54 • Economic Review Committee Sub-committee on Domestic Enterprises
Food & Beverage
Work Group Report
Overview
1. Singapore has a growing F&B sector which includes food caterers, restaurants,
bars, canteen, coffee shops, fast food restaurants, cafes, creameries, snack bars,
cocktail lounges and pubs. The F&B sector has a total of 3,356 establishments and
workforce of 48,202 workers in 2000. The turnover for the sector is estimated to be
1
about S$ 3.6 billion annually.
2. This sector, though small, forms an integral part of Singapore’s economy.
Although it contributes about 1% to Singapore’s GDP, it is a vital component of the
tourism industry. In addition, for Singapore to be a regional financial and business
hub, having a vibrant F&B sector is crucial in attracting business visitors as well as
enhancing the quality of life of the many foreign talents who have chosen to work
and live in Singapore.
3. The F&B sector is characterized by low entry barrier, high risk, high business
cost primarily in rental, labour and materials and high churn of concepts.
4. In terms of consumer spending, spending on cooked food as a percentage of
total average food-spend reached 55% in 1998, up from about 46% in 1988 and 35% in
2
1978. Singaporeans are eating out more than at home. According to a recent survey
conducted by Sydney-based research company, BIS Shrapnel, an average Singaporean
spent some $1,900 at hawkers stalls, cafes and restaurants last year. Eating out has
become a lifestyle amongst Singaporeans. Singapore has also been ranked alongside
Hong Kong and Australia as one of the three major eating capitals in the Asia Pacific
region.
1
2
Source: Economic Survey Series (2000), Department of Statistics
Source: Report on Singapore’s Food Service Industry (2001), Canadian High Commission
PART 3 Recommendations: Food & Beverage Work Group •
55
Vision
5. The vision for the industry is to develop a vibrant, top-class F&B sector with
excellent service standards and a reputable industry image. Singapore will also be
positioned as the test-bed for innovative F&B concepts.
6. The target is to make Singapore’s F&B one of the top 3 reasons why foreigners,
including tourists and businessmen visit Singapore and one of the top 3 icons that
Singapore can be proud of. It is also to increase the number of locally developed
innovative concepts and processes that are exported by ten folds and develop
Singapore into a franchise hub for F&B businesses.
Issues
7. To achieve this vision, we examined the key issues faced by the industry:
(a) Short concept shelf life. The life span of products/ services and concepts are
getting shorter and there is thus a need to continuously develop new concepts to
meet changing demand;
(b) Low service levels attributed partly to high staff turnover and mindset of
service staff;
(c) Difficulties in recruiting local staff and in attracting talents to join them due
to negative perception of the industry, lack of proper skills certification, long hours
and shift work;
(d) Low adoption of IT and technology to streamline business operations;
(e) Difficulties in expansion and globalisation due to high operating cost, lack of
resources such as finance, strong brands, well-developed systems to support overseas
operations and talents; and
(f ) Cumbersome and unfriendly government process as well as rigid labour policies.
56 • Economic Review Committee Sub-committee on Domestic Enterprises
Recommendations
The following are some of the key recommendations:
8. Stimulate Experimentation
F&B is generally a small industry, yet one of the unique characteristics is that it is
a high churn industry. Due to the low entry barrier, many F&B businesses are set up
every year. According to the Registry of Companies and Businesses (RCB), the number
of new F&B players entering the industry had grown steadily from 1987 to 2001.
(Refer to Fig 1)
Figur
e 1 : IIndex
ndex of Dynamism for F
&B IIndustr
ndustr
y
igure
F&B
ndustry
Each new player brings with them new food concepts and processes. Some were
imported overseas in the form of franchises, some were adapted from overseas
concepts and some were developed locally. This helps to bring vibrancy to the industry
and create an ideal F&B destination both for the locals and foreigners. Yet, many
restaurateurs are hesitant about going the path of innovation for the fear of failure
and the high cost incurred in experimentation. To encourage the industry to engage
in more experimentation, the following recommendations can be considered.
(a) Government Incentives — Providing tax incentives such as tax deduction for
cost incurred in experimentation is one way of encouraging more of such activities.
Another way is to allow companies to enjoy tax deduction for renovation of their
establishment. This will encourage more F&B companies to develop dinning concepts.
