SINGAPORE'S productivity drive has reached an inflection point; in order to rejuvenate languishing productivity growth, the country will need to shift its focus away from mere cost-cutting measures and towards more value-creating activities instead, said panellists at The Business Times' Pre-Budget Roundtable 2015.

"I'm in favour of a different and quite holistic approach," said Lien Foundation chairman Laurence Lien, a former Nominated Member of Parliament. "I think you have to focus at the end of the day on what is going to create new value. Cost and process improvement - that is one thing. But creating new value must be the centrepiece. Somehow, when we talk about restructuring, it's all on the cost side and the supply side of things. We are not focusing on the demand side."

Fellow roundtable participant DBS economist Irvin Seah agreed. Referring to the conventional calculation of productivity as output over input, Mr Seah said: "So far, policies have been pretty much focused on the denominator - trimming down headcount, for example - but not enough focus has been given to topline growth, to demand . . . It is topline growth that will bring about higher productivity, higher growth, higher income."

Even as he acknowledged that efficiency gains can be disguised by short-run swings in GDP - especially given the small and open nature of Singapore's economy - he highlighted the undeniably dismal productivity growth numbers seen so far.

Going by Mr Seah's 2014 productivity growth projection of -0.8 per cent, productivity growth has averaged -0.05 per cent per year from 2011-2014. This is far below the government's target of 2-3 per cent productivity growth per annum over the decade - first announced by the Economic Strategies Committee (ESC) in 2010 - and lower than the 1.4 per cent annual growth averaged from 2000-2009.

As Singapore moves into the second half of its restructuring journey, several panellists - including the Singapore Business Federation's (SBF) chief operating officer Victor Tay - said companies should focus on internationalisation efforts, since these will raise companies' topline growth.

This is especially so in 2015, when the 10-nation grouping known as the Asean Economic Community (AEC) achieves integration as a single market of 625 million people.

But Mohamed Ismail, chief executive of PropNex, stressed that most SMEs (small- and medium-sized enterprises) do not have the luxury to even contemplate such expansion plans, given their day-to-day struggles with rising business costs and a tight labour market.

"If you ask me what I want or what SME bosses want (from Budget 2015), the first thing we will say is: 'I hope the Wage Credit Scheme continues for another three years.' (One can debate) whether it works or not, but at least I'll know that for the next three years, I can survive . . . The minute you lift it, my cost goes up another 40 per cent."

From 2013-2015, the government has been co-funding 40 per cent of wage increases given to Singaporean employees earning a gross monthly wage of up to S$4,000. Mr Ismail now hopes the wage cap will be raised to S$4,500. And while SBF's Mr Tay agrees that the Wage Credit Scheme should be extended beyond this year, he believes it should apply only to SMEs and not to multinational companies - since MNCs would have already provided for salary increments and do not need the assistance.

The Wage Credit Scheme payouts are meant to help businesses facing rising wage costs in a tight labour market; the assistance has allowed companies like PropNex to free up resources to make investments in productivity, and to share the productivity gains with their employees.

Apart from the usual calls to adjust the Productivity and Innovation Credit (PIC) scheme further - to include more focus on research and development (R&D), for example - panellists also suggested tweaks to foreign worker levies.

Mr Seah and Mr Tay called for either a reduction or outright removal of foreign worker levies. While Mr Tay said the levies are "deadweight" and "unconstructive" with "no productivity usage", Mr Seah reiterated his suggestion to give more efficient companies a discount off their foreign worker levies.

"If you can prove that you've hired more Singaporean workers or sent them for training, you should be entitled to a discount - turn the foreign worker levies into an incentive for companies (to raise productivity)," said Mr Seah.

But Walter Theseira, a Nanyang Technological University (NTU) assistant economics professor, expressed his reservations about adjusting foreign worker levies or dependency ratio ceilings, fearing unintended consequences.

"There's actually quite a bit of evidence to indicate that the tightening of foreign manpower has resulted in a greatly improved labour market situation for low-income and low-skilled Singaporeans. So if that was the policy objective, then I think it has actually succeeded to a considerable extent. Their position has improved more rapidly than it would have in the absence of these policy changes.

"If you were to reverse the policy changes, I think it would be quite natural for the situation to regress again . . . So I think if we want to reduce the levies and so on, we would have to counterbalance that with some other measures to make sure that locals don't get the short end of the stick," said Prof Theseira.