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SMEs feel the blues of a tighter foreign labour supply

Wei Chan, owner of a mom and pop bakery in Ang Mo Kio spoke at two of tansitioning.org events. From what I understand from Gilbert, Wei Chan wanted to convince the audience that we need more cheap foreign workers in order for SMEs to survive. However, not only did he fail to get his message across, he soon became the target for the rest of the guys in the room. The conversation soon steered from a forum for minimum wage to one about migrant worker issues. At the heart of it was a very deep-seated problem faced by most SMEs in Singapore – businesses here are struggling to survive.

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Vincent Wijeysingha, Kumaran Pillai, Leong Sze Hian, Jolovan Wham and Wei Chan.

Wei Chan obviously was in the wrong neck of the woods. He soon realized that enough is enough and went back to where he hailed from and we didn’t see him around Gilbert’s forum anymore. I later found out that he sought company with ASME where his misery found other doting companions.

Like the story of Wei Chan, SMEs, who contribute to 50% of our national income, feel that they are left in the cold and with the government restricting the flow of foreigners in Singapore; these little businesses will have to either shape up or ship out (or close shop).

From the conversations that I have had with him and from what he has shared at the forum; behind his veneer of success is a struggling businessman. He depends on it to feed himself and his family. His workers depend on it and he is driven to succeed not because of greed but because of an ambition to do better than his predecessors, or plainly put because of the need to survive. For success would mean breakout from the economic trap(s) that hold us down.

Now, his hopes of building a better tomorrow, after investing thousands of dollars are dashed – the government plans to tighten the supply of foreign labour which he depends on to expand his business. He says the locals do not want to do it at the wage levels that he is offering. He can’t offer more because he will not be able to sustain his business at higher costs.

So, what can the likes of Wei Chan do?

If you’re an owner of an SME and have been adversely affected by the change in government’s foreign manpower policy, do not fret because there are ways to overcome this labour shortage by adopting strategies to overcome our over-reliance on cheap foreign labour.

But seriously, how much more can we innovate? If you have already invested in nice IT systems – point of sales, accounting, inventory management and automated your sales process or bought expensive machinery to cut down manual work, what else can you do?

Take a look at the two video below and you’ll be amazed but what our counterparts are doing:

Lay’s Vending Machine in Argentina

Automated cake baking machine in Japan

Now, why didn’t Wei Chan think of that? Or might it be that the cakes baked by an untrained foreign baker would be any better? I do not know.

But, what I know is that the noisiest fellas in our business community come from small businesses that are either too small to automate and not large enough to innovate (pun intended); and they often indulge in wallowing and attention seeking (just read the statements that come out from ASME).

Looking on the bright side, our G has decided to throw some good $$$ at this problem. However, throwing money at a problem is not a solution. What we need to do is to throw money where it matters most. There are few programmes, administered by A*Star and Spring Singapore that comes to my mind:

1. Technology Adoption Programme: A*STAR will help to link companies’ technology needs to solution providers to help companies across sectors increase productivity through adopting technology innovations and solutions. From July 2013, this programme will be piloted in six sectors – Construction, Food Manufacturing, Precision Engineering, Marine, Aerospace as well as Retail.

2. Capability Development Grant (CDG): supports up to 70% of the cost of productivity improvements and capability development that will result in greater enterprise competitiveness and business growth.

3. Collaborative Industry Projects: The Government will work with industry players and partners like Trade Associations and Chambers (TACs) to address sector-specific productivity challenges. Consortia with at least 3 SMEs, comprising solution providers and users, will be formed to develop and propose bottom-up deployable and scalable productivity solutions. SPRING will be looking at the Collaborative Industry Projects (CIP) in six priority sectors: Food Manufacturing, Food Services, Furniture, Printing & Packaging, Retail and Textile & Fashion…   for more information

There is also another programme that caught my eye – SME Talent Programme – where SMEs can attract local talent from ITEs and Polytechnics over the next three years. This is really commendable; something that they should have done years ago. Now, Wei Chan cannot say that he can’t find talent locally!

If you do need assistance or advise, please drop me an email or leave a message below.

