Economic Affairs

IE-Spring merger: In step with new business era

Merger of two enterprise promotion bodies paves way for businesses to get help to grow domestically, expand overseas - together

If one still needed a sign that the economic times we live in are at an important juncture, the Government delivered it last week.

The announcement that Spring Singapore and IE Singapore would be merged to form a new entity called Enterprise Singapore is as loud a signal as any that we have entered a new era in business and economics.

The merger will take effect in the second quarter of next year.

Spring is well known as the government agency focused on helping small and medium-sized enterprises develop their capabilities in everything from productivity to human resource matters. With over 400 employees, it helps businesses through programmes and grants such as the Spring Start-up Enterprise Development Scheme, which co-invests with the Singapore Economic Development Board (EDB) in innovative start-ups, and the Innovation and Capability Voucher, which provides financial support to companies seeking consultancy services on issues such as productivity, human resources and financial management.

One restaurant chain, House of Seafood, tapped Spring's Capability Development Grant this year to offset the cost of its Ready-to-Eat Crab vending machines, which it has installed at its outlets and various chalets, tertiary institutions and industrial estates islandwide.

IE, meanwhile, as a trade promotion agency, is the organisation that local SMEs turn to when they need a booster before venturing overseas or when they are already there. Its over 400 staff in over 35 countries help with funding, market research, introductions to foreign businessmen and government officials to get a new overseas unit off the ground.

ST ILLUSTRATION: MANNY FRANCISCO


One of its success stories is fashion blogshop Love, Bonito. When the firm wanted to open its first physical store in Malaysia, IE provided it with useful contacts, such as public relations, marketing, manufacturing and branding companies. In Indonesia, IE helped to connect Love, Bonito with a particular fashion designer that it wanted to work with.

With the marriage of Spring and IE, the message is clear: It is no longer an either-or situation. Businesses cannot afford to work on either building their internal capabilities or venturing overseas one at a time.

In this era of rapid change and disruption, both have to be done simultaneously.

This is not the first time that the Government has combined two agencies into one to better handle changes in the business environment and shifts in technology.

Last year, the Infocomm Development Authority and the Media Development Authority merged to form the Info-communications Media Development Authority in response to the convergence of IT, communications and media.

The JTC Amendment Bill tabled by the Ministry of Trade and Industry (MTI) will transfer the Housing Board's industrial properties to JTC in the first quarter of next year so that all industrial land and space issues are handled by a single agency.

The formation of Enterprise Singapore is a similar move, made in response to a new phase in the Republic's economic development.

With tighter domestic constraints - slower economic growth and the rising cost of doing business among them - external demand has become and will continue to be a more important driver of growth for businesses.

And to venture abroad and do it well, companies must have extensive international networks, superior capabilities, innovative products and strong brands, Minister for Trade and Industry (Industry) S. Iswaran noted last week. "The capacity to innovate, harness new technologies, scale up and internationalise are deeply intertwined for all companies regardless of scale or stage of development,"he said.

The creation of Enterprise Singapore empowers the agency's combined staff to look at the overall strategy of a business and identify the gaps to be plugged.

Mr Shamir Rahim, president of the Singapore Malay Chamber of Commerce and Industry, also noted that the merger should help to reduce administrative headaches for firms.

"Now you go to Spring to get the Capability Development Grant (CDG), but a lot of times that is to aid in going international. For example, SMEs go to get the CDG from Spring, say, to put in human resource capabilities, then go to IE to set up an international office in Jakarta.

"But Jakarta couldn't happen if not for the CDG from Spring. Both agencies have a complementary role. This merger will make it more seamless."

Mr Iswaran said in Parliament on Monday that Enterprise Singapore and EDB "will form two critical and complementary government agencies that will help formulate and implement strategies for the development of industry clusters and enterprises".

Enterprise Singapore will also work closely with EDB to drive collaboration between multinational corporations, innovative start-ups and enterprises of all sizes, he said.

THE ROAD AHEAD

Enterprise Singapore will be headed by Mr Png Cheong Boon, MTI's Second Permanent Secretary and a former chief executive of Spring and JTC.

The current chief executives of Spring - Mr Poon Hong Yuen - and IE - Mr Lee Ark Boon - will be redeployed to new roles, which have not been decided yet.

Though the merger has been confirmed, there are many details yet to be ironed out.

Mr Iswaran stressed last week that the merger "is not about downsizing or rationalisation", adding that the new entity will have about 900 staff - the combined strength of IE and Spring's existing headcount.

Nonetheless, he added that it would be "inevitable" that job scopes will change, giving the example of IE and Spring officers having to pick up each other's knowledge and skills so they each can serve clients comprehensively.

"There will be some element of training and adaptation," he said.

There is also the question of where Enterprise Singapore will eventually be located. For now, the two agencies will remain in their respective offices - IE in Bugis and Spring at Biopolis - as their leases have not run out, and so office space for the combined entity will only be decided some time after the merger takes effect.

Already, some organisations and businesses have asked if Enterprise Singapore will combine IE and Spring's existing programmes or come up with new ones altogether.

And would micro-enterprises, such as mom-and-pop shops in HDB estates, be ignored by this new entity that is so focused on taking firms overseas?

Such issues, too, will be worked out along the way.

Mr Iswaran said last week: "There is a transition period and we have to give them time and space to get it right. The services and support programmes that IE and Spring render to their clients will continue uninterrupted.

"Meanwhile, there will be the process of restructuring and merger. In the process, and most probably after the organisations have come together, they'll have a chance to reassess their programmes and see if there's a need to do any review of some of the programmes, perhaps by integrating some of them better in order to address some of the typical needs that they see in the market."

Singapore Business Federation chairman Teo Siong Seng also voiced his concern last week that the formation of Enterprise Singapore, an agency double the size of two household names that SMEs are used to, will leave small firms feeling neglected.

But ultimately, he added, the new agency is a step in the right direction that deserves a chance.

"I'm sure in this case that one plus one will be more than two."