Role of government and GLCs in the private sector affect competitive market structure for SMEs

Year: 2020

This post is written as a brief comment to headlines in local papers noting the unexpected increase in NODX.

“FMG notes enthusiastic headlines in local papers that NODX showed an unexpected increase. The devil is in the details.

First, those rises are off a very low base of much-reduced export volumes.

Second, a large proportion concerns trade in non-monetary gold. Neither is a good sign. The narrative of facts is made plainer in the data from the Department of Statistics.

Singaporeans still live in a dream world, expectant of normalcy or its imminent return, need to wake up.

The only Singaporean workers insulated are public servants with ‘iron rice bowls’. The financial sector is kept afloat by abundant liquidity, technology firms are having a bonanza, while bio-medical firms stand to gain from COVID.

The rest of the economy is a bloodbath, with SMEs doing most of the bleeding.

One reason is that in a small economy, the government and its GLCs long ago abandoned the ‘yellow pages rule’, meaning that they should not compete in sectors where private players can meet market needs or, if they do so to fix market failure, they should exit once that failure is remedied.

Instead, across a host of sectors, either government directly or GLCs ‘clean the clocks’ of SMEs, reducing their scope for growth and essentially presenting an unfair competitive market structure. This must change.”

– Devadas Krishnadas
CEO, FMG