my personal observation: that small is in. I will not be surprised to see that it will be SMEs that make up the bulk of companies to be listed on Nasdeq in the near future. SMEs have good chances of making it in the e-world along with the big boys.

15. Thank you.