ATC170802: Report on the joint study tour to Malaysia and Singapore by the Select Committees on Economic and Business Development and on Trade and International Relations, dated 2 August 2017

NCOP Economic and Business Development

Report on the joint study tour to Malaysia and Singapore by the Select Committees on Economic and Business Development and on Trade and International Relations, dated 2 August 2017
 

The Select Committee on Economic and Business Development and the Select Committee on Trade and International Relations, having undertaken a joint study tour to Malaysia and Singapore from 17 -24 April 2017, reports as follows:

 

1. Introduction

 

The two Committees on Economic and Business Development and the one on Trade and International Relations embarked on a joint study tour to Malaysia and Singapore starting from 16 to 26 April 2017.  The study tour focused on the Association of Southeast Asian Nations (ASEAN), with specific focus on Malaysia and Singapore. The ASEAN region is one of the fastest growing regions which is estimated to have a combined GDP of $2.4 trillion and a population of more than 600 million.

After a careful consideration of similar historical and political backgrounds, the two select committees selected Malaysia and Singapore as countries to visit and engage on how best South Africa can deal with the triple challenges of poverty, inequality and unemployment. Malaysia and Singapore are regarded as some of the greatest emerging economies that developing countries can learn from in pursuit of inclusive growth and sustainable development. Both countries’ economies have transformed from traditional industry-based, and now the economies are shifting from industry-based to a knowledge-based economy. 

Both countries have enjoyed high business confidence and attracted domestic and foreign investments. In a nutshell the countries have enjoyed despite the recent global economic and financial crises, relative good economic performance. Malaysia and Singapore have pursued empowerment programmes that aimed to ensure that all citizens benefit from the political, economic and social transformative initiatives.

Like in the case of Malaysia and Singapore, the National Development Plan (NDP), emphasises inclusive growth that would ensure that economic growth benefits would improve the well-being of South Africans, particularly the lives of those who were previous excluded in the main stream economy. 

The NDP, and various government strategic policy documents such as the 2014-2019 Medium Term Strategic Framework, NINE-Point-Plan including both the 2017 State of the Nation Address and Budget emphasised the need for the economy to grow faster; to increase of both domestic and global investment; lift export competitiveness and jump-start industrial development. In the main these policy documents are geared to ensure that the benefits of economic growth is inclusive and wide-spread in order to drastically reduce poverty, boost income for the poor and thus close income and social inequalities.

Investment in human and physical capital, research and development have received special focus in Malaysia and Singapore. Collaborative and improved coordinating efforts between government and the private sector proved to be one of the key elements that drive policy implementation.

What was central in the international study tour, was to learn how Malaysia and Singapore’s experiences can enrich South Africa to addressing socio-economic challenges. To gain insight on both country’s perspectives on inclusive growth and sustainable development agenda.

1.1 Delegation

 

The delegation was led by both Chairpersons of the two Committees; namely Hon MI Rayi, Chairperson of the Select Committee on Economic and Business Development and Hon ER Makue, Chairperson of the Select Committee on Trade and International Relations. The delegation included Hon SG Mthimunye; Hon MC Dikgale; Hon J Mthethwa; Hon JJ Londt; Hon WF Faber; Hon LV Magwebu (arrived late) and Hon MM Chabangu.

 

The delegation was also accompanied by the following support staff: Ms N G Dinizulu and Mr H N Mtileni (Committee Secretaries); Mr Z Ngxishe (Committee Researcher) and Mr C L Sishuba (Content Advisor); the Department of International Relations and Cooperation officials: Mr S Pike; Counsellor (Political) and Ms N Ramatshela, First Secretary (Political), Singapore Mission. In Malaysia, the delegation was accompanied by Ms P Reddy, First Secretary (Political) and Mr Maharaj, the Acting Commissioner from the Malaysia Mission, Department of International Relations and Cooperation.

1.2 Terms of reference

In brief, the terms of reference for the study tour focused on the following areas:

• To learn and compare experiences on how the economic development plans for both the visited countries drives an inclusive growth and sustainable development agenda.
• The openness of these two economies (Malaysia and Singapore) to international trade and Foreign Direct Investment (FDI), and how they in turn utilise the State Owned Entities to cooperate with private sector to boost economic growth, fast track innovation and lift economic competitiveness, enhance workforce productivity and use SMMEs as anchors for the economy and employment creation.
• The strategic positioning and alignment of the energy, logistics and transport sectors as key enablers in order to attain government policy outcomes.
• To learn how best the Tourism sector is being harnessed and supported to make a meaningful contribution to economic development and support of Small and Medium Enterprises.
• How manufacturing is prioritised and supported for the growth and development of a productive economy.
• How investment in innovation has an impact on the productivity of various industries.    

The report will be structured in the following manner for ease of reference:

The first section (following the Introduction) will capture the first leg of the study tour in Malaysia looking at the overview and welcoming remarks of the High Commissioner from the South African Embassy. This will be followed by the observations and deliberations of the joint select Committees with Malaysia Economic Planning Unit, SME Corp and the SME Bank.

Section Two of the report will cover the second leg of the study tour in Singapore, dealing specifically with lessons and experiences shared with the delegation by SPRING Singapore (SMME support and development); Energy Market Authority; Land Transport Authority (LTA); Maritime and Ports Authority (MPA) and Singapore Manufacturing Federation (SMF).             

SECTION 1

2. Overview of Malaysia and South Africa relations (diplomatic relations)

The following information is largely drawn from the Department of Trade and Industry’s Country Brief Report, 2015.

Malaysia is a Member of the ASEAN. The membership of ASEAN is composed of ten member countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Although the countries are at different stages of development but they present interesting growth stories and opportunities.  

 In 1997 South Africa signed a Trade Agreement with Malaysia. Total trade between Malaysia and South Africa has grown relatively from approximately R16 billion in 2013 to R17 billion in 2014. In spite of individual country preferences, South Africa and Malaysia view each other as close partners in the developing world and are committed to increasing South-South co-operation for increased market access, trade and investment to alleviate poverty and underdevelopment as it is prevalent in both Africa and Asia. Malaysia as a member of ASEAN, has been in support of the conclusion of a Free Trade Area (FTA) between Southern African Customs Union (SACU) and ASEAN. 

According to the Department of Trade and Industry’s trade statistics, by the end of 2014, Malaysia ranked as South Africa’s 33rd largest export partner and 25th largest import partner in the world. On the Asian continent, Malaysia became South Africa’s 9th largest export and import partner. According to the FDI markets database, only 1 South African company invested in Malaysia with a capital expenditure of R58.6 million during 2004, the major investor is Nandos franchise, which is focusing in food and fast moving consumer goods.  These projects represent a total capital investment of R58.6 million which is an average investment of R58.6 million per project and 437 total number of jobs created in Malaysia. In the education sector there is an exchange programme on Science and Technology.

