Key Role of SMEs in being part of a Sustainable Economy of Singapore

Key Role of SMEs in being part of a Sustainable Economy of Singapore

1267 950 Sovina Taneja

In an era of growing awareness and access to technology, the importance of sustainability to the economy has skyrocketed. Consumers are adamant about using products that are sustainable and convinced that they will help them fight climate change; people even prefer to work at eco-friendly companies that actively show how they are against unjust practices and policies. It is because sustainability presents the opportunity to provide an out-of-the-box answer to a problem that has been there forever – how do you supply finite resources to an infinite demand?

Source: Unsplash

Even with such a high demand for sustainable practices and products, SMEs seem to be lagging. They don’t realize that they are essential in driving the sustainable development wagon and focus more heavily on day-to-day operations. And who could blame them? Yes, entrepreneurs are known for their creative thinking and hard work, but staying relevant is increasingly difficult in an economy that is as dynamic as Singapore’s. Innovation is one of the key factors SMEs carry that provides a fresh perspective and answer to existing problems within the economy. The vision for innovation is limitless, and can take on the diversity of sustainable challenges – perhaps this is the solution to the age-old question.

Government support

Thankfully, the government realizes the difficulties SMEs face and has lent a helping hand through policy amendments that provide growing companies with a platform to thrive in an otherwise cut-throat competitive market. This realization came after Singapore went through its economic decline in the last two decades. The infamous deterioration was attributed to a decrease in SME productivity and forced the government to think about the future. They now have a portion of the national budget kept aside just for SMEs and their development. 

For instance, to make SMEs more competitive in the rapidly growing digital economy, the government launched the ‘SME Go Digital’ initiative in 2017. This program provides subsidies that cover up to almost three-fourths of an SME’s cost of undertaking various technological projects, ranging from implementing digital security to developing artificial intelligence products. 

Singapore’s Little India sector got targeted to implement e-commerce and e-payment in all small businesses. In collaboration with the SME Centre@Little India, more than one hundred SMEs were installed with digital technology to provide them the platform to engage company in the digital space.

Source: Unsplash

Singapore’s extensive commitment towards SMEs reflects in their loaning schemes – their SG$100 million budget got extended from 2019 to 2021. It gives SMEs both time and the perfect opportunity to utilize this capital towards becoming more sustainable! Green initiatives will get awarded a staggering SG$2 billion to take things a step further. Local egg farmers from Chew’s Agriculture have been one of the first SMEs to take a step towards sustainable development by obtaining a sustainability linked loan in 2019. A promise of higher quality eggs, and an ethical sourcing strategy – sounds like a win-win situation if we ever did see one.

Under the grand master plan that is the Sustainable Singapore Blueprint, long-range success is in the cards for small and medium enterprises. The government is also relying on its contribution towards national goals. One of the five focus areas in the act reserved for the development of eco-smart towns. Surbana Jurong has taken the lead by developing Singapore’s first green business park, CleanTech One. The urban design company has most recently made use of architectural design to minimize energy consumption through maximizing natural light and ventilation. The Treelodge@Punggol estate incorporates an abundance of green energy and has also made space for a community garden.

Source: Surbana Jurong

What is Deterring Growth?

The question today is not about raising awareness, but about why SMEs are not accepting the support that is very clearly already on the table. Business Review revealed that only 30% of Singaporean SMEs made use of government initiatives, even though 65% know that they exist. Are enterprises so caught up with internal workings and trying to succeed in this ruthless economy that they are overlooking a strategy that could help them flourish?

Another school of thought revolves around people believing that the government has provided an excessive amount of help. Most of the schemes put out by the government seem to have a low take-up rate since there may be massive layers of red tape, or the scheme may not be as relevant to most of the SMEs. Taking the take-up rate as a proxy for how well the government has met its objective, the Singaporean government should strive to find a balance to avoid inefficiency. SMEs function in various industries and have complex needs, so focusing on the main areas the majority of SMEs need help, such as finance, human resources, and technology development could lead to better up-take rates. 

There is also a possibility that the concept of sustainability deters SMEs. One reason can be the cost of dealing with environmental problems that are external to the business. In other words, the misunderstanding that social responsibility has to be external and does not lead to financial benefit may be the reason SMEs are not eager to accept help. 

Implementation of Sustainable Solutions

So let’s clear this out – sustainable practices can very quickly implement in internal operations at very minimal costs. A simple change to the business model can result in a host of benefits, as is evident from the Sunseap Group. The group modified their family business operations from manufacturing individual solar panel units to providing solar energy to buildings. This innovative strategy led to rapid growth for the company, which now boasts a hundred-man staff. 

Read More: Five Sustainable Business Strategies Singapore SMEs need to adopt 

Sustainable solutions can most definitely bring long-term economic gain by cutting costs, via indirection promotion, and improved efficiency. Many SMEs have seen the benefits of this incorporation, as it is a relatively untapped market with huge potential for growth and development. A prime example of an enterprise taking advantage of this initiative is The General Co – which spotted a missing link in the culinary industry. The General Co embodies a solution to a significant ceramic and plastic waste problem. Founder Colin Chen designs unique kitchenware using Jesmonite, an eco-friendly resin that is water-based as opposed to conventional solvent-based acrylic. What’s more is that these products have a longer lifespan, making them more durable than ceramic and porcelain

Communication is the Key

The Singaporean government has undoubtedly started many schemes to help SMEs with their business functioning to ensure operational stability and long-term survival. Business functions need to be sustainable to ensure economic stability. The government has thoroughly covered this aspect. However, in a conversation with the Singapore Business Federation, SMEs expressed what they’d like to see in the yearly budget. Most focused on support for their internal workings, while a few were thinking in another direction. Elmich, an urban landscaping company, was keen on how the government could provide industry guidelines on how to implement eco-friendly practices. Companies are looking for more sustainability-related support, which could be tax holidays or something more significant such as research funding for environmental solutions. This initiative is also a massive step towards SME and government communication. SMEs express their needs, helping the government to be better equipped to help address those needs, and support SMEs in a better way.

Innovation begins with better communication and the will to take up the initiative, and SMEs in Singapore are slowly but surely starting to close that missing gap. A sustainable economy requires balance, where the four factors of production work together, and the stakeholders understand the impacts on the external environment – while still generating economic profit!

Sovina Taneja

Sovina Taneja is a final year student at the University of Hong Kong. She majors in Food & Nutritional Science with a minor in Kinesiology. She has a keen interest in the field of Sustainability & Food Waste and also, keen on spreading awareness about its link to the private sector. When she is not working, you can find her at the dance class or soaking up some sun at the beach.

All stories by:Sovina Taneja
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Sovina Taneja

Sovina Taneja is a final year student at the University of Hong Kong. She majors in Food & Nutritional Science with a minor in Kinesiology. She has a keen interest in the field of Sustainability & Food Waste and also, keen on spreading awareness about its link to the private sector. When she is not working, you can find her at the dance class or soaking up some sun at the beach.

All stories by:Sovina Taneja

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