Both MNCs, SMEs needed for Singapore’s economy to thrive: Jeffrey Siow

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SINGAPORE - For Singapore’s economy to thrive, both multinational corporations (MNCs) and smaller local companies here need to succeed, said Transport Minister Jeffrey Siow.

Joining the debate on a motion moved by WP MPs, he made the case for why MNCs and small and medium enterprises (SMEs) are important to the country’s economy.

Singapore has to compete harder for foreign investments and work harder to support local companies amid a difficult global environment, said Siow, who is also Second Minister for Finance.

Amid the difficult global environment, the Government has to compete harder for foreign investments and work harder to support local companies, he told Parliament on Aug 5.

“We are not in a zero-sum situation. In fact, the growth of our local companies and our MNCs mutually reinforce each other,” he added.

The WP motion had proposed that the House believes “in an economic engine driven by dynamic local companies, healthy domestic demand, and Singaporeans and Singaporean capital venturing abroad”.

Siow said there is a significant difference in how the PAP and WP understand Singapore’s economic model.

The WP believes the model is imbalanced and needs to be fundamentally reoriented, he noted.

“They have portrayed Singapore as a place where MNCs create wealth, and there’s some Faustian bargain, where SMEs are held down, and Singaporeans receive the benefits through redistribution,” he said.

“I disagree with this characterisation.”

The Government’s strategy has always been built around Singaporeans, he said, adding that economic growth is a means to an end - to create better jobs, higher incomes and improve citizens’ lives.

This model has delivered for generations after generations of Singaporeans, he added.

Siow said the WP’s view appears to be that MNCs and local firms are competing for a fixed pie, with its MP Jamus Lim (Sengkang GRC) saying Singapore must pivot away from MNCs to SMEs.

He said SMEs are critical to Singapore’s economy as they employ the majority of Singapore’s workforce.

Very few countries support local companies like how the Singapore government does, with nearly $2 billion in direct grants set aside each year for SMEs, he noted.

Not all of these schemes are fully utilised, he said, adding that the Government will help more companies to tap them, and “stands ready in support with more resources” if demand grows.

Senior Minister of State for Trade and Industry Low Yen Ling, who spoke before Siow, had outlined the various support measures available to businesses.

She cited programmes to help food and beverage businesses improve productivity, redesign their operations and adopt digital and AI solutions.

Heartland and heritage businesses can also get help to strengthen operations, improve their storefronts and attract more customers, she added.

In his speech, Siow acknowledged that it has become more difficult for SMEs to venture overseas in the current economic climate.

“The answer is not to turn inward,” he said, noting Singapore’s domestic market is too small.

“It is the reverse: to strengthen our companies to compete more effectively in more overseas markets, with greater resilience.”

This was why the Singapore Economic Resilience Taskforce, chaired by Deputy Prime Minister Gan Kim Yong, was set up in 2025 to help businesses adapt.

He noted that companies have since benefitted, citing furniture company Castlery which diversified its manufacturing base with support from Enterprise Singapore.

At the same time, MNCs remain important to Singapore’s economy as they bring in resources, capabilities and technology, including artificial intelligence capabilities “which would take us years to develop on our own”, Siow said.

Many local companies grow and succeed because of their relationships with MNCs, he said, adding that global companies create high-skilled, high-paying jobs.

Some 85 per cent of senior management positions in MNCs in Singapore are held by Singaporeans, and they often have regional or global responsibilities, he noted.

Siow said as Singapore reinvents its economic strategy, it should be clear about what needs to change and what should stay the same.

“We are not choosing between SMEs and MNCs. We need both,” he said.

Similarly, the country needs both domestic demand and external markets, Siow added.

“Our enterprises have ambitions that extend far beyond our shores... Our job is to help our companies realise those ambitions, and not hold them back.”

Siow also responded to WP’s Kenneth Tiong (Aljunied GRC), who suggested creating a university-centred special zone where state land is priced at development cost rather than a value based on scarcity, with a system that prioritises young people.

Tiong’s point that the Government has a universal land pricing model is “simply untrue”, Siow said.

He noted that land is priced differently at fair market value based on its intended use, be it social, commercial, industrial, community, educational, or religious.

“Now we can debate whether there is sufficient flexibility in the current framework, and whether there could be or should be further differentiation. But that is quite different from suggesting that the current framework is fundamentally flawed,” Siow said.

“On the contrary, our clear and transparent framework ensures responsible stewardship of our limited land resources.”

Rising after Siow’s speech, Lim said the WP was not suggesting that SMEs and MNCs are competing for the same pie.

He added that the party is also not suggesting that greater support for local SMEs must come at the expense of existing MNCs or punish these “golden geese”.

Lim said he was careful to emphasise in his speech that Singapore must not sideline MNCs and Government-Linked Companies, nor shut off foreign capital.

The WP is “not blind” to how domestic demand alone is insufficient to drive Singapore’s economic engine, he said, adding that the party wanting healthy domestic demand is not equivalent to saying that Singapore does not need foreign demand.

“What we want to urge is the growth of consumer demand that historically has been weaker here than in other advanced economies of our level of development,” he says.

In response, Siow said the Government had that impression of WP’s position because of the language used in the motion – where there was no mention of global enterprises and the global economy.

He said Lim had also said that Singapore should “pivot” towards SMEs.

“When we say pivot, I’m assuming there is an impression of a zero sum arrangement that he had in mind,” Siow said.

“But if I was mistaken, I’m very happy that he has clarified that the Workers’ Party is certainly aligned with our economic strategy.”