Last week I
ended up having a bit of cash than I expected to have and so, I decided to
indulge in a quick bite at KFC. Although I don’t patronize fast food joints
much these days, I’ve always had a soft spot for the food at KFC. There’s
always been something special about the way they’ve turned the chicken skin
into something quite delicious. My single “Zinger” cost me a grand total of
seven dollars plus.
A Tasty
Piece of Chicken for Seven over Bucks
That was, as
they say a great indulgence because I had a bit extra in my pocket. After that,
I’ve been going back to my neighbourhood economic rice stall. My last meal
there cost me a grand total of three dollars and ninety cents. I managed to get
my fill of carbohydrates, vegetables and meat as well as a drink.
A full meal
and drink for less than four bucks
This experience
was a reminder of a point that I was trying to make in my blog posting “Small is Smashing,” which was published on 6 June 2021. The point is this simple, the
local coffee shop economic rice uncle had managed to feed us something
healthier, tastier and dare I say healthier for less than the international fast-food
joints. I’ve argued that this fact isn’t limited to the food industry. I’ve argued
that Singapore is filled with businesses that do offer their customers better
value for money than their larger international counterparts.
Whilst giant
multinationals grab headlines for their large investments, the real strength of
any economy is based on the quality of its Small and Medium Enterprises (SME). Singapore
is no exception. According to UOB, the SME Sector employs some 65 percent of
our workforce and contributes about 48 percent of our GDP.
https://www.uobgroup.com/assets/pdfs/research/SME_1q17.pdf
Yet, despite
the significance of the SME sector to our economy, words like “entrepreneur” or
“small business” have barely touched the lips of government officials.
The difference
in the attention provided to multinationals and the SME sector can be seen in
the government departments in charge of those sectors. The Economic Development
Board (EDB) works like a dream. All you have to do is to ask and they’ll
provide it for you. Enterprise Singapore (IE Singapore) on the other hand has
problems getting the microphone to work in its seminars aimed at getting SMEs
to expand outside of Singapore.
Lee Kuan Yew
himself, had something of a disdain for small time businesses. I remember watching
him on a YouTube talking about how Singapore like other small nations didn’t
have the scale to build anything really viable. I’ve also read his book where
he states that our people were “traders” not “entrepreneurs.” While the English
Educated Mr. Lee did get many things right, he had that most damaging of
Confucian prejudices – namely the bureaucrat’s disdain for traders.
In fairness to
Mr. Lee and the system he created, it was a good thing to get multinationals to
come into invest. They brought the skills and capital that we needed.
Singaporeans who have worked in multinationals have learnt “world-class”
standards rather than locally made ones.
However, while
multinational investment is important in growing an economy, one cannot develop
a sustainable economy based purely on investment from elsewhere. You actually
need a “Singapore core” of businesses. As one Indian born data analytics
entrepreneur, who is starting his second business in Singapore says, “You would
get more value spending the money on attracting multinationals on developing
your SME sector.”
As stated in
the UOB report, home grown SME’s employ more than half of us. In the multinational and government linked
corporation space, Singaporeans are facing competition from elsewhere with
regards to the “good” jobs. So where can Singaporeans get “good jobs.”
Inevitably the answer is from a strong SME sector. Think of Germany as the example.
When most people think of Germany, they think of the big car makers like Daimler
Benz (Mercedes), Volkswagen and BMW or big pharma companies like Bayer or tech
companies like SAP. The truth, Germany does not have as many home-grown
multinationals as one might expect of a market of its size. The real strength of
Europe’s largest economy lies in its SME sector or the 'Mittelstand,' which comprises of many companies
making world class products for niche markets. The one that comes to mind is “Rationale”
which makes ovens that every chef that I have worked with drools over.
We need our version of the Mittelstand, especially if we are
to create decent enough jobs for our local people. We have the legal
infrastructure, the physical infrastructure and to repeat a government mantra,
although we have no natural resources, we have highly developed human
resources. So, why can’t we strengthen our SME sector?
Well, there is an argument that the government is trying to
nurture entrepreneurship and is now more SME/Start-up friendly. There are
grants and wonderful mentorship programs for aspiring entrepreneurs. If you
want to “make it” in the next big sexy sector, the government will be there.
While all this is very helpful, the record of governments nurturing
entrepreneurs is rather bleak for a good reason. In Singapore, being
SME/Start-up friendly makes a good headline. However, the government cannot
resist minimizing competition for the “big boys”
Let’s go back to the hawker, the most typical example of a home-grown
enterprise that keeps families employed and feeds the local community. The
government is now making a lot of noise about our “Hawker Heritage” and how we
must preserve “hawker culture,” as being an integral part of Singapore’s
cultural landscape. There are even courses on “hawker-preneurship.”
However, while all these things are nice, what really
discourages people from having a start-up hawker stall is costs – specifically rent.
Any bright spark is bound to ask if its worth standing over a hot stove for
hours on end when rent alone is going to eat up at least half of the hawker’s
costs.
Ironically as a good portion of hawker stalls are on government-controlled
land, this is one costs that the government has control over. So, how does the
government help. Well, the National Environment Agency (NEA) has proceeded to
help hawkers who are struggling from various covid-related limits on their
business by jacking up rents by 40 percent. Let’s put this in perspective. If
the hawker paid $1,000 a month before, they’ll now pay $1,400 a month. Or to
put it into perspective, the chicken rice seller now needs to sell 80 extra plates
just to cover the increase in rent (assuming one plate sells for $5).
The government’s defense for this tone-deaf move runs along
the lines of we gave hawkers lots of help last year but now we want our money
back. To give this a “humorous” touch, the NEA Chairman has decided to star in
the following video, which is funny to everyone except the hawkers struggling
for business and the customers who will face a price increase.
https://www.youtube.com/watch?v=Hv9blaVypwU
So, what can the government do? Well, the extra capital and
cheap loans are not bad as help goes. Nobody will say no to easier access to
capital. Likewise, nobody has ever said networking sessions were a bad thing.
However, what small businesses really want from the
government, was best spelled out by an Afghan entrepreneur describing his
government. He said, “I don’t expect them to help me – I just don’t want them
to f*** it up for me.”
Running a business is tough enough. However, it does not help
when the government decides that business is its football. The fellows at the
NEA should have understood that when they decided to make life that much harder
for the entrepreneurs doing their best to make a living by feeding the rest of
us at affordable prices.
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