PART 3 Recommendations: Food & Beverage Work Group •
57
(b) Business Incubators for Experimentation — To encourage companies to experiment
with new food concepts and processes, incubation centres could be set up. Incubation
centres similar to Holland Village concepts can be explored to help seed and spur
innovation.
(c ) Positioning Singapore as a Test-bed for F&B Innovation — Singapore aims to be a
convention centre for the region. Riding on this, we can position Singapore as a testbed of innovative F&B concepts for the region. Through the hosting of international
F&B events, we will encourage world-renowned companies to gather in Singapore.
This will help facilitate exchange of concepts and ideas.
(d) Food Tours — Many restaurateurs have fedback that travelling is the most
effective way to develop new food concepts. Regular food tours can be organised to
bring the industry operators overseas to source for new concepts and processes.
(e) Alignment of Government Policies — To encourage innovation, government
regulations need to be reviewed and realigned to facilitate and support efforts by the
industry. A recent example is the rigidity of the license available. Currently, companies
could either apply for a food license if they set up a food business or a bar license if
they operate a bar. For companies who wish to innovate and concoct a new dining
experience by combining the two concepts into one, they will still have to apply for
2 licenses. Hence, the industry fedback that government should be more pro-active
in these areas.
9. Develop Workforce
In any service industry, the workforce plays a critical role in determining its success
or failure. This is especially so in the F&B Industry. There is a shortage of labour in
many domestic industries in Singapore. This situation is especially acute in the case
of F&B. Many seemed to attribute this to the low profile of the industry, long and
irregular working hours as well as the negative connotation associated with an F&B
service staff. These have led to difficulties in attracting local workforce, both
managerial and non-managerial level, difficulties in retaining these talents and
difficulties in maintaining a satisfactory standard of service. To address this situation,
a multi-pronged approach must be adopted.
(a) Skills Certification — There are currently no authoritative skills certification
body for the F&B industry except that which are certified by the Institute of Technical
58 • Economic Review Committee Sub-committee on Domestic Enterprises
Education (ITE) and offered by Singapore Hotel and Tourism Education Centre
(SHATEC) and Restaurant Association of Singapore Training Centre (RASTC).
Recently, a Diploma programme was offered by PSB Academy-Raffles Institute.
Proper skills certification will enhance professionalism and employability. One way
of establishing skills certification is through the National Skills Recognition System
(NSRS). Another channel is through the establishment of a culinary institute that
will provide training and certification to all levels in the industry. This will also help
create a more attractive career path for those in the industry. Certification can also
be extended to foreign talents and workers such as cooks, chefs and service staff.
This is where the industry and government can work together to set up criteria for
skills assessment.
(b) Work Re-design — Companies have to redesign their work processes to be more
responsive to customers. Staff have to be empowered with more knowledge and
technology to create more value. One recommendation is to shift the work of chefs
from the traditional cooking role towards product development and system control.
(c) Awards Recognition — Currently, several awards are in place to recognise
successful restaurateurs and outstanding chefs. Examples include those given during
the World Gourmet Summit, Tatler and Wine & Dine magazines. More national
awards could be developed to recognise the local F&B workforce with outstanding
achievements such as best chef, best service personnel, best restaurant manager.
(d) Training — One of the ways to maintain and improve service standards is
through training. There are several service quality training programmes available.
However, many have fedback that they are costly. While it is important to make
training affordable, it is equally important to seek out effective training models. One
recommendation was to emulate the training model adopted by Singapore Airlines
and customise it to the F&B industry. Benchmarking against others such as Hawaii
will also help to improve existing service standards.
(e) Service Excellence Movement — Achieving service excellence in the industry is
not the sole responsibility of the service providers. It is also important to educate
consumers to encourage and appreciate good service. Hence, a service excellence
committee has been instituted in Jan this year to identify issues and make
recommendations that will promote service excellence in Singapore.
PART 3 Recommendations: Food & Beverage Work Group •
59
( f ) Publicity and Promotion — Changing the mindset of the workforce is as critical
as providing training and certification. Negative perception must be changed in order
to attract more people to consider a career in the F&B industry. Joint recruitment
exercises can be initiated similar to those initiated by the Singapore Arm Forces and
Ministry of Education.
10. Strengthen Business Capability
In order for a company to grow, maximising its strength and overcoming its
weaknesses is critical. To remain competitive, it is necessary to provide good quality
products and services efficiently and at an affordable price. The following are some
key recommendations that will help strengthen the industry’s operational capability.