Kumaran Pillai is a member of Action Community for Entrepreneurship (ACE). He also blogs actively, comments periodically, runs a business incubator daily and stages protests at Hong Lim Green when he feels the blues. 

Gilbert Goh – The Accidental Rebel

The Accidental Rebel

The Accidental Rebel

Singapore has stumbled upon a rebel, a real one, for that matter. While other rebel-rousers have dedicated their entire careers to it, Gilbert Goh almost effortlessly organized the largest protest in Singapore (since independence) through online social media and other socio-political blogs.

Now, old and new rebels want to perform at his events, but he is careful that his platform is not hijacked by any other political parties. He wants to keep his platform party-agnostic and does not want to be dictated by other political agendas.

He thinks that there are elements out there who want to portray him as a racist. “Make no mistake, “he says, “People are trying to ‘sabo’ my efforts. “ It is no accident that he has been subject to online vitriol by other netizens who think some of his pieces are written in bad taste. His article Characteristics and behaviour of our 1.8 million foreign population is definitely a “must read” for anyone following the political developments in Singapore.

However, Gilbert is not the first to profile the different races in Singapore. Former Prime Minister Lee has also written about the customs and mannerisms of the different races here. One opposition politician said that the main difference between Gilbert and LKY was:  Gilbert is a political novice while LKY is a master at this game.

I have asked Gilbert some questions and do read them to find out more about Gilbert.

1.       A lot of local politicians have gone down this path of staging public protests but have had limited success with it. You on the other hand have been wildly successful. What is your secret to success?

I am fortunate as we did the protest which affected a lot of Singaporeans i.e. the 6.9 million population White Paper (walau, no space bring more people some more). Many people are unhappy with the overpopulation issue and it sort of broke the camel’s back for many Singaporeans.

We also have done several protests the past years e.g. minimum wage, foreign influx, retirement issues among others but the attendance seldom went past 200 people.

2.       You seem to have a quite a sizable support base online. What is your primary message to them when you ask them to participate in your protests?

We use socio political blogs like TRE (Richard very helpful one), Feed me to the fish, TOC, The Real Singapore and Facebook to promote the event and it was also widely publicised via the international media e.g. Yahoo, BBC, CNN, Reuters, Bloomberg, AFP and others.

I just appeal to the protestors to save Singapore and come out with courage to protest in person than complaining behind their keyboard. We can do something together and this time round I am proud Singaporeans came out even though it was pouring (i.e. raining).

Something changed and I guess the fear factor disappeared after that historic event (Feb 16 Protest).

By now, many Singaporeans see the power of public protest done peacefully and we are able to send a strong message to the ruling elite.

3.       What made you organize the protest on the 16th of Feb? Was that politically motivated?

Like many Singaporeans, I was enraged by the 6.9 million projections that was flashed on CNA (aiya, they neber listen one) and decided that I must do something.

We also did an indoor event on the 6 million population target earlier in Dec 2012.  So when I saw the higher 6.9 million population target I knew that something is very wrong here.

I slept over it for two days before finally deciding to announce the event on my website (Gotto do it ah bro, the Government does not listen one… siow siow ah) and Facebook page and the rest was history.

4.       I understand that you’ll be organizing yet another forum on the 23 of March. This would be the 3rd in this series. So what is new this time?

The 23rd March event will be held indoors and the venue has a maximum seating capacity of sixty.  So, do sign up for it quickly.

The session will be more of a discussion – a Transitioning.org “conversation” if you like. The press will be invited (of course). Most of the speakers are from the first protest and now they’ll be given more time to expound their ideas using audio visual tools. It will be more in-depth.

5.       Tell me more about the May Day Protest that you are organizing? Who are the speakers and what kind of support are you looking for?

We are doing a sequel protest on May 1st on the 6.9 million White Paper plus other issues that affect Singaporeans e.g. lack of a minimum wage, sky-high property prices, and huge income gap. We hope to attract a crowd size of ten thousand.  So far, Mr Leong Sze Hian, Nizam ismail, M Ravi have confirmed that they’ll be speaking.

We are still trying to get other civil societies on board and will announce them once it’s confirmed.  We will continue to use social media to publicise our event via Facebook and other socio-political sites.  I am glad that ST has also reported our event in their papers few days ago. I also heard that Media Corp radio has also announced about our Labour Day protest.