The South African Acting High Commission in Malaysia, Mr Maharaj, also emphasised the need for both countries to strengthen trade and investment relations. The Malaysian economy has undergone notable transformation from dependence on agriculture and commodity exports to a more diversified and open economy with strong links to global value chains, and this a lesson that South Africa can learn from including policy implementation initiatives. A case in point, is Operation Phakisa, which has been adopted and adapted using Malaysian implementation model.

 

3. Malaysia - Economic Planning Unit (EPU)

The Malaysia Economic Planning Unit (EPU) is a government entity under the Department of the Prime Minister. The EPU was established in 1961 as the Economic Secretariat of the Economic Committee under the Executive Council of the then Federation of Malaysia. It is primary responsible for development planning which entails:

• Development programme through outcome based approach;
• Maximise the usage of finance resources through effective distribution of allocations;
• Strengthen human capital towards elevating efficiency and professionalism; and
• Establish organisational capacity towards effective services delivery.

The EPU is tasked to formulate development plans in partnership with other stakeholders such as state ministries, agencies, academics, the private sector and civil society. The current development plan (Eleventh Malaysia Plan -2016-2020) has identified key strategic policy areas, which will place Malaysia in a high-income country band:

• Enhancing inclusiveness towards an equitable society;

• Improving well-being for all;
• Accelerating human capital development for an advanced nation;
• Pursuing green growth for sustainability and resilience;
• Strengthening infrastructure to support economic expansion; and
• Re-engineering economic growth for greater prosperity.

What is central to the development plans is to lifting the bottom 40 per cent households towards a middle-class society; enabling industry-led technical and vocational education and training; embarking on green growth; translating innovation to wealth; and investing in competitive cities (recognising that cities are engines for growth and development). Some of these policy strategic areas also find expression in the South Africa’s National Development Plan including Budget plans.

Like South Africa, Malaysia with the support of key global development partners such as the World Bank and OECD, seeks to advance policies that would focus on increasing economic growth that would be more inclusive. The focus is to boost trade and investment, improve productivity and competition (improve quality of education and training and strengthen competition capacity and capability), improve efficiency and effectiveness of state linked companies. Furthermore to boost public sector capacity and improve the functioning of the labour market and the regulatory framework for small and medium-sized enterprises (SMMEs), including fostering regional integration.

What is also key in Malaysia, is to constantly conduct evaluation of strategic government plans and programmes in order to reduce the gap between planning and implementation. In Malaysia, the planning and budget management, including economic planning capacity reside in the Prime Minister’s Department. In South Africa, the economic and budget planning resides in various government departments such as Economic Development and National Treasury. In South Africa, there may be a need to strengthen economic and resource allocation management capacity and capability.

The Malaysian Prime Minister and the Governor of the Central Bank play a critical role in coordinating economic development through various strategic governance structures such as the Economic Councils. In Malaysia, there is a strong economic development ecosystem that involves the private sector and civil society in formulation of development plans.

The establishment of the Planning Commission, Department of Planning Monitoring and Evaluation (DPME), and Presidential Infrastructure Planning Commission in the Presidency in South Africa should be commended. However the lack of economic planning and resource allocation management capacity in the Presidency has the potential to hinder implementation of the NDP. However unless improvement in economic planning and resource allocation management capacity in the Presidency is done, it may have the potential to hinder implementation of the NDP.

The advantage of Malaysia is that the Prime Minister’s Department has the capacity to coordinate economic planning including resource allocation management and formulating policies that support SMME growth and development. Furthermore the EPU is using a long range approach in planning economic development and this modus operandi has started many decades ago. What may be needed in South Africa is to establish a clear, streamlined and co-ordinated governance structure at the centre of government administration to improve policy coordination and implementation.

4. Ministry of Tourism and Culture

In the case of South Africa, tourism and arts and culture sectors have separate ministries, whereas in Malaysia, tourism and culture are merged in a single ministry. The Malaysia’s Ministry of Tourism and Culture’s primary aim is to enhance the tourism and culture sectors as well as to strengthen, conserve and preserve national arts, culture and heritage. 

This section would outline the background of the Ministry of Tourism and Culture, objectives of the Ministry, Malaysia tourism industry performance potential growth areas, tourism products, and strategies used to intensifying domestic tourism.

4.1 Background and objectives of the Ministry of Tourism and Culture

Since early 1970s tourism became one of the major industries identified that could contribute to the Malaysian economy and boost economic development. In 1972 the Malaysian government established the Tourism Development Corporation in recognition of the importance of the tourism industry in overall economy growth. 

In 1987 the Ministry of Culture, Arts and Tourism was established, and in 2004 the tourism component was again separated to become a stand-alone Ministry. However in 2013 it was again merged to form a new Ministry of Tourism and Culture.

The main of objectives of the Ministry is to:

• strengthen the arts, culture and heritage sectors towards enhancing national unity based on the National Cultural Policy;
• enhance the synergy and cooperation among the tourism and culture industries players towards making Malaysia the preferred tourist and cultural destinations;
• strengthen the tourism and culture sectors towards growing the nation's economy;
• promote Malaysia's uniqueness in arts, culture and heritage as the main catalysts for the growth in tourism and culture sectors; and
• develop knowledgeable, skilled, creative and innovative human capital in tourism and culture sectors.

4.2 Malaysian Tourism Industry Performance

From January to December 2015, Malaysia welcomed a total of 25.7 million tourists and attracted RM 69.1 billion tourism receipts, however compared to 2014, it recorded a decline of 6.3 per cent (tourism arrivals) and 4 per cent (receipts).

In terms of the Malaysian Tourism Transformation Plan 2020, Malaysia plans to achieve 36 million tourist arrival by 2020 and thus generate RM 168 billion in revenue. The main focus is to increase tourists spending not just only increasing tourist’s arrivals. To this end, Malaysia plans to attract the higher end segment of the tourist market. To achieve that, the aim is to attract higher end segment market within the ASEAN region in countries like China, India, Japan, South Korea, Australia and Taiwan.

In order to boost and enhance tourism, fuel economic growth and improve income levels, the Malaysian government has developed the following tourism and cultural development programmes:

4.2.1 Ecotourism- primary aim is to promote ecotourism. Malaysia has developed a National Ecotourism Plan (NEP) 2016 – 2025 to boost tourism by incorporating nature and adventure into tourism market products.

4.2.2 Heritage, Culture and Arts- the aim is to maximise returns from creative industries by using heritage, culture and arts as components that could support economic development. Malaysia is in the process of developing the National Creative Industry Plan (NCIP) that would outline the policy direction with regard to creative culture, arts and creative cultural heritage.

