WP calls for SME-driven economic growth; PAP says Singapore needs both local firms and MNCs

During the debate, Second Minister for Finance Jeffrey Siow emphasized that Singapore's economy requires both multinational corporations (MNCs) and small- and medium-sized enterprises (SMEs) to flourish, stating that the two work in tandem rather than competing against each other. The Workers’ Party (WP) called for a stronger focus on SMEs to drive economic growth, while the People's Action Party (PAP) government argued that Singapore also needs MNCs to thrive.

The motion was introduced by WP MPs Kenneth Tiong and Jamus Lim, who outlined their vision for an economy centered on SMEs.

Assoc Prof Lim suggested reducing dependence on foreign investments and MNCs, arguing that the government's Economic Strategy Review (ESR) still shows an implicit bias towards MNCs. In response, Siow countered that many of the WP's proposals are already reflected in the review and that he sees a lot of commonality between the two parties' views. However, he noted that no groundbreaking ideas have been presented in recent speeches, and the WP is merely building upon existing ESR recommendations.

Assoc Prof Lim called for a shift away from prioritizing low taxes, undervalued exchange rates, and attracting footloose MNCs. Instead, Singapore should concentrate on strengthening local enterprises and fostering entrepreneurship. He highlighted that SMEs make up 99% of registered businesses and employ 70% of Singaporean workers, yet contribute only around half of the economy's value added.

If SMEs are stifled by competition from larger players, Singapore's potential for homegrown, globally competitive firms will remain untapped.

Siow stressed that Singapore must continue to attract foreign investment while supporting local companies. He pointed out that the government provides nearly S$2 billion (US$1.56 billion) in direct grants to local SMEs annually and that more can be done to ensure these schemes are fully utilized. However, he emphasized that simply spending more money will not automatically create world-class companies. Building a successful company is challenging, and the government's role is to provide resources and support.

PAP MPs and Nominated MPs echoed Siow's position, stressing the importance of maintaining openness and recognizing the role of both MNCs and SMEs in Singapore's economy. They argued that domestic demand is insufficient to drive growth on its own, and Singapore companies must compete in larger markets. Several PAP MPs emphasized that while local firms contribute agility and innovation, global enterprises bring investment, technology, and international networks, creating a mutually beneficial ecosystem that fosters capabilities, accelerates innovation, and generates better jobs for Singaporeans.

Overall, the debate underscored the need for a balanced approach that leverages the strengths of both SMEs and MNCs to drive Singapore's economic growth.