 We will also do a press conference one week before the event to generate more publicity.

6.       A lot of people think that you harbour racist or xenophobic feelings deep inside. But, I understand that you have lived and worked abroad and based on my interactions with you, you seem like a guy who gives equal opportunity to all. So, what is your response to the people, do you think you were unfairly criticized?

I guess when we stand against the 6.9 million population White Paper people will accuse us of being xenophobic as a lot of the population growth is accomplished through foreign influx. This is unfortunate.

Yes, I have lived and worked abroad in Sydney via a 4-year work visa tied to my ex-wife’s visa as she was posted there for work. They are PRs now but I am not a PR.  The work visa has since expired.

Having worked abroad, I experienced the same kind of frustrations our foreign friends face here.

I apologise if any of my articles appeared xenophobic in the past and have tried to be more careful with what I say now.

It was never my intention to turn the movement into an anti-foreigner one and we have always advocated both online and in the open that we want to be seen as anti-policy rather than anti-foreigner or anti-government.  All foreigners are welcomed to attend any of our events organised by Transitioning (admission is free).

Gilbert’s protests come in instalments – there are sequels and prequels to it. Just in case you miss the one on the 23rd of March at NVPC, you can attend the next show on the 1st of May 2013 at Hong Lim Green. Admission is free.

With movie tickets selling at $8.00 and above, Singaporeans are turning to protests as their main source of entertainment.

Sign up for Sequel protest – For A Better Singapore – organised by transitioning.org

Is PAP becoming more welfare oriented?

I predicted not too long ago that the government would become more welfare oriented at a forum organized by Gilbert Goh in 2011. My predictions were not based because PAP would have a change in mindset, but because of necessity and with a huge fiscal reserve, the government can afford to have a more balanced budget in the future. In fact, going forward and if everything else remains constant we’d see more balanced budgets in the years to come.

govt here to help

Photo: Internet

My assumptions are based purely on econometric projections, if the government has a huge reserve and since we are investing our monies in economies which are growing at a rate which is faster than ours; the external wing of our economy is self-sustaining. So there is little incentive to grow the external wing by extracting rent from the locals.

Besides, what our economy requires is a shot in the arm and it is also politically prudent to do so. Our local industries, particularly the SMEs need to be revitalized. The government has probably come to the realization that growing the GLCs at the expense of SMEs is hurting the people. And if you’ve been paying close attention to Hsien Loong and team, they will probably push our GLCs to focus in the regional economies so that SMEs can grow domestically.

But growth in the domestic sector will be sluggish in the next couple of years. With rising cost of living (and it seems like they will be able to tame this beast for the moment) and because of cutting down on the intake of foreign labour, our SMEs will take time to adapt to the new cost structures.

Putting the moral issues of whether the workfare subsidies reach employees and about the profligate use of tax-payers’ monies, any injection into the circular flow of income will boost GDP by a factor of 1.8- 2 times of $3.6B. Hence, the revision of our GDP projections from 1% -3% to 3% – 4% in the next three years. Good GDP growth and a more social focus seems like a good recipe to win over those sitting on the political fence.

According to some analysts, the COE prices are also likely to decline in the next few months/years. And Khaw is likely to keep a lid on HDB prices and even bring it down to tolerable levels. It is also quite unlikely that Khaw would adopt the suggestions put up by SDP, as it Pareto inefficient i.e. as some home owners may be adversely affected by this policy*. (I mean no disrespect to the ex Chief Economist of GIC who endorsed it. To be fair, he said that it is worth looking at)

It seems like the arguments for minimum wage is based on grounds of morality rather than good economics or politics. A minimum wage of S$1200 would more likely to benefit our foreign workers and foreign domestic workers. While we speak of greed and all that (and enough of that rubbish), the real test is whether we are willing to pay S$1200 for our maids (Foreign Domestic Workers) at home. It just seems to me that this policy would be hugely unpopular as it would affect about 600,000 people in Singapore. Unless the minimum wage policy is aimed purely at locals, in which case, the policy makers would be criticized of being home biased or exploitative of foreign workers,  cos their (FW) wages may be lower than the minimum wage floor.

