TODAY Singapore. English., © 2010 MediaCorp Press Limited

SINGAPORE - In a move to develop local firms and turn them into globally competitive companies, the Government has unveiled a programme that aims to enhance links between local and foreign companies.

The Partnerships for Capability Transformation (Pact) programme announced during the 2010 Budget yesterday is expected to help local enterprises scale up operations by developing competencies through collaboration with their foreign counterparts.

Speaking in Parliament yesterday, Finance Minister Tharman Shanmugaratnam said: "We will now build on this collaborative approach by focusing not only on procurement, but also on the development of new capabilities for our local enterprises."

The Government is setting aside $250 million over five years to defray part of the expenses for such partnerships.

The new programme expands on the current Local Industry Upgrading Programme (LIUP), which will now be subsumed under the new scheme.

While the LIUP helped establish partnership between 200 multinational companies and 1,000 Singapore suppliers, the Pact will help local companies meet stringent manufacturing quality and certification requirements when they expand abroad.

"Significant emphasis was given to unlocking the growth potential of SMEs, and this should bode well for Singapore's longer-term growth prospects," said DBS Group Research economist Lim Su Sian of the 2010 Budget.

Yet, industry players said that getting local companies to participate in the scheme may not be easy.

This is because many small companies are reluctant to work with the big guys for fear of losing their ideas and identity, said Mr Phillip Overmyer, chief executive officer of the Singapore International Chamber of Commerce

"We've worked a number of years in trying to do match-making and we have had limited success.

"So, I think that whole area needs more than money to make it work," he said.

To this end, the Government may have to educate local companies on the merits of growing their capabilities in order to be globally competitive, said Mr Wilson Chew, group principal consultant and chief executive officer of consulting firm StrategiCom.

"MNCs will help SMEs gear up in terms of internal operational modes so that the two can operate seamlessly on a global scale," he said.

In another measure to grow globally competitive companies, the Government has also allocated $100 million over five years to support business associations, including both trade associations and chambers of commerce.

This is to help them drive productivity and facilitate market access for their members.

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