Small and Medium Enterprises in Singapore - Essay Example

Small and Medium Enterprises in Singapore Introduction SME stands for Small Medium Enterprise. In Singapore, SMEs are those with S$15M or less fixed assets investment, and for the manufacturing businesses it is those with two hundred or fewer employees. Singapore has got approximately 130,000 SMEs. SMEs are acrucial pillar in Singapore’s economy. The SMEs contributes over 42% in the gross domestic product. SMEs are contributors to the economic growth of the country and seen as innovators and shock absorbers. The government of Singapore has introduced blueprints in order to beef up the ability of the SMEs to act as shock absorbers (Sum & Chen 2004, p. 43). The government aims at making Singapore the best place for SMEs in the world who also bring about many benefits the government of Singapore Contribution of SMEs in Singapore SMEs promote the growth of the country’s economy. The country gains from the taxes paid by the businesses to the revenue authority thus increasing the country’s resources thatused in investments that generate capital for the country. During the licensing of these enterprises, the owners pay afeethat is also a source of capital to the government of Singapore. The SMEs help in keeping the money in the economy through the services they offer to the people. The SMEs encourage investors from outside Singapore, who also bring about many benefits the government of Singapore. All these activities contribute to the gross national product of the country. SMEs help create employment to the citizens of Singapore. There are different businesses that are started ranging from manufacturing, production, exporting and many others thus creating job opportunities to the people. This raises the living standards of the people who in turn invest in something else thus boosting the economy of the country. The SMEs raise the competitive process in the country. Due to the many SMEs started competition arises among them. The enterprises strive to outdo each other in order to win the liking of the people. This competition ensures that they produce or give the best services to the people. In a bid to improve the productivity progress, the enterprises come up with innovations and creations. This way they providehigh-quality goods and services that meet the needs of the people. It also helps them to compete withthe emerging trends and new technologies in the world. Constrains/problems of SME in Singapore. One of the problems that SMEs face in Singapore is lack of finances. In order to keep up with other enterprises, the businesses require money to finance their ventures. They also need money to expand the sales, increase the outputs, maintain the enterprises, and pay the employees and other bills. With all the expenses, some potential investors fear to start up the businesses. Even those in existing businesses get discouraged by the many expenses that they have to meet, and they give up thus closing down the enterprises. It is not everyone that has anSME is conversant with the current trend in technology. Many people face difficulties in exploiting the technology. This makes them unable to compete with other companiesthatmean they lag behind in terms of innovativeness and thus it leads to closure of the industry. Lack of technological expertise can also make a potential entrepreneur shy away from starting up a business no matter how good their idea are because they cannot produce quality goods and services that can compete in the market. Low productivity is another problem that SMEs face in Singapore. There are many factors that can lead low productivity; one is alack of skilled labor. Some enterprises require the staff who are well skilled resulting to low production. Lack of creativeness also leads to little production in Singapore. This happens when people are short of ideas on how to increase the production, and there is some retardation in the enterprise. Small-scale production can also be as a result of lazy employees who put little efforts at work. Even lack of cooperation among the workers that brings wrangles among them contributes negatively to the production of the business. Use of outdated technology can also lead to small production. Old technology is prone to breakdown hence affecting the production activities in the enterprises; it is also slow low output hence. SMEs in Singapore face problems in marketing and promotion of products. This problem of development comes in where the enterprises lack the money to advertize the products making them unable to compete with those goods and services that extensive advertising. The problem of market also comes in when the products of the enterprise are of inferior quality. The product is unable to compete for the market with those that are high quality and receive much liking from the consumers. Steps to strengthen SME in Singapore. One way of strengthening the SMEs in Singapore is by use of price preference. This is where the government provides support to the small and medium business enterprise by extending some offers to them like reducing the prices to some facilities so that the enterprises can have easy access to them. This motivates them to start the enterprises and to attract more entrepreneurs. If the government of Singapore applies this measure, it will undoubtedly strengthen the small and medium enterprises since the entrepreneurs will afford technology that improves the production. The enterprises will also sustain the employees, compete in the global market with other businesses. The success of SMEs means