The Finance Minister Heng Swee Keat delivered the 2019 Budget on 18 February. In the face of significant shifts in the form of shifting global economic weight towards Asia, rapid technological advancements, changing demographic pattern and decline in support for globalisation, Budget 2019 aims to build a strong and united Singapore. While including measures to build a safe and secure nation that is a global city and home for all and fostering a caring and inclusive society, for businesses, this year’s budget is focusing on deepening enterprise capabilities, workers’ capabilities and furthering innovation and internationalisation.
The following is an overview of the key schemes and changes that are relevant to the Singapore businesses.
No changes were announced. Companies were looking forward to some form of short-term relief from the rising business costs and were expecting an enhanced corporate tax rebate or some sort of sweetener in the form of tax concessions to be announced for the next Year of Assessment. Since a rebate was announced in the previous budget for YA2019, the CIT was left untouched this year. Although no changes to corporate tax rate or any tax rebate were announced in Budget 2019, last year a rebate of 20% of the tax payable, capped at S$10,000 was announced for the YA2019. So the businesses still have a breather.
Schemes to Enhance Business Capabilities
Scale-Up SG Programme
Launched by Enterprise Singapore the programme will help SMEs and Startups to scale up and grow using more customised support. It will help aspiring high-growth firms to innovate and internationalise by offering customised business support, better financing options and supporting technology adoption.
Expanded SMEs Go-Digital Programme
The Accountancy, Sea Transport and Construction sectors will get their own Industry Digital Plans (IDPs) in addition to the Environmental Services, Retail, Food Services, Wholesale Trade, Logistics, Security and Media sectors that already have their IDPs. Furthermore, the number and range of pre-approved digital solutions will be expanded to drive digitalisation among SMEs. SMEs can get up to 70% funding support for qualifying costs to adopt these solutions.
Schemes to Drive Innovation
Innovation Agents Programme
Professionals identified by Enterprise Singapore will provide mentorship to enterprises on innovation opportunities. These professionals with technology and business acumen will be selected on the basis of their track record in innovation and experience in growing businesses. This will be a two-year pilot programme in which Innovation Agents will be matched to enterprises by Enterprise Singapore.
New Centers of Innovation (COI) for Aquaculture and Energy
The COIs integrate stakeholders from the industry and institutions of higher learning and research establishment to aid SMEs in innovation by providing assistance in developing and testing technology products, through access to laboratory facilities, consultancy services and training courses. In addition to the eight such COIs that are already in place, two new COIs will be set up for aquaculture and energy in Temasek Polytechnic and Nanyang Technological University respectively. The COIs will pool resources, share intellectual property rights, infrastructure and expertise to steer ideas to prototypes and commercialisation and business growth.
Digital Service Lab
The three-year pilot programme is aimed to bring together multiple stakeholders in service sectors such as Retail, Media and Logistics to cut-across the barriers in digitalisation. Companies participating as users and solution providers can apply for funding support of up to 70% of the qualifying costs.
Schemes to Drive Productivity
Reduced Dependency Ratio Ceiling (DRC)
The government has strongly demonstrated its commitment to economic restructuring and productivity enhancement. To reduce the dependency of the businesses on cheap foreign labour and to drive productivity growth the Dependency Ratio Ceiling (DRC) is now reduced for the service sector – from the present 40% it is to be reduced to 38% on 1 January 2020, and to 35% on 1 January 2021. The S-Pass Sub-DRC is also reduced – from the present 15% it is to be reduced to 13% on 1 January 2020, and to 10% on 1 January 2021. The DRC remains unchanged for other sectors. Likewise, the Foreign Worker Levy (FWL) also remains unchanged for all sectors.
Enterprise Development Grant (EDG)
The EDG is extended for three more years until 31 March 2023, and support levels will be reviewed after FY2022. Under the EDG, SMEs can access up to 70% support while non-SMEs can access up to 50% support for qualifying expenses; but for hardware/software expenses, the support level differs – SMEs get up to 50% and non-SMEs get up to 30%. The grant is aimed to drive organisations to adopt measures to improve their operations efficiency, business capabilities and expand through internationalisation.