(a) Process Re-Engineering — In today’s competitive environment, it is important
for companies to constantly review their processes to ensure that they remain
competitive. Obsolete methodologies and processes need to be reviewed and changed.
The same applies to the F&B industry. Back of the house operations can be examined
to see if processes can be streamlined, systems enhanced to improve quality and
efficiency. One example cited was redesigning the menu and adopting a modular
kitchen system that helps to automate part of the cooking process.
(b) Shared Services — Investment in technology is costly. It requires a large client
base to achieve a reasonable return on investment. However, with Singapore’s small
domestic market, many F&B entrepreneur are hesitant to commit large investment
in technology. Moreover, there are very few big players in this industry, only about
1% of the F&B establishments employ more than 100 workers. Yet, to improve
efficiency and reduce reliance on labour, technology plays an important part. To
enable more companies to tap on technology at an affordable cost, a shared service
platform is recommended. Some examples of share service platforms that are currently
being explored include shared point of sale and customer relations management
modules. In the case of a shared point of sales platform, participating companies
need not invest in costly hardwares such as servers. Instead, these hardwares will be
provided and maintained by the service providers on a shared platform.
(c) Outsourcing — The days where all operations are housed under one roof may
no longer be viable. Gradually companies are looking at more cost effective alternatives
to meet their needs. Outsourcing is one of the common ways. Instead of preparing
60 • Economic Review Committee Sub-committee on Domestic Enterprises
and cooking all their products in-house, many companies have started to practice
outsourcing. Some examples include making of sauces, gravy, bread and pastries.
Currently, these are carried out individually. It is recommended that a grouping
approach be explored. F&B companies sourcing for a common product can band
themselves together and approach a food manufacturer. As the collective volume is
higher, the manufacturer may deem it viable to invest in high end technology and
shared R&D to assist the F&B outlets produce higher quality products at a reasonable
cost.
(d) Supply Chain Alignment — Supply chain examines the flow of goods. In F&B,
we can start from the point where raw materials are procured and how they are being
transferred to the central kitchen, outlets and eventually to the consumers as “finished
goods”. Improving the flow of goods can result in reducing costs and turnaround
time as well as ensuring that a certain level of quality is being maintained. One of the
ways, supply chain can be improved is the use of IT. Online procurement and payment
is commonly practised in many industries such as manufacturing. Establishment of
industry standards is also one way of ensuring quality.
11. Facilitate Strategic Alliances and Internationalisation
A business can expand in many ways. One is to continue to set up subsidiaries or
outlets. This method offers more control but it also takes up resources in terms of
time and labour. Other forms of expansion can be considered.
(a) Franchise — The franchise model is one proven concept for growth and
expansion. Many F&B as well as retails companies have leveraged on franchise for
growth both locally and overseas. However, for the franchise model to work effectively,
companies must establish a structured operational support system. This could be
done with the assistance of franchise experts.
(b) Internationalisation — The domestic market is small. Companies’ growth is
too limited without tapping overseas opportunities. The following are some
recommendations to assist companies move overseas:
•
•
•
•
Forming an F&B franchise agent or export house to help F&B entrepreneurs
sell their concepts overseas;
Providing a dedicated F&B venture fund to finance companies’ plans for
expansion;
Develop strong branding to penetrate overseas market; and
Offering initial group tax relief for companies starting overseas operations.
PART 3 Recommendations: Food & Beverage Work Group •
61
12. Review Workforce Policies
(a) Tight labour supply — The F&B sector is plagued by a severe shortage of workers.
There are difficulties attracting local workers and there are restrictions in employing
foreign workers as well as foreign talents. Whilst it may not be viable to increase the
supply of foreign workers in the long run, an interim measure to relax foreign workers
policy will help alleviate immediate and critical problems. It will create a bigger pool
of workers and allow employers to recruit those that best meet the requirements of
the business. It will help propel those who have plans to expand but were handicapped
due to shortage of manpower. Some of these foreign talents can be models for service
excellence and motivate others to follow. Some recommendations to ease the supply
of labour includes:
•
•
•
Allow students attending commercial schools to work as transient labour;
Incentivise companies who employ mature or retrenched local workers by
granting them higher quota for foreign workers eg 1 extra foreign worker
for every 3 mature or retrenched workers employed; and
Explore alternative source of foreign workers.