significant benefits to the government also since there will be economic growth. The government also can strengthen the SMEs through networking that brings about the spirit of competitiveness. This exists where the government connects the SMEs with those of another country where the SME has succeeded. If the contractors are provided with a platform where they meet other successful entrepreneurs, they can learn a lot. In such a platform, the business people share much in terms of the expertise, new ideason improving the businesses, innovations, current and emerging technologies and even new market demands. The business people get challenged by each other, and this sharpens them to be more innovative and come up with new things that can compete globally. The government can also come up with initiatives like expos where entrepreneurs showcase what they can do, and this also encourages technological innovation. Increasing investment opportunities to the people can also help strengthen the SMEs in Singapore. The government can do thisthrough reducing the taxes this attracts potential investors interested in starting up small or medium businesses. High taxes push away the enterprises, and the owners of existing businesses can also close down the business if they cannot make to pay the taxes. The government can also reduce the tariffs and that also encourages the entrepreneurs. If the government applies this standard, there will beasignificant increase in the productivity from the SME in Singapore. Increased production ensures that there is no shortage of goods or services in the markets and therefore the people of Singapore will not lack anything they need from the markets. It also ensures more Income to the people and to the government of Singapore. Priority sector lending is another measure that the government of Singapore can apply. This involves giving priority to some sectors of the economy that possess great potential to contribute so much to the economy. In this action, the government seeks to encourage the people to venture into businesses in such areas by offering favorable conditions. The government lends money at low-interest rates to the enterprises, and they use it to expand the markets. The entrepreneurs are attracted by the low rates, and they go for the offers which they put into companies in the selected areas. This also aims at reviving some sectors of the economy that are doing poorly. The government can also offer other incentives like grants to the people in the selected areas.This encourages them to invest in those areas, and that increases the income to the people and the growth of the economy too.This initiative strengthens the SMEs in Singapore. Conclusion The SMEs should strive to be reliable. This is by ensuring that they deliver the services in time if the enterprise involvement in giving services to the people, delivering goods in time too. A business with animage of being reliable wins the trust of the people. The people prefer the business to other businesses that are unreliable. Another benefit to the honest enterprises is that they do not incur extra costs of repeat of work since the services they offer are acceptable to the people. The enterprises must also ensure that they produce valid goods.The quality of products measures their validity. Quality products will attract the customers since they can meet the consumers’ needs. The enterprises should not focus on quantity and compromise on quality. SMEs should also focus on going global. Globalization is where enterprises grow to worldwide or global scale. The advantages and benefits of globalization are enormous, and the SMEs in Singapore through the government should impose it. Globalization leads to growth in theemployment rate as new companies come up creating job opportunities. Globalization brings new companies from different countries with new products and new technologies. The IT, production and research new technologies help cut down the production costs and increase sales. When the enterprises in Singapore utilize the capital by starting up new businesses this in turn generates more wealth and prosperity to the country. It also uplifts the standards of living to the people. The people of Singapore need enlightenment on globalization and the many more benefits that come with it. Other benefits that come with globalization are; opportunity costs, change in production and consumption, trade terms and comparative advantages. Globalization also lowers the inflation; this comes about because the rivalry in the market prevents the enterprises from increasing the prices.Singapore also needs to encourage young entrepreneurs to venture into business. This provides job opportunities and evades idleness among the youth. Young entrepreneurs have innovative and creative minds; they come up with new ideas that they put into practice and in turn they produce goods that fit in a growing market. The young people also are more conversant with the changing technology and are at much ease using it. The idea of encouraging the young people to start SMEs also helps curb the crime rate in Singapore. This is because the youths will have a source of livelihood, and hence they will not pursue criminal activities to make a living.Reduced crime rate in Singapore benefits the government in that it spends less resources in curbing crime. References Sum, C. C. K. L. S. J. & Chen, C. S., 2004. A taxonomy of operations strategies of high performing small and medium enterprises in Singapore. International Journal of Operations & Production Management.. s.l.:s.n. Read More