Increasing our population to 7M maybe arguably good economics (still I’m not totally convinced by this) but it is definitely poor politics. It seems like the government wants to grow our population in order to drive domestic consumption and growth. There are some benefits from this exercise, but the key concern is that some Singaporean workers may be displaced (and the PAP knows this). On the flip side, there are more opportunities for locals to set up businesses as the consumption base would be bigger.

There are more reasons now than ever to implement social programmes to keep the electorate happy. And speaking of PAP trying to keep us happy, we may even get free bus rides during off-peak hours. How about throwing in a free lunch at Jack’s Place and free Dim Sums for tea? For some, that would be enough to win their “trust.”

*I do confess that I have not read the whole population paper by SDP in its entirety and if there are any differences of opinion, I’d be happy to publish their response on my blog. 

American Shane Todd’s death – suicide or murder?

20130313.141205_internet_shanetoodOn the 16th of Feb, I received a note in my Facebook inbox from a close friend of mine pointing to an article published in FT Magazine titled “Death in Singapore.” In the opening paragraph, the authors immediately point out the controversy surrounding the death of Dr Shane Todd, who was on a working stint with the Institute of Microelectronics (IME). He was supposed to return to the US after 18 months of work in the government research institute in Singapore, but he did not. His parents claim that he was murdered and was involved in an illegal transaction with a China based company Huawei, a telecom manufacturer. At the crime scene, Shane’s mother finds an external hard drive which contains incriminating evidence of a transaction between IME and Huawei:

The plan lays out how, from 2012 to the end of 2014, IME and Huawei would “co-develop” an amplifier device powered by gallium nitride (GaN), a semiconductor material able to withstand extreme heat and power levels well beyond silicon. GaN devices have commercial use in lighting as well as high-powered transistors for mobile phone base stations. They also have tremendous military potential, and major US defence contractors – including Northrup-Grumman and Raytheon – have pursued significant research and development in GaN for use in radar and satellite communications.

Security and technology experts consulted by the FT reviewed the project plan and all noted its civilian and potential military applications. Robert York, a professor of electrical and computer engineering at the University of California, Santa Barbara – a world leader in GaN research and where Shane earned a doctorate in silicon devices – said it would be “unnerving but not surprising” if Huawei were to be trying to advance its GaN technology. The high-powered amplifier has civilian use but “could be used for a number of military applications: high-powered radar, electronic warfare including signal jamming and even potentially some weapons”, Professor York added.

Shane, it turns out, had deep misgivings about the project he was working on and feared he was compromising US national security. His family wants to know whether that project sent him to his grave.

Read the full article here

Huawei is a security risk to US

The Chinese firm, Huawei, has been labeled a security risk by the House of Representatives Intelligence Committee due in part to its ties to the People’s Liberation Army, and it has also been banned from participating in the Australian broadband network. And allegations of “stealing” intellectual property has been rife since 2003 when Cisco took civil actions against Huawei.

IME received funding from US

According to an article in billingsgazette.com, IME received nearly $500,000 in 2010 in Defense Department sub-grants. And the senators in Montana have proposed blocking of funding to IME till FBI sees records/evidence of Shane’s death.

Shanmugam visits US Capital to reassure them

Law and Foreign Minister K Shanmugam made a visit to the US to reassure that no improper transfer of technology took place between the Institute of Microelectronics (IME) and Huawei Technologies. He also said that IME was “subject to rigorous internal audits, and there had been no illegal transfers of technology”.

However IME told the Australian,  “the institute did not go beyond preliminary talks with Huawei on a commercial project relating to GaN power amplifiers for base station applications. The institute does not have and has never had a project with Huawei on GaN power amplifiers.”

It is still unknown about the extent of these “preliminary talks.”

Minister Shanmugam is walking a diplomatic tight rope with allegations of murder and illegal transfer of technology to Huawei. He has also committed that the Singapore police will share evidence with the United States’ Federal Bureau of Investigation (FBI) in probing the disputed death of American researcher Shane Todd.

