Techblog
Singapore Budget 2016: How the Automation Support Package will impact SMEs
The new Automation Support Package (ASP) announced during the Singapore Budget 2016 aims to support businesses as they roll out and scale up automation projects. Here’s a look at how the package can benefit Small- and Medium-sized Enterprises (SMEs).
What does it entail?
While announcing the package in his maiden Budget speech, Singapore’s finance minister Heng Swee Keat noted that the “significant financial outlays” needed to fund automation projects make it difficult for many companies to commit to such an endeavour.
As such, the ASP has been designed with several measures to help businesses secure financing. The government expects to spend more than S$400 million over the next three years to fund the package, which has four components.
- Grants to support scaling
Grant financing is being made available as part of SPRING Singapore’s Capability Development Grant (CDG) programme, which is being expanded to support automation projects.
Companies can obtain funding for up to 50 percent of project cost, with a maximum grant of S$1 million.
- Allowance for equipment
A new 100 percent Investment Allowance will also be available for automation equipment.
Companies will be able to secure an allowance of 100 percent on the amount of approved capital expenditure (capped at S$10 million per project). This support is in addition to the existing capital allowance for plant and machinery.
- Improving access to loans
Recognising the fact that smaller businesses generally find it more difficult to secure funding, the government has made it easier for SMEs to obtain loans to finance automation projects.
For SMEs with qualifying projects, the government is increasing its risk share with participating financial institutions from 50 to 70 percent. The enhanced risk-sharing scheme enables financial institutions to support more SMEs with funding, while still meeting their own credit needs.
For non-SMEs, a 50 percent risk-share is available.
- Enabling foreign market entry
Lastly, two government agencies are joining forces to help companies access overseas markets with large-scale automation projects. In relevant cases, International Enterprise (IE) Singapore and SPRING Singapore will help businesses to scale and internationalise.
Unlocking potential
Analysts believe the ASP can help advance the government’s plan to leverage technology and make Singapore the world’s first Smart Nation. PwC, for instance, said it “will no doubt drive the Smart Nation vision in the right direction”.
However, it pointed out that there would need to be clarification on the criteria that will be used to determine what constitutes an automation project. PwC also noted that due to the higher level of grants offered under the ASP, companies claiming benefits “will likely be subject to more stringent evaluation” by SPRING Singapore. It would be worthwhile for companies looking to apply for grants to first seek guidance to ensure their application meets the criteria.
Finally, entrepreneurs seeking to innovate through automation may like to consider this insight by Lyon Poh, head of digital and innovation at KPMG Singapore: “I agree with the minister’s comment that innovation goes beyond technology. It is not mere automation but changing the mindset on how future business should be conducted in a digital world."
Introduced in the Singapore Budget 2016, the ASP makes available critical financing and assistance for automation projects. It could well provide the boost needed for businesses to get started by means of:
- Grants for automation.
- Automation equipment allowance.
- Improved access to loans.
- Agency help for large projects.
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