MICROCREDIT SCHEMES

MICROCREDIT SCHEMES

26.

Mdm Ho Geok Choo asked the Minister for Community Development, Youth and Sports (a) whether it is viable in Singapore to encourage microcredit schemes similar to those started by the Grameen Bank in Bangladesh to help alleviate the widening income gap and reduce the need for social support; and (b) whether Singapore’s highly regulated environment in terms of licensing requirements poses a barrier to simple start-ups which are the intended result of these microcredit schemes.

Dr Vivian Balakrishnan: Studies have shown that microcredit schemes have proven more successful in developing countries where job opportunities are scarce, financing options for small businesses are limited, and start-up costs of business are relatively low.

In Singapore, there are existing mechanisms to help small start-up businesses. Individuals who wish to set up micro-businesses can access small loan financing facilities. These include Thrift and Loan societies, credit cooperatives, commercial banks like POSB’s Loan Assist programme as well as SPRING Singapore’s Micro Loan Programme. With the 2008 amendments to the Moneylenders Act, licensed moneylenders can continue to provide up to $3,000 in unsecured loans where the interest rate is capped appropriately. This gives added protection to borrowers with small or no income.

Starting a small business is but one avenue for lower income individuals to be self-reliant. For the majority, it is more viable for them to seek employment and earn a stable income. For this reason, the Community Development Councils and employment agencies have put in resources to help lower income Singaporeans with employment assistance and re-training. Those receiving social assistance on the Work Support programme are expected to demonstrate efforts towards seeking employment. We also promote social enterprises as sustainable avenues to provide employment and training opportunities to the needy and disadvantaged.

Mdm Ho had also asked if Singapore’s highly regulated environment in terms of licensing requirements pose a barrier to simple start-ups. Towards this end, a number of initiatives are in place to make it easy to do business in Singapore.

The Online Business Licensing Service integrates 71 licences from 19 agencies into a single platform. Businesses now only need to make a single application for multiple licences and pay a consolidated fee.

There have also been initiatives targeted specifically at Singaporeans who hope to start micro-businesses. For example, the Home Office Scheme initiated in 2003 allows residents of HDB flats and private residential homes to set up offices at home as long as they do not compromise the residential ambience and amenities of the housing estates. As at end October 2009, there were more than 18,000 active HDB Home Office users operating various trading and service-based businesses from home. Under HDB’s Home Based Small Scale Business Scheme, HDB lessees can carry out small business activities like making paper bags, sewing, baking cakes, etc, at home as long as they do not cause inconvenience or pose a nuisance to neighbours. This allows home owners to partake in informal businesses at home to supplement their household income.

In addition, the National Environment Agency re-introduced in 2000 the Street Hawking Licence Scheme. The scheme allows itinerant street vendors to operate in Town Council estates and parks, and sell items such as ice cream, other less perishable food items, newspapers and costume jewellery. Since August 2004, the NEA has awarded 257 licences.

The Government constantly explores ways to reduce the regulatory burden on businesses. We regularly review licensing requirements to ensure they remain relevant, and would remove licences that cease to fulfil a purpose. The Pro-Enterprise Panel chaired by the Head of Civil Service, seeks suggestions from the public on how Government rules and regulations can be improved for businesses, and acts on these suggestions. So far, the Panel has received about 1,800 suggestions, and has accepted and implemented over half, or close to 1,000 of these. If Members of this House or the public have further suggestions, I am sure the Panel would be pleased to consider them.