There are several questions surrounding this case and foremost was, why was the police quick to classify this as suicide before concluding the inquiry into this matter? Secondly, why wasn’t the crime scene secured? And thirdly, why is IME, a local institution getting grants from the US Department of Defense?

Copyleft Notice: Please accredit this piece to Kumaran Pillai and provide a backlink. 

Chaun Jin sets new targets for productivity led labour growth

fwcurbs

Acting Minister for Manpower Tan Chuan Jin told parliament yesterday that “if we are not able to meet these targets, we are likely to continue the tightening and restructuring approach.” The targets he set out are:

  • foreign presence in the labour pool is capped at around a third;
  • productivity grows 2-3 per cent a year; and
  • when Singaporeans’ wages improve.

He pointed out that the foreign workforce grew by 67,000 last year. He remarked that the number was still too large and needs to be tightend to ensure that growth is led by productivity rather and increasing the supply side.

The minister also announced changes to the Employment Act, which will ensure better protection for workers – including Professional, Managers and Executives. This new move will provide better protection to about 450,000 workers.

Mr. Tan also said that there is a need to strike a balance between the needs of the employers and employees. Policies need to be honed based on feedback on the ground.

Giving details of the key changes, the ministry said the salary threshold of non-workmen will be raised from S$2,000 to S$2,500 for them to enjoy working hours-related protection, including overtime payment. Examples of non-workmen include retail assistants, administrative staff and clerks. About 150,000 more workers stand to benefit from working hours-related protection.

However, to help employers manage costs, the ministry will cap the amount of overtime rate payable to non-workmen at the salary level of S$2,250.

Beyond the salary protection already accorded to PMEs earning up to S$4,500, they will also be protected under the general provisions of the Employment Act — like sick leave benefits and protection against unfair dismissal. About 300,000 PMEs will benefit from this change.

Big-Car COE cheaper than smaller cars

The proof is in the pudding they say. In the case of our government trying to level the playing field between the rich and the poor, they seem to be tripping over the policies created by their predecessors.

coe

No where on earth would a tax for a luxury car be lower except in Singapore. Well, this is the genius of our bureaucrats. Not too long ago DPM Tharman said that we have a progressive tax system. Like as if his words were jinxed, the COE prices for big cars plunged below those for smaller cars in the recent COE bidding exercise. So now we have a situation where the tax for a Ferrari is lower than the tax for a cheap Korean car. You need to give it to these guys, they have turned economic theories on the head. Or as depicted in the illustration, they have a car on their heads instead of a brain in their head!

But all is not lost. PAP MP thinks that this can be corrected while the car dealers think that the market will correct itself in the long run.

Chairman of the Government Parliamentary Committee for Transport Cedric Foo said, “with the loan curbs shifting demand to Cat A (cars up to 1,600cc) and with all the German marques there, there is upward pressure on premiums. If we don’t adjust supply, this is what happens.”

Maybe so but Cedric seems to have forgotten what I said before, “if the economy ain’t broke, don’t break it.” What we need is a set of policies that bridge the wealth gap. It seems to me that whatever measure they come up with are defeated because they have tinkered too much with the economic system.

In another article, I have also highlighted about how the Wage Credit scheme though well intentioned is not meeting the objective of raising the wages of the workers.

Jenn Jong is suggesting a government led financing for SMEs in Singapore. What are your thoughts on this?

Yee Jenn Jong

Committee of Supply Cuts by YJJ on Ministry of Trade and Industry

SME Bank

The service economy is increasingly important to Singapore. Excluding Financial and Insurance, the service sector had 135,000 enterprises and employed 1.35 million workers in 2010.

The 2012 SME Development Survey highlighted that 50% more service sector SMEs found bank financing a challenge compared to the previous year. This is despite the availability of government-backed loans through financial institutions. The survey also found more SMEs facing cash flow problems and worsening liquidity.

Service sector SMEs generally require working capital financing such as supplier invoice financing, working capital term loans and factoring. They are generally asset light with little collaterals. Financial institutions are cautious and tend to make unsecured lending only to bigger mid-sized SMEs. With the Basel III minimum adequacy requirement, banks are likely to tighten loans to smaller and riskier SMEs.

Government lending to SMEs has…

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