4.2.3 Meetings, Incentives, Conventions and Exhibitions (MICE)- to position Malaysia as a world class destination for global Meetings, Incentives, Conventions and Exhibitions (MICE). Thus to secure major global events to boost tourism and contribute to the economy. The International Congress and Convention Association (ICCA) Rankings for 2011, ranked Kuala Lumpur number 21 in the world and number 5 in Asia Pacific. Malaysia ranked number 29 in the world and number seven in Asia Pacific.

4.2.4 Shopping- the Secretariat Shopping Malaysia (SSM) was established by Tourism Malaysia in 2002 with the aim to promote Malaysia as a world-class shopping destination to overseas and domestic tourists. The primary task is to to boost the local tourism and retail industries by increasing tourists’ arrivals and tourists’ spending.

4.2.5 Muslim Travel Market- focused on the Muslim travellers’ needs and requirements. Mosques can easily be found in each district around the country, and there are many prayer facilities available in most tourist attractions, shopping malls, airports, parks and public places. Most restaurants in the country serve halaal food, including international fast-food franchises which are all certified by the Department of Islamic Development Malaysia (JAKIM), Malaysia’s sole Halaal Certification Body.

4.2.6 Homestay- tourism operators provide tourist the experience of life in a kampung or traditional village. The kampungs involved in the homestay programme are committed to ensure that visitors experience village-style living first hand. All kampungs taking part in the homestay programme are carefully selected and comply with strict guidelines from the Ministry of Tourism and Culture in order to bring out the best of Malaysia. Service providers are taken through the certification process by Tourism Malaysia, preserving the experience of traditional Malaysian charm ensuring the spirit of Malaysian hospitality is kept alive.

4.2.7 Intensifying of Domestic Tourism; focused on increase domestic tourism. The “Cuti  Cuti 1 Malaysia”  Campaign, aimed at encouraging Malaysians to spend their vacations locally and deepen their appreciation of local tourism products.

Like in South Africa, the tourism sector features high in the Malaysian Economic Development Plan. The NDP, like the Malaysian Development Plan has identified the tourism sector as one of the important sectors that could stimulate economic growth and increase income levels.  

5. SMMEs as Engines for Growth and Development

The joint select committee met with the SME Corporation Malaysia (SME Corp. Malaysia). The Members were briefed that the SMMEs’ composition is dominated by the services sector. According to Malaysian Economic Census 2011 report, SMMEs’ account for 97.3 per cent or 645,136 of total business establishments in 2010. SMMEs’ concentration are in the services sector with 90 per cent or 580,985 establishments. Meanwhile, 6 per cent of total SMMEs (37,861) are in the manufacturing sector, followed by 3 per cent in the construction sector (19,283) and the remaining 1 per cent (6,708) in the agriculture sector and 0.1 per cent in the mining and quarrying sector.

Furthermore most SMMEs are predominantly micro-enterprises representing 77 per cent of total SMMEs in Malaysia in 2010. Small-sized SMMEs accounted for 20 per cent, and medium-sized SMMEs formed 3 per cent. This is a case that is not totally different with regards to South Africa.

SMMEs’ overall contribution to the economy has been significant. SMME contribution to GDP increased from 29.6 per cent in 2005 to 36.3 per cent in 2015. It was further reported that SMMEs also contributed 65.5 per cent of total employment and 17.6 per cent of total exports. However, they acknowledged that more needs to be done. Many other emerging economies and developed countries have in recent years performed much better. This argument was also advanced by several SC Members.  

The SME Corp is a Central Coordinating Agency under the Ministry of International Trade and Industry - Malaysia, and it is also responsible to formulating overall policies and strategies for SMMEs. It works closely with other state ministries and agencies, and stakeholders (private sector, academia and civil society) in development of SMMEs’ programmes. It acts as the central point of reference for research and data dissemination on small business enterprises. SME Corp. - Malaysia also assumes the role of the Secretariat to the National SME Development Council (NSDC), which is chaired by the Prime Minister.

The key priority area of the SME Corp Malaysia is to; provide infrastructure facilities; financial assistance; advisory services; market access and other support programmes to small business enterprises, working in partnership with the private sector, academia and civil society. It was explained to Members that the establishment of the National SME Development Council (NSDC) in 2004 marked another chapter in SME development in Malaysia. The NSDC as the highest policy-making body, makes policy coordination across all economic sectors more effective as most relevant ministries and state agencies are represented.

In the South Africa there is no structure like the NSDC, residing in the presidency responsible for the formulation of policies and programmes geared to support SMMEs. Unlike in Malaysia, there are many development agencies and programmes residing in various ministries and departments.

SME Corp. Malaysia is the nation’s leading organisation for the development of SMMEs to enhance wealth creation and social well-being of the nation. As articulated in the SME Master Plan 2012-2020, the SME Corp. Malaysia was tasked to implement Six High Impact Programmes (HIPs), which are viewed as the drivers of change in the SMME ecosystem.

The HIPs focus on the following focal points: to ensuring that business registration and licensing is integrated in order to ease the way of doing business; to establishing technology commercialisation platforms to promote and support innovation; furthermore to create SMME investment initiatives platform in order to finance and fund early stage; to form programmes that would link domestic SMMEs with international markets; to establish programmes that would support and promote catalytic SMMEs, and further enhance their international reach; and furthermore to develop programmes that would support empowerment of the vulnerable groups (such as women), to improve income levels.

SME Corp. Malaysia provides business advisory services and information to SMEs in Malaysia through its One Referral Centre (ORC) and its 11 State Offices nationwide.  As the Central Coordinating Agency for the overall SME development in Malaysia since 2009, SME Corp. Malaysia coordinates, streamlines, monitors and evaluates the progress and effectiveness of SME development programmes implemented by 15 Ministries and 65 Agencies. The information collected from the relevant Ministries and Agencies is published as an annual report called the SME Integrated Plan of Action (SMEIPA). This report was first introduced as the SME Development Blueprint (2006-2008) prior to SME Corp. Malaysia’s appointment as a Central Coordinating Agency.

The SC Members acknowledged the establishment of local innovation centres that would harness the innovation potential of SMMEs. It widely recognised that SMMEs often lack the capability to access both public and private sector innovation programmes. Funding for innovation or Research and Development (R&D) remains one of the challenges facing many countries, particularly developing countries such as South Africa.

Productivity and competitiveness of SMMEs remains high in the Malaysian government. In 2007, Malaysian government introduced SME Competitiveness Rating for Enhancement (SCORE), which is a tool used to rate and enhance competitiveness of SMEs, based on their performance and capabilities. SCORE, performance enhancing tool was reported to have enabled many Malaysian companies to improve their competitiveness and others were able to competitively compete relatively well in global markets.

In 2012, the Malaysian government launched the SME Masterplan with the primary objective to heighten the role of SMMEs in the economy, in order to become a high-income country by 2020. The NDP, also recognises the important role of SMMEs to ensure that South Africa achieves its development objectives.

