LOCAL INDUSTRIES UPGRADING PROGRAMME (Progress report)

Encik Harun bin A. Ghani asked the Minister for Trade and Industry if he will give a progress report on the Local Industries Upgrading Programme, especially on (i) how it helps the companies to grow and (ii) how it assists to upgrade the skills of workers involved.

The Second Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, the Local Industry Upgrading Programme (LIUP) is a collaboration programme between MNCs and their local suppliers. Its objective is to help local companies upgrade their capabilities in areas such as operational efficiency, product and process improvements, and manpower development.

Under LIUP, MNC partners help their local suppliers by transferring relevant technological, operational and managerial skills and know-how to these local companies. It benefits the MNCs in return as the local suppliers then become better equipped to provide higher quality and more reliable products and services at competitive prices. It is a mutually beneficial programme.

We have achieved good progress under the LIUP programme. To date, there are 37 MNC partners from the electronics, petroleum and petrochemical, marine, logistics, information technology and broadcasting sectors. The number of local companies benefiting from the programme has grown from 24 ten years ago, to about 300 today.

Local companies under the LIUP programme have generally performed better in sales turnover, profitability and return on investment than their local competitors which are not in the scheme. For example, the sales per establishment for LIUP companies are about 3(r) times higher than non-LIUP companies. The compounded annual growth of sales for LIUP companies is about 18%, as compared to the 5% registered by non-LIUP companies.

One important area of emphasis under LIUP is the training of workers. For instance, the LIUP partners in the marine and process industries have jointly embarked on industry-wide training and skills development programmes to upgrade the workers in their supporting industries.

The marine group has developed courses to train workers in critical marine skills such as mould lofting. Nine hundred workers were trained in 1996 and 2,000 more will be trained this year. The petroleum and petrochemical group has developed training curricula for 12 core skills, as part of efforts to establish an on-the-job training programme to meet industry manpower needs. One thousand workers have been trained so far. The target is to train 5,000 workers by the year 2000.