Productivity Solutions Grant (PSG)
The grant defrays the cost of adopting pre-qualified, off-the-shelf productivity solutions and technologies by SMEs. Originally the grant provided up to 70% funding support; however, this was set to drop to 50% after 31 March 2020. Now, the 70% support has been extended for another three years up to 31 March 2023. Notably, the scope of the PSG is now expanded to include expenses made towards productivity training. Whereby, subject to conditions, eligible enterprises will be able to receive a subsidy for up to 70% of their out-of-pocket training expenses, capped at S$10,000.
Improved Access to Finance
SME Co-Investment Fund (CIF) III
The government has now set aside S$100 million under the CIF III to continue to help the qualifying SMEs to scale-up and internationalise. The CIF is part of Co-Investment Programme (CIP) launched in 2010 to augment patient capital from the private sector to catalyse the growth of Singapore-based innovative startups and high-growth SMEs. The freshly injected fund is expected to raise S$200 million additional funding from the private sector investors.
Enterprise Financing Scheme (EFS)
Enterprise Singapore will discontinue eight financing schemes – SME Equipment Loan, SME Factory Loan, SME Working Capital Loan, SME Micro Loan, SME Micro Loan for Young Companies, SME Venture Loan, Internationalisation Finance Scheme, and Loan Insurance Scheme Plus. In place of them, the EFS will now meet the financing needs of companies in six areas namely, working capital, trade financing, fixed assets, venture debt, mergers and acquisition, and project financing. The government’s risk sharing with the participating financial institutions for young companies that have been incorporated for less than five years is now increased to 70% from the previous 50%, and the enhanced support for young companies will be reviewed by 31 March 2021.
The SME Working Capital Loan will be brought under the EFS, when it is launched in October 2019. The scheme that supports SMEs to access funds for their working capital needs was set to lapse on 31 May 2019, but it is now extended until 31 March 2021. Under the scheme qualifying companies can access up to S$300,000 in unsecured financing to meet their working capital and cash flow needs.
Schemes to Improve Workforce Capabilities
New Professional Conversion Programme (PCP)
In addition to the thirty sectors in which PCP is currently available, new PCP will be launched in new and high-growth sectors related to the blockchain, embedded software, and prefabrication. PCP is to help mid-career PMETs to undergo training for skills conversion and move into jobs with high-growth potentials. The PCP provides wage support to participating employers of up to 70% or 90% of the trainees’ monthly salary capped at S$4,000 or S$6,000, per trainee per month.
Career Support Programme (CSP)
The CSP is to help mature and retrenched or the long-term unemployed Singaporean PMETs to find suitable jobs. The participating employers receive up to 50% wage support, capped at S$42,000 for up to 18 months. The CSP is now extended for another two years till 31 March 2021.
Global Ready Talent Programme
The GRTP aims to develop a pipeline of global-ready talent that has adequate knowledge of and exposure to international markets through internships and Management Associate Programme. The aim is to have a ready local talent pool to empower the enterprises in their internationalisation efforts. In the former, the government will provide up to 70% funding support for the salary and overseas allowance of the Singapore citizen and permanent resident students participating in local or overseas internship programmes provided by the participating local and foreign companies. The Management Associate Programme involves funding support for companies to defray the expenses incurred in sending young Singaporeans with up to three years of working experience on job postings in key overseas markets.
Schemes to Drive Internationalization
Framework for Secure Exchange of Electronic Trade Documents
The budget unveiled plans to work with trade partners to facilitate the secure exchange of electronic trade documents to further ease international trade and extract more value from the nation’s network of trade agreements.
Local Enterprise and Association Development Programme (LEAD)
The budget acknowledges the role of Trade Associations and Chambers (TAC) in the internationalisation efforts of enterprises and their ability to draw synergies from their network of partners and members. The LEAD programme provides up to 70% funding for qualifying expenses incurred to drive industry initiatives, focusing on areas like technology and infrastructure, business collaborations, as well as intelligence and research. Notably, high-impact multi TAC projects get up to 90% funding support. Enterprise Singapore will develop a five-year roadmap with TACs that have demonstrated strong leadership and shown ambition to do more for the business community. The programme aims to empower the TACs with more funds and secondees from the public sector so that they can take a more strategic approach and role in industry transformation and internationalisation of enterprises.
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