With Regard to financing and funding of SMMEs, the joint select committees met the Malaysian SME Bank, in attempt to have an understanding on how the country meets SMMEs financial needs and requirements. SME Bank started operating in in 2005 as a Development Financial Institution (DFI) regulated by Bank Negara Malaysia and reporting to the Ministry of International Trade and Industry (MITI). Currently, the SME Bank is wholly owned by the Ministry of Finance (MoF). The main aim of the SME Bank is to develop SMEs to be the nation’s engine of growth as articulated in the government’s Economic Transformation Plans such as the National Key Economic Areas (NKEAs) (2010-2020) and the Financial Sector Blueprint (2011-2020).

The SME Bank has 38 branches throughout the country that services small enterprises. Of the 38 branches, 7 operate as Regional Centres; 19 are Enterprise Centres; 8 operate as Urban Transformation Centres (UTC) and 4 serve as Business Centres. The operation network enables the SME Bank to reach many entrepreneurs.  

The SME Banks financing areas for SMEs has focused on key sectors of the economy as outlined in various economic development plans. The focus sectors are Tourism, Wholesale and Retail, Oil and Gas, Education, Healthcare and Business Services. Loans allocations to small business enterprises favoured the services sector followed by the manufacturing and construction sectors. Like many developing finance institutions, loan impairments remains a concern, although it was reported that the SME Bank has in recent years recorded an improvement. Like in 2015, the loan impairment rate improved by 0.3 percentage points settling at 3.2 per cent compared to 3.4 per cent in 2014, with services and manufacturing sectors contributing to this higher impairment.

By recognising the value of social and economic partnerships, SME Bank has a track record to work in partnership with other government agencies, private sector and civil society in promoting small businesses.

To achieve higher small growth rate and performance, the SME Bank has established the following financing facilities; Malay Reserve Financing Development (MRDF), Bumiputera Equity (EquiBumi) Financing Facility, Young Entrepreneur Fund and SMEGo including the IBS Promotion Fund, SME Technology Transformation Fund (STTF) and My Seed SME Scheme (MYS3). The financing facility was created to boost productivity, innovation, inclusivity and entrepreneurship in the small enterprise ecosystem. Also to ensure that Malaysian domestic companies gain competitiveness in global markets. Furthermore, the Bank financing programme ensures that underserved categories such as women and young people benefit, as well as previously disadvantaged communities. Also what is important was to ensure that micro-businesses transform to other bands (migration business support).  

As SME Bank is a central financing agency, which is dedicated in providing financial requirements of small enterprises places Malaysia in a unique position compared with South African financing institutional platforms. Hence there may be a need, in South Africa, to establish a one stop SME financing agency. A possible policy option is to consider merging the National Empowerment Fund (NEF) with the Small Enterprise Finance Agency (SEFA) and Small Enterprise Development Agency (SEDA).

As already mentioned in the report, the development finance institutions have a responsibility to pursue the country’s socio-economic goals. SME Bank, as reported to the Members, has the task to strike a balance between “Doing Good” and “Doing Well”, thus financial sustainability becomes a key determining policy objective.   

6. Strategic Policy Management

The two select committees met Performance Management Delivery Unit (PEMANDU). PEMANDU was formed in 2009, and is located in the Prime Minister’s Office. Its strategic location enables it to influence policy and programme implementation across the state departments and development agencies. The newly created Department of Planning, Monitoring and Evaluation in South Africa, residing in Presidency, could play a strategic role in influencing policy and programme implementation across the various state departments and development agencies.

PEMANDU is responsible for driving implementation of the Malaysian policy strategy such as the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP), which aims to place Malaysia in the high income economy band by 2020.

The essential role of PEMANDU is to enable the economy to perform in an efficient and effective manner, and it is supported by high performing public service. Initially it was established solely as an in-house government consultancy unit, and now, due to emerging opportunities in the private sector and global community, was positioned as an independent advisory organisation (Pemandu Associates, Sdn Bhd).

The PEMANDU, is a private consultancy firm newly-established by Pemandu management and staff.  The new operating model and positioning would enable the organisation to generate own revenue, become financially sustainable, and lessen the burden to the fiscus. Most of the public sector programme managed by PEMANDU would be shifted to the Civil Service Delivery Unit (CSDU) within the EPU. 

The GTP was designed to enhance public-private sector partnerships, and introduce private sector methods in managing public sector programmes. The ETP was developed to jump-start the Malaysian economy, in the main to attract foreign investment, and to make the economy more competitive.

The Members noted the essential elements that PEMANDU’s business model offered, and that South Africa may learn from:

• Strategic location (in the Prime Minister’s Office) make it more effective in coordinating policy and programme implementation.
• Strong focus on Partnerships  ministries and departmental agencies across the sectors, improve service delivery ( results focus delivery);
• PEMANDU’s method of implementation focuses on Big Fast Results. The method is mostly used by private firms to turn businesses to achieve high growth results.

The Big Fast Results Method was created to focus on the following elements: strategic direction by conducting surveys, consultation and quantitative analysis of media; establish labs that would provide service delivery solutions; allow the public to offer feed-back to the Labs; foster accountability led by ministries; enhance programme implementation-monitoring; involve international experts (drawn from World Bank, IMF including Transparency International) to review programme implementation and solidify service delivery audits; and also publish progress reports to the public.

The following are some of the key highlights achieved by PEMANDU, which were shared with the SC Members:

• Supporting law enforcement to achieve a 35 per cent drop in reported street crime within one year.
• A survey conducted by Transparency International’s Global Corruption Barometer 2010 showed that 48 per cent of Malaysians felt that the government’s efforts in fighting corruption were effective, marked a significant increase from 28 per cent in 2009;
• In rural areas, approximately two million people benefited from projects that provided potable drinking water, extended electrical service, built roads, and restored housing.

As many developing countries, like South Africa, are faced with challenges such as lack or poor service delivery, trapped in low economic growth or remain middle income countries and increase in inequalities, better service delivery platforms are needed. PEMANDUs business model attempts to address a lack of policy implementation. The focus has been on results. This is the issue that Members acknowledged as a challenge facing South Africa.   

It was emphasised that the PEMANDU business model needs to be managed carefully (in the RSA context), as some ministries and departments might see the work of such a structure to be duplicating their work.

Members were told that the newly created private consultancy, Pemandu Associates, remained committed to the government on the national transformative initiative. The new entity has entered into agreement with the government on Jan 5, 2017, that would see 45 people deployed to the NTP work under the supervision of the CSDU. The number would be reduced to 30 in 2018 as part of the transitional phase. The work of the new entity would also focus beyond Malaysia, seeking business opportunities around the world.

