Techblog
Singapore Budget 2016: what SMEs hope to see
With the Singapore Budget 2016 announcement scheduled for 24 March 2016, businesses can get a hint of what may be in store for them by looking at the Small and Medium Enterprises Committee's (SMEC) proposals.
Combat growth challenges
The SMEC, which was established by the Singapore Business Federation (SBF) in 2011, has proposed several measures to tackle the near-term challenges small businesses face in Singapore due to global economic uncertainties and domestic constraints.
How did the committee come up with its suggestions? SMEC said several factors were taken into consideration, including substantial downside risks in a turbulent global economy, a prolonged period of slow growth in Singapore and local SME sentiments: SBF's National Business Survey found that 58 percent of businesses are concerned about the uncertain economic environment and seven out of 10 see high labour costs as a key challenge.
Here’s a look at some of the recommendations for SMEs.
Ease tight labour market
The committee proposed several measures to combat Singapore's tight manpower market and high labour costs, including freezing planned increases in foreign worker levies and conducting a review to reduce their amounts.
Small businesses have seen the government provide help in this area before. Last year, levy rises were deferred to give SMEs breathing space to adjust to Singapore's tightening foreign worker policies.
SMEC also asked for an expansion of the Job Flexibility Scheme to beyond the services sector and for more source countries to be included for work permit holders from the hospitality and tourism industries.
Help for rising business costs
With rising business costs a key concern, the SMEC suggested a number of measures to ease the burden for SMEs. These include more equitable interest rates for government financing schemes, enhanced risk sharing and loan schemes to help with working capital and restructuring.
Other industry watchers like the Institute of Policy Studies have also pointed out that small businesses have seen costs rising for over a decade in Singapore, highlighting the need for measures such as subsidies and grants.
Assist international growth
Singapore's government has been encouraging SMEs to expand internationally and last year’s Budget saw the introduction of a tax incentive to fuel the process.
To further encourage international growth, the SMEC has now called for stronger “on-the-ground support in overseas markets” to help small businesses tackle rules, regulations, compliance and bureaucracy. It also proposed incentives to encourage collaboration between SMEs and large local enterprises on overseas projects.
Boost innovation
Innovation is central to the government’s long-term plan to lift productivity and growth in Singapore, but SMEC said more support is needed to increase the capacity of SMEs to innovate and aid their transition “to value creation”.
To begin, the committee said research and development programmes need to be reviewed to better understand SMEs' innovation needs. It also called for enhanced capacity and knowledge in Technology Transfer Offices and for more accessible incubator and test-bedding facilities. "If we want to move from value adding to value creation, facilities and support for innovation will need to be more SME-friendly and better organised," said Melvin Tan, chairman of the SMEC Sub-committee on Innovation.
Finally, SMEC has again sounded the call for a single SME authority to drive the development of small businesses in Singapore. "A more concerted effort is required to drive SME development and growth amidst the current economic restructuring and global slowdown,” said Lawrence Leow, chairman of SMEC. He added that a single authority “would be an effective means towards ensuring that the blueprint and strategy for the SME sector is not only designed with a more holistic approach but also implemented more effectively under one umbrella".
As a central growth driver in Singapore's economy, SMEs have long enjoyed government support. While further measures may be expected, businesses will only know the details when the Singapore Budget 2016 is announced. Until then, we do have some hints of what help may be provided through the proposals by industry bodies such as the SMEC. Here’s a recap of the key points:
- Combat growth challenges
- Tackle manpower issues
- Ease burden of rising costs
- Assist international growth
- Boost innovation