Creating a launchpad for international SMEs yet

The protectionist sentiment that is spreading throughout the global economy has put governments around the world on tenterhooks. Even as Singapore continues to perform well, it narrowly avoided a technical recession in the third quarter of 2019 and will need to remain vigilant.

The onus falls not only on regulators to help plan for Singapore’s economic future, but also on businesses who need to sharpen their own competencies and drive increased competitiveness. One approach they should consider is expansion across borders, which is a ready way to grow markets and customer bases. With advancements in technology and intra-regional connectivity boosts lowering barriers to market entry, internationalisation is no longer something businesses can, or should, sleep on.

In Singapore, Small and Medium Enterprises (SMEs) form 99% of all registered enterprises and are the lifeblood of our economy – a segment that we cannot ignore. But has Singapore successfully created a launchpad for these SMEs to go international?

Research from our recent SME survey showed that 38% of firms were keen to expand their businesses in 2019, amongst which almost half – 47% – intended to internationalise. More notably, there was a sizeable proportion of smaller SMEs who were hoping to venture abroad for the first time. These numbers are indicative of a growing appetite among Singapore’s enterprises to try their luck overseas.

To do so effectively, these firms need to have the right balance of enabling factors in their favour. This begs for careful analysis across regulatory, financial and business protection frameworks.

On the regulatory front, the Singaporean government has already made strong moves to help local SMEs venture abroad, putting in place national programmes and initiatives. This includes Scale-up SG and the SME Go Digital Programme, which help SMEs reach the next steps in their internationalisation and digitalisation journeys and puts them in touch with relevant industry experts who can act as mentors to them.

Our survey also provided key insights into the current sentiment and participation in these programmes. It found that whilst 65% of SMEs indicated that they are aware of the various forms of government support available to them, only 30% have actually utilised this support. The next step is to recognise what is holding these firms back from taking up the help already on offer, which can be achieved through direct outreach to businesses to encourage them to participate and collaborate with the government in enhancing their competitive edge, especially during challenging economic times.

However, we need to look beyond the launch phase alone and ensure long-term sustainability to expansion. Failing to do so would be irresponsible. This system should work to ensure these ventures are well-protected and have a business continuity plan that takes into account the trying landscape in which they are attempting to launch and establish themselves.

Apart from like-minded firms sharing their best practices with SMEs and mentoring them, collaborative partnerships with private firms, like insurers, would be another avenue to explore to help SMEs mitigate risks associated with the venture. Insurers offer varied products catered towards specific risks such as risk of bad credit, risk to property, cyber risks, accident risks, change in regulation and general liability, among others. More importantly, some insurers provide multi-market insurance that can cover a company’s business ventures across several geographies.

Opportunism should not be the main focus for insurers when helping businesses venture abroad. As insurers, we see ourselves as reliable partners to SMEs, enhancing our offerings whilst sharpening our underwriting capabilities to ensure that our products continue to be competitively priced and delivered efficiently and optimally. Insurers must continue to understand and consider the unique differences between each business and allow flexibility in product design adapted to their individual needs. A one-size-fits-all approach would be counter-intuitive.

Whilst there is much impetus to internationalise, this strong desire must be backed by contingency-planning and careful risk assessments. For firms that have successfully made their ventures, their experience and guidance would be invaluable in helping firms make their first forays. Insurance forms a key part of business protection and should also be considered a key part of the expansion checklist.

In short: yes, we have a working launchpad, but the next step is ensuring that the ventures are risk-protected and insulated against the worst-case scenario. Only then will we have a sustainable SME launchpad that ensures the successful spread of Singapore’s SMEs globally and creates a foundation to thrive.