PEMANDU is beginning to get a global reach, in past years it has started working with the South African government, Planning, Monitoring and Evaluation Department in the Presidency. With strong leadership, led by the current Chief Executive Officer, who is globally recognised as a person who turned a loss making Malaysian Airlines into a profitable business in the late 2000s, Pemandu Associates has the potential to be one of the global advisory consultants. 

SECTION 2

This section will cover the study tour in Singapore. The overview information is largely drawn from the Department of Trade and Industry’ Country Brief Report, 2015. Like Malaysia, Singapore is a member of the ASEAN, and also forms part of ASEANA.

Singapore aimed by 2020 to have increased skills in every job, ensured that domestic firms have necessary capacity and capability to be competitive in Asia and globally. Further to ensure that Singapore becomes a global city. It has a challenge of an ageing population To that effect, Singapore has invested in adult learning, and more broadly in education and training with special focus on maths, science and technology.  Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to establish Singapore as Southeast Asia's financial and high-tech hub.

The Singapore government has long recognised that small business enterprises are the engines of economic growth. The country has dedicated resources to enhancing the productivity of small business enterprises. It has multi-agencies that support small business enterprises providing a range of financial and non-financial provisions such as tax cuts to loans and grants. Research and development and innovation are the key enablers that boost competiveness.

Key challenges of the country is its land capacity. Many reports such as the World Bank have recommended that the country needs to optimally use the land including implementing green growth strategies. It has limited arable land that is not strong in agriculture as contributor to the national economy.

Singapore is recognised as one of the success stories of the Southeastern Asian countries that have achieved high income status after independence. The country is a free-market economy, and it reported (in many reports) a low corruption level, competitive and efficient economy with very low unemployment. The country’s economy is much dependent on exports (consumer electronics, information technology products, medical and optical devices, pharmaceuticals). It has efficient transportation and a dynamic services industry.

Dti report indicates that South Africa and Singapore trade increased from R11 billion in 2011 to R23 billion in 2015, then decreased to R12 billion in 2016. During the global recession period (2008-2009), trade between the two countries decreased by 38 per cent.

The Dti report further indicates that the trade balance has been in favour of Singapore since 2008, except in 2016. In addition, in 2016, Singapore became South Africa’s 32nd largest export partner, globally and 38th largest import partner. In the Asian region, Singapore became South Africa’s 10th largest trading partner during the same period. South Africa has the potential to increase exports in products such as the light petroleum oils and preparations, automobiles with reciprocating piston engine, diamonds non-industrial excluding mounted or set diamonds, gold in other semi-manufactured form n-monetary and polypropylene amongst others.

South Africa investment in Singapore showed only 10 South African companies have invested in Singapore with capital expenditure of R1.67 billion between January 2003 and October 2015 (Naspers, Computamaps, Investec, Scope Technologies, Wings Travel, Rand Refinery, Cartrack, Datatec and Nandos). In the case of Singapore investment in South Africa, represented a total capital investment of R246 million, invested in industries such as Business Machines & Equipment; Industrial Machinery, Equipment & Tools; Medical Devices and Software & IT services.

The two countries have shown great interest to increase trade and investment relations. In 2005, former President, Mr Thabo Mbeki undertook a State Visit to Singapore and met with Singaporean counterpart former President SR Nathan. In 2016, Deputy President, Mr Cyril Ramaphosa undertook an official visit to Singapore and met Mr Tharman Shanmugaratnam, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies.

7. SMEs as Engines for Growth

The select committees met the SPRING Singapore, a SMEs development agency under the Ministry of Trade and Industry. The main task of the agency is to assist SMEs to grow and building trust in Singapore products and services.

In Singapore, SMEs are defined as enterprises with annual sales turnover of not more than S$100 million, or small business enterprises with employment size of not more than 200 workers, and make up 99 per cent of the business population. In terms of value contribution by enterprises to the economy, small business enterprises contribute 47 per cent, and employs 2.2 million people. The concentration of SMEs is in manufacturing and services industries (165,900), and most small business enterprises are constituted by micro enterprises (82 per cent).

In the recent past, with the effects of the global economic crisis, Singapore’s SMEs were also adversely affected. Like in 2015, Singapore’s economy grew by 2 per cent, and it reported the slowest economic growth since 2009. From the backdrop of the economic challenges, SMEs were facing labour costs, negative turnover growth, materials and rental costs. Furthermore financing cost, currency fluctuations and government charges have been identified as growing cost concerns by small business enterprises. Despite the economic challenges, with the support of the SPRING Singapore, many SMEs were reported to have continued to transform their businesses operations to investing in innovation and technology in order to remain competitive. 

SPRING Singapore has developed partnership with various government agencies, private sector, academia, research and financial institutions including Trade Associations and Chambers to help enterprises to have access to finance, to ensure SMMEs have capability and management capacity, technology and innovation, and access to markets.

The SPRING Singapore service delivery model is mostly anchored by partnerships created to ensure that SMEs access benefits that ranges from financial products and services, productivity and innovation to standards adoption. Furthermore, through partnerships created, SMEs also access business excellence and internationalisation.

Apart from offering services to SMEs, SPRING Singapore oversees the safety of general consumer goods in Singapore. This responsibility is managed by the Business Division for Consumer Protection, Weights and Standards within SPRING Singapore.

SPRING Singapore has identified 5 key strategic focus areas that would enable growth of SMEs, and enhance their overall contribution to the economy:

• Develop Competitive Sectors; this initiative has adopted an industry led approach. Partnerships have been created with big industry players including business associations to create industry capabilities for SMEs. Innovation centres have been established to drive competitiveness.  
• Catalyse Growth Opportunities for Targeted Enterprises;
• Enable SMEs;
• Develop Human Capital in SMEs;
• Build Quality and Excellence in Products, Services and Enterprises;

Main task is to support SMEs in existing industries in the manufacturing and services (Manufacturing and Engineering, Lifestyle and Food, Business Services) to maintain and expand their local and global shares, including developing skills in new industries such as Data Analytics, Robotics and Advanced Materials. SPRING Singapore has designed a Capability Development Grant (CDG) to build small business enterprises’ capabilities in areas such as productivity and innovation. It also has seven Centres of Innovation (COIs), which help SMEs to tap innovation expertise.

Through the 12 SME Centres, SPRING Singapore provide free business advisory services to enterprises in order that they are able to upgrade and grow their businesses. The business advisor services are located throughout the country. In partnership with private sector, financial institutions and institutions of higher learning, SPRING Singapore has rolled out training programmes to assist business advisors in the SME Centres to upgrade their skills. By speedily shifting on automation and innovation, Singapore’s SME are expected to add value to the country’s economic restructuring initiative.

Targeted key sectors such as retail, food services, food manufacturing and precision engineering, were also supported to building brands, expanding overseas and strengthening their product offerings. Furthermore, SPRING Singapore in partnership with private sector, financial institutions and institutions of higher learning, it has designed programmes that support high potential impact start up enterprises. Through the its own investment arm (SPRING SEEDS Capital Pte Ltd), which operates as an equity has supported, in partnership with private sector, strategic partners, high potential start-ups. The investment programmes has helped start-ups with strong growth potential break into international markets.