(b) Increasing business cost — Certain labour policies also increase business cost.
Some of the key ones are:
•
•
Explore waiving foreign levy as foreign worker quota would be sufficient
control to ensure the industry employs local workforce;
Review the minimum salary requirement for employment pass holder and
consider formulating different minimum salary requirement for different
trades. Industry fed back that it was not necessary to pay an employment
pass holder in the F&B industry $2,500 per month.
13. Streamline Cumbersome and Unfriendly Processes
Several government regulations or processes have been identified as not probusiness. Examples of some recommendations on how these processes can be
improved include:
(a) Set up a one-stop centre to advice and assist new F&B operators in applying
for the various start-up licences and permits.
(b) Review the headcount restrictions on entertainment business such as the
stringent fire safety requirements
62 • Economic Review Committee Sub-committee on Domestic Enterprises
(c) Establish Mutual Recognition Agreements (MRAs) with overseas government
import/export agencies. This will reduce the number of import regulations eg waiver
of import license for meat products if supplier already holds license to export to
developed countries such as Japan, USA.
(d) Adopt a flexible approach whereby the government regulate by listing the
areas that are not permissible and allow the market freeplay in the other unspecified
areas.
14. Identify Industry Champion
Identifying an F&B champion.One way is to form an F&B centre chaired by a
committee comprising industry players and government officials. This centre will
have the support and mandate from the government and autonomy to drive the
F&B industry forward. Some activities that the centre can undertake includes the
administration of venture funds to finance companies that are keen to expand and
internationalise their F&B concept as well as acquire overseas concepts.
N.B: A Complete list of Issues and Recommendations raised by the F&B Work
Group is attached in Annex 1.
PART 3 Recommendations: Food & Beverage Work Group •
ANNEX 1
Issues and Recommendations
Issues
1.
Issues
2.
• Cumbersome business application process.
• Potential operators needed to apply for up to 4 difference licences,
such as music, entertainment, liquor and GST, separately.
Rec
ecommendation
ommendation
Pro-business application process
• A one-stop centre should be set-up to cater to the needs of new
operators.
(The Singapore Police Force has already put in-place a one-stop licensing center
(OSPEC) )
• General perception of inconsistency in government decisions in
implementing policies and regulations in the F&B sector.
Rec
ecommendation
ommendation
Transparency of policies and regulations
• Reasons for rejection of employment passes be offered so that
companies could actively seek individuals who meet the criteria.
Issues
3.
• Labour shortage, difficulty in attracting workers in the
F&B industry
Rec
ommendation
ecommendation
Allow more students to be part timers
• Tapping on the foreign student pool of 30,000 attending
commercial schools, as a source of transient labour.
Incentive for employing older workers
• Allow restaurants to recruit more foreign workers for every older
worker employed
Review sources of foreign labour
• Do not limit foreign workers to those from traditional source.
63
64 • Economic Review Committee Sub-committee on Domestic Enterprises
Issues
4.
• Difficulty in attracting retrenched personnel to work in the
F&B industry.
Rec
ecommendation
ommendation
3 for 1 Policy
• Allow restaurants to recruit 1 extra foreign worker for every
3 retrenched workers hired to enhance the adoption of retrenched
personnel into the F&B industry.
Issues
5.
Issues
6.
• When hiring foreign talent to work in the F&B outlets, companies
could pay a salary lower than the current minimum salary
requirement of $2,500.
• This results in additional costs for businesses. Difference in foreign
worker wages could be transferred to local worker salary instead.
Rec
ecommendation
ommendation
Minimum Wage Requirement for Employment Pass Applications
• Waive the foreign workers levy as restriction on the number of
foreign workers should suffice in encouraging enterprises to hire
locals.
• Review the salary requirements and formulate different minimum
salary requirement for different industry.
• MOM requires CPF statements of local workers before applications
for foreign workers are permitted. This is not practical when
companies are opening new outlets as CPF statements can only be
obtained 3 months after operation.
Rec
ommendation
ecommendation
Responsible Operators Policy
• Allow F&B operators to sign an undertaking that they would meet
the local workers quota within the first few months of operation and
allow them to apply for foreign workers.
• Operators that violate the quota will then be penalised.
• Allow F&B operators to move workers between outlets as long as
overall foreign workers quota is adhered.
