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Singapore Budget 2014: Update on the Latest Developments
We keep you updated on the latest developments leading up to the Budget 2014, including snippets of what the government has proposed so far and what's on the business-related wish list.
As we lead up to the Budget 2014 delivery on 21 February, here's a quick recap on the latest developments, as well as what SMEs are hoping for on the business front.
Extension of PIC Scheme
Speaking to Channel NewsAsia recently, Senior Minister of State for Finance Josephine Teo said that businesses have asked for the continuation of the Productivity and Innovation Credit (PIC) scheme, adding that the government is considering the merits of extending it. The government has also hinted at more support for businesses through both broad-based schemes and industry-specific measures.
It is a move likely to be welcomed by SMEs. In a survey conducted by KPMG and supported by the Singapore International Chamber of Commerce, 96.8% of respondents want the PIC scheme to be extended beyond its expiry date in 2015. The Association of Small and Medium Enterprises (ASME) said that its own survey showed that SMEs have asked for it to be extended for another 2 to 3 years.
Introduced in the Singapore Budget 2010, PIC provides tax deductions or cash payouts to companies that invest in six areas that have been identified to enhance productivity and innovation. The Straits Times recently reported that SMEs would also like more freedom in how they allocate investment across the six areas, for instance through the removal of individual caps on spending in each area.
Less Complex Schemes
The theme of having more follows through. According to KPMG , close to half of SMEs surveyed are asking for less complex business regulations and incentive schemes.
ASME reported that some SMEs found schemes introduced in 2013 to be "unhelpful" due to the process of having to pay first and enjoy reimbursement at a later date, which in turn put a strain on their cash flow. As a result, some businesses are requesting for measures that have less complicated criteria and processes.
Costs of Economic Restructuring
Mrs Teo also said to Channel NewsAsia that "the Budget is timely for the government to give an update on the progress in restructuring." The move has also been recommended by the Singapore Business Federation, as the restructuring process, together with high business cost, affects SMEs’ economic competitiveness.
Deloitte Singapore, in a pre-Budget report , calls for a helping hand to SMEs that "struggle to deal with such costs in line with the economic-restructuring agenda" as Singapore continues moving in the direction of a knowledge and capital intensive economy.
Reducing Business Cost
Businesses have also indicated that they hope to see measures that help reduce high land and rental costs, which have a high impact on their profit margins. Manpower costs have also been singled out as a concern.
SMEs are calling for tax rebates, subsidised land or rental costs and for the government to aid them in retaining their productive workers, such as through Medisave rebates or top-ups for older workers in order to encourage their employability. There have also been concerns over the validity period of work passes for foreign employees as this impacts productivity and manpower cost.
The FY2014 Budget Statement will be delivered by Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam, on Friday, 21 February, at 3.30pm in Parliament and broadcast live over Channel NewsAsia and over the radio on 938Live. A live webcast can also be viewed on the Singapore Budget website, Channelnewsasia.com and via Toggle.
REACH will be organising a public forum on 26 February 2014 and a ‘live’ Facebook Chat on the REACH Facebook Page on 2 March.
Read on for more on Singapore Budget 2014:
- Singapore Budget 2013: Key Initiatives Impacting SMEs
- Singapore Budget 2014: Frequently Asked Questions
- Singapore Budget 2014: Update on the Latest Developments
- Singapore Budget 2014: 7 Key Points for SMEs
- Singapore Budget 2014: Potential challenges for Singapore SMEs
- Singapore Budget 2014: FAQ for ICV and PIC Schemes
Sources:
http://www.straitstimes.com/the-big-story/budget-2014/story/budget-cheat...
http://www.kpmg.com/SG/en/SingaporeBudget/budget2014/Pages/KPMG-Pre-Budg...
http://www.asme.org.sg/index.php/news/new/budget-2014-singapore-smes-see...
http://www.enterpriseone.gov.sg/en/News/2014/January/140115%20SBF%20Prop...
http://www.deloitte.com/view/en_SG/sg/services/tax/singapore-budget-2014...