In partnership with Infocomm Development Authority of Singapore and the Agency for Science, Technology and Research, SPRING Singapore has established, with the private sector, an incubator programme.  The incubators are designed in such a way that start-ups accelerate their growth thorough well-structured advisory services, mentorship and access to networks of customers and investors.

Investment in skills development is one of the essential initiatives undertaken by SPRING Singapore, again in partnership with private sector, financial institutions and institutions of higher learning, to supporting SMEs to grow and reach international markets. The programme also links large organisations with SMEs, and thus helped small business enterprises to gain capacity and capability to grow their operations.

SPRING Singapore in partnership with other government agencies and private sector has established quality and excellence infrastructure to support industry and enterprise growth. The work of SPRING Singapore includes regulatory functions with regard to development and management of national and international standards through the industry-led Singapore Standards Council. The Singapore Council create opportunities for enterprises to access new market opportunities and compete on the global stage. Additional to the Singapore Standards Council, SPRING Singapore manages an accreditation entity called Singapore Accreditation Council. Singapore Accreditation Council is responsible for offering independent quality assurance of conformity assessment services such as testing, calibration, inspection and certification.

SPRING Singapore also work as a regulatory authority for specific and general consumer goods sold in Singapore. The work undertaken by SPRING Singapore ensure that unsafe household products are removed from the market. In the main it builds trust between consumers and goods and service providers.

In partnership with private sector and institutions of higher learning, SPRING Singapore has established the Business Excellence initiative. The aim is to expose Singapore’s enterprises to international best practices, and thus to lift enterprise’s competitiveness.

What South Africa can draw from SPRING Singapore? The institutional framework that supports SMMEs in Singapore is coherent and it is anchored through partnerships with privates sector and institutions of higher learning. It is mostly industry led. The needs of small enterprises influence the design of business support programmes. The partnership, and industry led approach further ensures that resources are used in an efficient manner, and programmes become more effective. Furthermore, the increasing role of the private sector reduce the utilisation of the fiscus, and attracts private capital.

The institutional framework enhance the SMME ecosystem. Resource allocation, and overall planning and implementation of programmes benefit a lot through partnerships. SMMEs are able to access a range of assistance programmes.

8. Promoting Competition within the Energy Industry to Enhance Economic Development

The select committees met the Energy Market Authority (EMA), which is a statutory board under the Ministry of Trade and Industry. The main goals of the EMA are to ensure a reliable and secure energy supply, promote effective competition in the energy market and develop a dynamic energy sector in Singapore.

The work of EMA is structured to focus on the following areas:

• To operate as a Power Systems Operator. It operates the delivery infrastructure used in the supply of electricity to homes, offices and industries. It also oversees the electricity transmission system and generators in power stations and the operation of the natural gas transmission system.
• It also operate as the industry regulator. As industry regulator it is responsible to ensuring the security, reliability and adequacy of electricity supply to keep the lights on. From a regulatory point of view, EMA regulates Singapore’s electricity and gas industries in order to promote fair competition while protecting consumers’ interest. The key issue is to promote investment in the industry.   
• In terms of industry development, EMA plays an essential role in developing and promoting the energy industry, facilitating the efficient use of energy, and supporting research and development efforts to secure the country’s energy future. Furthermore to support efforts to developing human capital in the industry, enhance innovation initiatives and establishing thought leadership through platforms such as annual Singapore International Energy Week. EMA also promotes residential energy efficiency.

Singapore energy policy has identified three key challenges faced by the country. Singapore alternative energy sources are very limited. Due to its energy resource situation, it a price importer and price taker. Furthermore, with rapid urbanisation and limited land space it is faced with a challenge to use energy in a more efficient manner. About 95 per cent of Singapore’s electricity is generated from natural gas. The rest is composed of petroleum (0.66 per cent) and other sources making (4.08 per cent). In the long run, Singapore aims to be a hub for Liquefied Natural Gas (LNG) and gas trading activities.

Currently, Singapore has established initiatives to facilitate the use of solar energy. It has established market rules and regulations for electricity consumers. To that effect it has established Central Intermediary Scheme to make it easier for small consumers to receive payment for injecting solar energy into the power grid.

It was reported that Singapore’s electricity industry was originally vertically integrated and government – owned. Since 1995 the country introduced reforms to liberalise the electricity industry, in order to allow competition and promoting innovation and efficiency. Currently there are no state owned electricity generation companies. All state-owned generation companies were whole privatised in 2008.   

In 1998, the Singapore Electricity Pool commenced its operation to facilitate the trading of electricity between generators and SP Services Ltd. Through further liberalisation of the electricity market, the National Electricity Market was established (NEMS). NEMS has managed through the process of liberalisation of the electricity, the purchase and sale of electricity, serving as a trading platform for electricity. The Energy Market Company, a branch of the EMA operates the wholesale energy market. 

According to the EMA, the market has opened up 75 per cent of total electricity sales to competition. A total of about 13,000 consumers are able to exercise their choice of electricity purchase.

Since 2001, there has been a clear separation of competitive businesses (contestable) from natural monopolies (non-contestable). The retail electricity market has gradually liberalised to allow contestable consumers to buy electricity from any retailer on commercially-negotiated terms, or from the wholesale electricity market.

The Singapore’s electricity market is representative of two categories of consumers: contestable and non-contestable consumers. Contestable players or consumers have the option of buying electricity from a retailer directly or indirectly.

Customers who buy electricity directly are those who remain with Singapore Power (SP) services and buy electricity from the wholesale market. Non-contestable players or consumers, such as residential consumers and other small business enterprises are only allowed to buy electricity from SP services at regulated tariffs.

Currently the EMA, in partnership with industry stakeholders, is in the process to undertake full-scale of liberalisation of the retail electricity market to competition. This process is anticipated to be effected in 2018.

This will allow most small consumers, such as residential consumers, to choose between buying electricity at the regulated tariff or from retailers at market prices.

The select committees heard that the introduction of the smart meters has enabled consumers to obtain timely information on their electricity consumption so that they can better manage demand. The smart electricity meters have been deployed for business consumers who are buying electricity from electricity retailers. The full-scale liberalisation of the retail electricity market would enable electricity consumers, mostly households to make a choice. It would enable them to even have an option to use smart electricity meters.

Another development which the select committees heard, EMA has embarked on a pilot trial to extend smart metering for water supply and town gas. The initiative would include the development of a mobile application to provide timely information to consumers on their utilities consumption/cost via headphones.