Issues
7,
• Requirement for businesses to pay an additional car park levy when a
space is converted to F&B use.
Rec
ecommendation
ommendation
Car Park Levy for conversion of use
• Review of the levy as more and more businesses were establishing
themselves in shophouses and other non-traditional sites.
PART 3 Recommendations: Food & Beverage Work Group •
65
Issues 8. • High land prices provide difficulties in establishing new concepts
ecommendation
Rec
ommendation
Sale of land for F&B development
• Allocate/tender land specifically for F&B activities.
• Proposed shorter land leases for sites identified for F&B creative use
to allow operators to develop semi-permanent or permanent
structures.
Issues
9.
• Difficulties in importing meat products from overseas. F&B
companies are not allowed to import poultry products from Thailand
even though the producer has a license to export to Japan.
Rec
ommendation
ecommendation
Import Restrictions
• Producers with licences to export to Japan or the United States can
forgo the formality of applying for a license to export to Singapore.
• Establish a set of recognised import licences of overseas countries
Issues
10. • Requirement from the Ministry of Environment to have at least two
Food Hygiene Officers (FHO) for each unit of an F&B operation.
This results in companies having to incur additional costs in terms of
course fees and absentee payroll.
• Strict entry requirements for course result in difficulties in selection
of suitable candidate for the course
Rec
ecommendation
ommendation
Training of Food Hygiene Officers
• To relieve companies of the requirement and take up the role of
ensuring food safety instead
• Revise Entry requirement for FHO courses
(ENV replied that it is not necessary for every restaurant to have two FHOs.
Only those that operate more than one shift would need to have two FHOs so that
there will be at least one FHO when the restaurant is in operation.)
Issues
11. • For night-spot business, enforcing the code by conducting checks
over the weekends, not only disrupts business operations during this
profitable period but also results in unhappy customers.
Rec
ecommendation
ommendation
Restrictions to the entertainment business — Fire Safety
• Authorities could take into account measures taken by companies to
increase fire safety such as extra sprinklers, when calculating the
maximum occupancy levels in a night-spot.
66 • Economic Review Committee Sub-committee on Domestic Enterprises
• Consultants could be employed to work with the companies and
authorities to address the issue and help establish standards for the
night-spots sector.
Issues
12. • Architecture and other facets of F&B buildings that could help
project a more vibrant image are restricted through licences such
as regulation of neon lights.
Rec
ecommendation
ommendation
Improve Architecture of Buildings
• Laws restricting such as neon lights could be re-examined to give
the F&B outlets more free-play
Issues
13. • Outlets are restricted by the hours of serving liquor according to
details dictated in the liquor licences
Rec
ecommendation
ommendation
Deregulation of liquor licence
• Allow the operator to decide the hours of operation
• Consider self-regulation by the industry
Issues 14. • Lack of funding for expansion
ecommendation
Rec
ommendation
Venture Capitalist (VC) investments
• A venture capital fund similar to that for electronics should be
established
Issues 15. • Lack of strong Singapore brand
ecommendation
Rec
ommendation
Brand Development Education
• Educating local entrepreneurs to create and strengthen their own
brands
Issues
16. • Lack of strong established operational system to support scaleable
business
Rec
ommendation
ecommendation
Systems Development and Enhancements
• Develop systems/processes that are able to support multiple
operations and are difficult to duplicate
• An example would be modular kitchen systems that controls food
quality, and standardise cooking time. This also helps to cut down
the number of staff required in the kitchen.
PART 3 Recommendations: Food & Beverage Work Group •
67
• Explore back room, recipe, cooking processes and food preparation
redesign
Supply Chain Enhancement
• Review and strengthen supply chain players and components
Issues 17. • High cost of going high-tech
ecommendation
Rec
ommendation
Shared Services
• A wireless POS network and electronic payment gateway be
established with funding from the government
• An ASP aggregator that provides shared IT infrastructure such as
hardware and software applications such as POS and CRM to the
industry. This model enables the industry to enjoy state of the art
technology at a shared cost.
Issues
18. • Streamlining operation eg reduce heavy dependence on central
kitchen and adopt more outsourcing
• Reduce labour and rental costs
Rec
ecommendation
ommendation
Outsourcing
• Create networking opportunities between F&B operators and good
manufacturers.
