Small and medium Enterprises or more commonly known as SMEs are companies whose headcount or turnover falls within a certain limit set by the governing authority of the country. SMEs are often responsible for driving innovation and competition in many economic sectors.
Even though the operating environment for SMEs is a tough one in land scarce Singapore, the government firmly believes that SMEs must not be neglected as the country progresses and has pledged to assist SMEs in the upgrading of skills, developing new products and brands as well as finding new markets abroad to ensure that they not just survive but thrive. SMEs therefore play a vital role in an economy, being ...view middle of the document...
The Government will enhance support for SMEs in the areas of productivity, innovation and capability upgrading. This will help SMEs boost their capabilities, restructure their business and remain competitive
The SME sector is an important pillar of Singapore’s economy. They contribute more than 50 per cent of economic output and 70 per cent of employment. Ministry of Trade and Industry (MTI) has identified international expansion as one of the focuses that will facilitate the sustainable growth of SMEs, given the rising demands in China and India, with a growing middle class of 300 million and 160 million respectively. The review of the development strategies for our SMEs aims to help them strengthen their business competitiveness. In the SMEs master plan of Singapore, it was stated that local SMEs constituted 90% of the total number of establishments, provided 44% of employment and contributed 24% of value-added over the inputs in the economy. With close to 99% of all enterprises in Singapore being SMEs and contributing close to 50% of the national GDP, the Singapore Government has been acting to address several issues related to such international expansion.
The SMEs created more jobs than large enterprises. Between 2002 and 2010, net employment in the EU rose substantially, by an average of 1.1 million jobs (or 0.9%) each year. 85% of this net employment growth was registered as employment growth in the SME size class. This share is considerably higher than the share of the SME size class in total employment (which was 67% in 2010). This implies that the employment share of the SME size class has increased over time, and indicates the increasing economic relevance of this size class. Within the SME size class, the highest growth rate is found in the size classes of micro and small enterprises.
The favourable employment development in SMEs can be observed in most sectors of industry. A clear exception to this rule is the trade sector, in which employment in SMEs increased by 0.7% annually, while in large enterprises it increased by an average of 2.2% per year. This was the result of a strong increase in the number of large trade enterprises, in particular in sales, maintenance and repair of motor vehicles.
The SMEs make important contributions to job creation. They make up over 95 per cent of enterprises and account for 60 to 70 per cent of jobs. In construction SMEs account for 80 to 90 per cent of all employment. The fact that these industries loom large in overall employment underscores the importance of SMEs as sources of employment. According to Hebert (1989), an entrepreneur buys a good or service at a certain price and sells it at an uncertain price to make a profit, and therefore he is at the centre of transactions that create wealth in a society or market economy.
Constraints of SMEs in Singapore
The biggest concerns were difficulty in finding qualified motivated employees, anxiety about a cash flow squeeze, keeping costs...