As already indicated, gas industry makes an essential contribution in the electricity industry and also stimulating competition in Singapore’s electricity market. Natural gas is imported into Singapore from Malaysia and Indonesia via four offshore pipelines and is regulated and sold by the respective governments. Singapore also imports LNG from various countries across the world.

The Singaporean government decided to import LNG to meet future energy demand and enhance energy security:

• There is no certainty that Singapore can secure more Piped Natural Gas (PNG);
• Liquefied Natural Gas Singapore plans to access the global gas market and thus enhance competition;

In May 2013 Singapore built its first LNG receiving terminal to fulfil the rising demand and to diversify its sources of natural gas. It has an initial capacity of 3.5 million tonnes per annum and this will be increased when additional regasification facilities are constructed.

In the case of South Africa, the electricity market industry is dominated by ESKOM. It is reported that ESKOM generates approximately 95 per cent of electricity used in South Africa. In the African Continent, the state entity generates approximately 45 per cent of electricity used in Africa. ESKOMs domination in the electricity market is from generation and transmission to distribution to the end user. However, some local municipalities and metropolitan municipalities are playing the role of retail distributors and on-sellers in many cases.

There have been public calls and government plans to restructure the electricity markets to accommodate more competition and private investment. In South Africa, industry reform has been on the agenda for some time. The Independent System and Market Operator (ISMO) Bill, which proposes placing the operation of the electricity grid in an independent , but state-owned entity, was seen as a positive move towards reform. The 1998 energy policy supports competition and encourages an increase of private sector participation in the energy industry.

The Renewable Energy Independent Power Producer Procurement Programme has been acknowledged as one of the positive steps taken by the government. The programme has attracted hundreds of billions of rand in investment, with potential to spur local manufacturing and ownership and boosted empowerment of local communities. However, it is advocated by many industry experts that ESKOMs current vertically integrated structure does not accelerate private investments (solar and wind energy contracts).

Deregulation of the electricity market has the potential to create newly businesses, a more secure power supply and increase foreign investment. Most importantly to transform the economy and creation of jobs. 

9. Land Transport Authority (LTA)

The Land Transport Authority is an agency responsible for planning, building and maintaining Singapore’s land transport infrastructure and systems, the LTA plays a vital role in making Singapore a vibrant and bustling metropolis.

The work is guided by the Land Transport Master Plan 2013, with greater emphasis on enhancing the travel experience, which has 3 key areas:

More Connections: In the area of building more connections, the TLA aims to connect people to more places where they work, live and play.

Better Services: by providing better service means that whichever mode of travel someone chooses, the agency would improve its reliability, comfort and efficiency.

Inclusive and Liveable Community:  In order to achieve these goals of a liveable and inclusive community, the TLA would build the well-being and run the transport system with the well-being of the diverse community how it enhance the common living space.

9.1 Functions of LTA

The laws passed by Singaporean Parliament give power to the Land Transport Authority to regulate and control provincial and bus services as follows:

• Formulation of land transport policies;
• Integrate transport planning with land use;
• Central bus network planning;
• Plan, design & develop Active Mobility e.g walking, cycling and Personal mobility devices;
• Ownership, management of Bus and Rapid Transit System assets;
• Manage road traffic and maintain road infrastructure;
• Promote public transport;
• Regulate public transport services;
• Regulate private transport ownership and usage; and
• Enforce against illegal parking

 

9.2 Public Transport System

The twin pillars of the public transport system are extensive urban rail network and a comprehensive public bus system. This is supplemented by taxis that bridge public and private transport modes.

9.3 Builder and Regulator of the Rail Network

The LTA is the builder and the regulator of Singapore’s urban rail system which develop and invest in the construction of the rail lines. The LTA also decide where the lines run, how the construction should be done, what technologies and trains to use and the schedule for the roll-out. As the regulator, the LTA work with the public transport operators to improve reliability, comfort and user-friendliness of train services.

9.4 Planner and Regulator of the Public Bus Network

The LTA works with the bus operators to plan routes and improve existing ones. As the regulator it works closely with the Public Transport Council to monitor the quality and affordability of bus services, to ensure service levels provided by the two operators meet the Quality Service standards.

9.5 Growing Bus Fleet

 In order to enhance connectivity, the LTA added more buses to the bus fleet and introducing new bus services through the Bus Enhancement Programme, About 3.600,000 passengers travel on buses daily. The Agency also work with private bus operators to run Peak Period Short Services. These overlay existing bus services to connect residents from housing estates to the nearest MRT station and bus interchanges, as well as link them directly to the city on buses known as ‘City Direct’.

9.6 Integrated Transport Hubs

Singapore is one of the key transport innovations integrated transport hubs that seamlessly merges bus and rail travel with retail environments in major towns. This allows people to transfer easily from major rail stations to bus interchanges. Currently there are six such hubs around the island. Over the next 10 years, the LTA would be building seven more hubs in tandem with the development in the respective areas.

9.7 Taxi Services

The LTA responsibility is to issue taxi operator licenses and taxi driver vocational licenses, and monitor service quality standards. Since 1998, taxi fares have been deregulated and taxi companies are free to set fares according to the services they provide. There are more than 27,000 taxis on the road and the number of passenger trips on taxis daily is 967,000.

10. Maritime and Ports Authority (MPA)

Another visit by the two select committees was at the Maritime and Ports Authority of Singapore (MPA). The MPA was established in 1996. MPA was formed through the merger of the Marine Department (which was under the then Ministry of Communications), National Maritime Board and the Regulatory departments of the former Port of Singapore Authority.

The main aim of the MPA is to develop Singapore as a premier global hub port and International Maritime Centre (IMC). In addition, MPA is to advance and safeguard Singapore's strategic maritime interests. The MPA plays a regulatory role by regulating and managing port and marine services, facilities and activities within the Singapore waters. This role includes vessel traffic and navigational safety and security, through regulation on operational efficiency and on the environment.

MPA is the driving force behind Singapore's port and maritime development, taking on the roles of Port Authority, Port Regulator, Port Planner and IMC Champion. MPA has entered into partnership with industry players to enhance safety, security and environmental protection in port waters, facilitate port operations and growth. The partnership has extended into development initiatives to expand the cluster of maritime ancillary services, and promote maritime research and development and human capital development in the industry.

Menon Economics’ international report has for the third time raked Singapore as one of the world’s top maritime capitals.  Singapore maritime and port industry is regarded as one of the global port and international maritime centre. In terms of ship registration, Singapore is recognised as one of the world’s top ten largest ship registries. This means MPA has a sound administration backed with a "quality flag" strategy.

The port of Singapore comprises a number of facilities and terminals that handle a wide range of cargo transported in different forms, including containers as well as conventional and bulk cargo. The (MPA) is responsible for the overall development and growth of the port of Singapore, which includes terminal operators, such as PSA Corporation and Jurong Port Pte Ltd.