• Set up food clusters or group F&B operators with similar needs and
link them with food manufacturers who can invest in high-end
equipment and R&D to supply cooked or semi-cooked products/
sauces to their central kitchen
Issues
19. • Poor service standards.
• 10% service charge is typically treated as revenue for the restaurant
and may not be redistributed to staff.
Rec
ecommendation
ommendation
Tipping for Quality Services
• The viability of tipping should be left to market forces.
• Tipping should not be discouraged and suggested printed messages
in tourist promotional materials stating that tipping is not necessary
in Singapore should be removed
Benchmarking
• Identifying best practices and benchmark Singapore’s service
excellence against these standards
68 • Economic Review Committee Sub-committee on Domestic Enterprises
Issues
20. • Difficulties in talent retention impact service standards.
• Staff was promoted due to the shortage among the ranks and they
might not have sufficient experience to perform well.
Rec
ecommendation
ommendation
Performance Based remuneration
• Performance-based remuneration should be encouraged.
Work Redesign
• Redesign work processes to be more responsive to customers.
Empower staff with more knowledge and technology to create more
value. New work arrangements, such as virtual office and teleworking
can be explored. One suggestion is to shift the work scope of chefs
from the traditional cooking to more product development and
system control.
Issues 21. • Lack of awareness of the importance of service
ecommendation
Rec
ommendation
Service Excellence Movement
• Instil mindset change of service providers as well as consumers
Change of mindset
• Campaign to promote a service culture. The campaign could be
done through media to achieve high impact and service ambassadors
could be elected from media artistes
• Need for commitment and high profile approach when promoting
awareness through campaigns similar to those organised to recruit
army personnel
Issues 22. • Lack of Service Excellence Training
ecommendation
Rec
ommendation
Development of Service Excellence Training Programmes
• Work with successful model companies such as SIA to develop
affordable training programmes for the industry
Issues
23. • Difficulty in assessing skills of foreign workers especially chefs
• Allow both the F&B company and Ministry of Manpower to certify
the skills of the chef and facilitate the employment pass process
Rec
ecommendation
ommendation
Standards of Certification
• A committee set up to allow the certification of skills. Foreign
chefs wanting to work in Singapore could take such a test to assess
their skills.
• Development of skills certification such as NSRS.
PART 3 Recommendations: Food & Beverage Work Group •
69
Issues 24. • Lack of recognition of local talents and concepts
ecommendation
Rec
ommendation
Awards for the F&B industry
• To initiate internationally recognised awards for the F&B industry.
Singapore Culinary Mark (SCM)
• To develop Singapore Culinary Mark for qualified local F&B outlets
with excellent service standards and food quality.
Issues
25. • Low image of industry
• Educate local and regional students.
Rec
ecommendation
ommendation
Culinary Institute
• Setting up of a renowned culinary institute to enable the proper
training of chefs for the industry similar to the Culinary Institute
of America.
Issues
26. • Lack of New Concepts
• Showcasing of home-grown concepts
Rec
ommendation
ecommendation
Increase Opportunities for Exposure to New concepts
• Government agencies to work with industry members on missions
to visit good overseas F&B outlets to experience for themselves the
operations and the services there.
• Position Singapore as a test-bed for innovative concepts. Hosting
renowned exhibitions and global events in Singapore to facilitate
exchange of ideas.
Issues 27. • Encourage experimentation of new concepts
ecommendation
Rec
ommendation
Business Incubators
• Set up business incubators to seed and spur development and
experimentation of new concepts
Issues
28. • Profiling model companies to create positive perception of the
industry
Rec
ecommendation
ommendation
Point and Reward System
• A point system that rates best standards that the government is
looking for such as cleanliness, service standards and fire rating of
70 • Economic Review Committee Sub-committee on Domestic Enterprises
the establishments, could be set up. A reward system can be linked
to this to recognise model companies. This could be in the form
of allocation of tax rebates or other incentives that can reduce
business cost.
Profile Model Companies
• Featuring model companies in the media, publications, dialogue
session with government officials and forums etc
Issues
29. • Market currently has many low VA equipment suppliers, not many
manufacturers with R&D engineering capabilities. The prices of
high VA equipment is too high
Rec
ecommendation
ommendation
Sourcing for Equipment Vendors and Suppliers
• Additional support in locating suppliers with R&D Engineering
capabilities.
Issues 30. • Lack of dedicated group that takes care of the industry
ecommendation
Rec
ommendation
F & B Committee
• Formation of a committee comprising industry players and
government agencies.
• This committee would be provided with a fund to finance companies
that were keen to internationalise their F&B concepts or to acquire
overseas F&B concepts. The committee will also be the channel to
feedback issues to the relevant agencies
PART 3 Recommendations: Food & Beverage Work Group •
Internationalisation
Issues
31. • Small local market
• Operational constraints of business caused operators to focus
on their daily operations.
• Lack of time and manpower to develop franchise
• Lack of Support Mechanism For Franchising
Rec
ecommendation
ommendation
Franchise Concept Management Company
• F&B entrepreneurs could sell their concept to another party, like
an F&B INTRACO, which would then be responsible for the
franchising.
• Offer incentives to encourage the market to expand overseas as
a cluster.
Issues
32. • Lack of skilled managerial talents for local and overseas
operations
Rec
ecommendation
ommendation
Regionalisation Training Scheme for Restaurants and Franchisees
• The regionalisation training scheme should be extended to allow
training of employees/managers of overseas franchisees.
Japan Singapore FTA
• Leverage on FTA arrangement and allow free flow of human
resources eg allowing Japanese workers to be trained in Singapore
and letting them work in Japan outlets
Issues
33. • Lack of Understanding of foreign legal system and branding,
the development of R&D capabilities and the branding of the
concept.
Rec
ecommendation
ommendation
Increased Industry Education
• Provide much needed information via website or collateral
71
72 • Economic Review Committee Sub-committee on Domestic Enterprises
Tax Issues
Issues
34. • Facilitate the regionalisation effort as most businesses only turn in
profits from the second year, this would help reduce the impact of
losses and allow business to recover the following years.
Rec
ecommendation
ommendation
Group Tax Relief
• Offering tax relief to the profitable local office during the initial years
of setting up overseas outlets. The tax owing with interest can be
clawed back after period of the tax holiday.
(This recommendation is currently under review by the ERC sub-committee on
taxation)
Issues
35. • Difficulties in talent retention impact service standards.
• Staff was promoted due to the shortage among the ranks and they
might not have sufficient experience to perform well.
Rec
ecommendation
ommendation
Performance Based remuneration
• Tax incentives could be offered to companies with lower staff
turnover in to encourage focus on employee retention and lower
retrenchment possibility.
Issues
36. • Established infrastructure (eg R&D) must be in place to support its
overseas expansion plans.
Rec
ecommendation
ommendation
Assistance to encourage R&D and experimentation
• Tax incentives such as tax deduction on R&D expenses can be
offered to encourage companies to undertake experimentation
Issues
37. • Effectiveness of property tax rebates in reducing costs for businesses.
• Landlords enjoyed the rebates but were not obligated to pass on the
savings to their tenants
Rec
ecommendation
ommendation
Property Tax rebate
• A clearer mechanism, be established to ensure that the savings are
passed on to the tenants.
• Possibly a shared savings formula where additional rebates are given
to landlords when savings are shared with tenants.
PART 3 Recommendations: Food & Beverage Work Group •
73
Issues
38. • Renovations, fixtures and fittings, development of franchising
system are deemed as a pre-operating expenses and not depreciable.
Rec
ommendation
ecommendation
Depreciation of Capital Investment
• Definition of capital investment for tax purposes should be
expanded.
• Allow F&B businesses to depreciate capital investment over a
shorter period.
Issues
39. • Encourage job creation and lessen the expense burden of training on
the company for new hires generated.
Rec
ecommendation
ommendation
Tax Reduction for Job Creation
• Attract overseas F&B companies to invest in Singapore, a scheme to
match a reduction in tax in the first year of operation for companies
generating employment.
• Match the tax reduction and deposit the savings into a training fund
set aside for workers
Issues
40. • With the stoppage of issue of commercial licences, ‘Q’ plates,
marketing and sales personnel of F&B companies had to use private
cars as a means of transportation for business purposes.
• Expenses arising could not be claimed as they are deemed as private
expenditures. Such expenses increased business cost.
Rec
ecommendation
ommendation
Commercial Motor Vehicle Licences
• Reconsider issuing of Commercial licences
• Introduce a logbook system, as practised in Australia where business
related expenses were documented. These expenses are then
deductible from personal income tax.