In the case of South Africa, the country has an insignificant domestic maritime transport sector that contribute to the overall economy. South Africa’s Ship Register does not have significant value. This is the area that presents growth potential.

South Africa’s ports are ranked high in Africa, however high trade and input costs have been identified as some of the reasons that affect South Africa ‘ports competiveness. Reports suggest that port tariffs for non-mineral exports are very high (container tariffs are 3 times higher compared to global levels). There are also calls for a new institutional framework to separate the Ports Authority and Ports Terminals from the Transnet Group, to enhance competition in the ports, and furthermore boost private sector participation. The following pieces of legislation namely the National Commercial Ports Policy, 2002 and the National Ports Act, 2005 including the National Freight Logistics Strategy, 2005, have long cited the need to encourage competition in the transport and logistics industry to attract private sector investments.

11. Singapore Manufacturing Federation (SMF)

In Singapore, like other fastest growing economies, the manufacturing industry is regarded as a backbone of the economy. The manufacturing industry contributes up to 20 per cent of the nation’s GDP and employs up to 400,000 people.

The delegation also met the Singapore Manufacturing Federation (SMF) that was established in 1932. It was reported to the two committees that SMF’s aim is to advance the interest of the manufacturing industry in Singapore, and help members to grow, innovate, transform and expand their businesses.

SMF supports and promotes collaborative partnership amongst its members. The objective is to support efforts among businesses to strengthen the industry’s value chain.

SMF partnerships initiatives extends beyond the ASEAN region. SMF, in partnership with International Enterprise Singapore and Intellectual Property Intermediary, have established Enterprise Europe Network (EEN) Singapore. The aim is to promote business and technology partnership and collaboration between the European Union and the rest of the world.

Through various initiatives, in partnership with government agencies, SMF has accelerated efforts in promoting innovation to boost industry productivity via programmes such as Industry Projects (CIP), Local Enterprise and Association Development (LEAD) projects and Lean Enterprise Accelerated Programme (LEAP).

In order to help members to grow their companies, SMF launched Business Model Innovation MasterClass programme. The programmes is designed to equips participants, namely, CEOs, business owners and senior managers, with the knowledge and skills to review their business model and transform their companies.

What is also essential to the work of the SMF, is to build capability of industry, by supporting members’ to grow and also to invest in innovation and human capital. Partnerships with government agencies also helps the SMF members to have deeper appreciation of government policy initiatives that could have an effect on the industry. That policy dialogues platforms enables the industry to influence policy implementation and enhance trust between government and industry players.

With current levels of trust between government and business, the SMF model could offer growth opportunities for South African companies. In South Africa, the manufacturing industry has experienced slow growth owing to global conditions.

However, the South African manufacturing capacity is currently experiencing low capacity and capability to produce value added products that could compete in global markets. The exports are dominated by minerals than non-mineral exports. In Singapore, the case is the opposite.

SMF with the support of Singapore government plans to hold the first trade mission and business expo in South Africa. The aim of the trade mission is to introduce African businesses to the newly established ASEAN Economic Community (AEC). The plan is to create a platform that could present trade and investment opportunities for African businesses in the ASEAN community.

The event is scheduled to be held in the Sandton Convention Centre, Johannesburg, South Africa, from 6 – 8 November 2017, and the second leg will be held in Singapore, in 2018.

The President of the Singapore Manufacturing Federation indicated that Africa has a huge population, an emerging middle class and abundant natural resources that present opportunities for Singapore’s companies.

12. Tour to Singapore Urban Redevelopment Authority (URA) City Gallery

The delegation visited the Urban Redevelopment Authority City Gallery (Gallery). The Gallery was opened in 1999. The Gallery provides a miniature-structure visual map of and story of Singapore’s physical transformation over the past 50 years.  The visit to the Gallery confirmed the importance of cities and regions as engines of economic growth and offer for job opportunities. If cities and regions, including rural towns, are developed in an integrated manner they offer opportunities for have inclusive communities. Investment in infrastructure need to be coordinated to yield positive social and economic outcomes.

13. Observations

South Africa remains locked in a low growth path that is currently shadowing social gains, deepening inequality and poverty. The overall economy remains highly concentrated, and ownership patterns need fundamental transformation. The Malaysian economy has demonstrated remarkable growth, created jobs and contributed in changing the lives of previous disadvantaged people. Singapore, since its independence, has transformed to a high income country.  

South Africa remains over-dependent on minerals-based exports. The economy needs to diversify the export industries. Singapore’s economy has moved from a traditional economy to a high value and knowledge economy. 

South Africa needs to increase FDI. Malaysian and Singapore economies have grown on the back of notable FDI including domestic investments. Singapore is one of the countries regarded to have favorable policies that make it possible to attract investments.

As employment in traditional industries of the economy shows knocks, investment to new industries must be considered. Beneficiation of minerals needs to be prioritised. Obstacles that affect new investments need to be removed and new businesses need to be supported.

New sectors need to be opened up to provide business opportunities to the new black business stratum. Most importantly, investment in skills and education need to be prioritised. Despite large fiscal allocations to the education and training sector, outcomes remain poor. Education in mathematics, science and technology should be high on government’s agenda. The Education and Training sector need to improve its performance to skill young people. The initiatives could assist the country to reverse possible social, political and economic instability. 

While government efforts to improve capacity of the state need to be commended, efforts to meet the intended outcomes are not yielding expected outcomes.

In Malaysia, economic policy planning, coordination and strategic management reside in the Prime Ministers’ Office. South Africa may need to enhance alignment of the overall economic development plans with resource allocation and strengthen implementation capacity and capability.  

What South Africa can draw from SPRING Singapore and Malaysian SME Corp? The institutional framework that supports SMMEs in Singapore and Malaysia is aligned to development plans. It is also coherent and it is anchored through partnerships with the private sector and institutions of higher learning. It is mostly industry led. The needs of small enterprises influence the design of business support programmes.

In Singapore, electricity markets have been restructured to accommodate more competition and private investment. Independent grids have been established to contract state and private power generation on an equal footing. That has rebalanced the industry with the aim to benefit the consumers, and more importantly creating new companies in the economy and contributing to job creation efforts.

SMF institutional set-up offers opportunities for the South Africa. South Africa’s current levels of trust between government and business, has also contributed to investor and business confidence, which is presently on a low level. The SMF model could offer growth opportunities for South African companies, and contribute positively to the growth of the economy.

In the case of South Africa compared to Singapore, South Africa has an insignificant domestic maritime transport sector that contributes to the overall economy. South Africa’s Ship Register does not have significant value. This is the area that presents growth potential.

Reports suggest that port tariffs for non-mineral exports are very high (container tariffs are 3 times higher compared to global levels). There are also calls for new institutional frameworks to separate the Ports Authority and Ports Terminals from the Transnet Group, to enhance competition in the ports, and furthermore boost private sector participation.