Coming at the back of the worst-ever recession and amid looming uncertainties, the Singapore Budget 2021 includes a S$11 billion COVID-19 Resilience Package to provide continued support to businesses in their fight against the pandemic. To help businesses emerge stronger from the pandemic $24 billion has been allocated for firms and workers to be spent over the next three years.
The budget themed as “Emerge Stronger Together” focuses on three core enablers:
- To grow a vibrant business community with a strong spirit of innovation and enterprise that is deeply connected with the ASEAN region and the world
- Catalyse a wide range of capital
- Create opportunities and redesign jobs
Following is an overview of the key schemes for the business community:
BUSINESS DEVELOPMENT AND LEADERSHIP
Enterprise Development Grant (EDG)
The grant supports companies to upgrade, innovate or venture overseas. Grants are available under three pillars:
- Core Capabilities, wherein projects that help businesses prepare for growth and transformation by strengthening their core business capabilities beyond basic functions.
- Innovation and Productivity, wherein projects that support companies to explore new areas of growth, or enhance efficiency by reviewing and redesigning workflow and processes through technology adoption.
- Market Access, wherein projects that support companies to venture overseas.
Apart from being a Singapore-registered and operating entity with at least 30% local shareholding, the applicants should demonstrate financial viability to start and finish a project. Effective April 2020, as part of the qualifying requirements, applicants are required to commit for worker outcomes such as increase in wage increment, job creation, job redesign, or training for existing staff. Subject to conditions, eligible employers can also obtain subsidies under SkillsFuture Enterprise Credit.
Under Budget 2021, the enhanced maximum support level of up to 80% will be extended from 30 September 2021 to 31 March 2022.
Enterprise Financing Scheme – Venture Debt (EFS-VDP)
The scheme is to finance the growth of innovative enterprises using Venture Debt and Warrants. Singapore registered business entities that are physically present in Singapore with at least 30% equity held by locals and having a group annual sales turnover of not more than S$500 million qualify for venture debt. Ideally suited for high-growth startups that lack access to conventional bank loans due to lack of collateral. The scheme has a maximum repayment period of 5 years with 50% risk sharing by the government ( young companies have up to 70% risk sharing). The interest rate will depend on the participating financial institution’s assessment of the borrowing entity. Notably, financing support under the EFS now covers six different areas, namely, working capital, fixed assets, venture debt, trade, projects and mergers & acquisitions
Under Budget 2021, the EFS -VDP is enhanced to support the growth of later-stage enterprises. The maximum loan quantum will be raised from S$5 million to S$8 million for new applications initiated from 1 April 2021.
The programme is targeted at high-growth companies to help them scale rapidly and become leaders in their fields. Select companies can be groomed into future global champions. The 12-18 months programme helps local companies scale effectively and contribute to the Singapore economy by creating jobs for Singaporeans.
Administered by Enterprise Singapore, the programme works on a co-funding model in which Enterprise Singapore supports up to 80% of the participation costs from 14 September 2020 to 31 March 2022.
Companies under the programme benefit from
- Peer learning and collaboration between a close-knit community of CEOs and founders.
- Development of leadership team and succession planning through strengthening the competencies of next-generation leaders; and
- Access to expertise and networks of Enterprise Singapore and its programme partners, to support their growth objectives.
Companies selected for participation in the programme are assessed on the basis of the following criteria:
- Global headquarters in Singapore
- High-growth enterprise, with a demonstrated track record
- Leadership with strong growth ambitions and a clear growth strategy
- High potential for positive economic spin-offs for Singapore, such as creating good job opportunities for Singaporeans
- Highly committed and able to dedicate significant management time and resources to accelerate growth with Enterprise Singapore and the programme partners
Enterprise Sustainability Programme (ESP)
It supports local enterprises to develop capabilities in sustainability, and seize sustainability opportunities and adopt sustainability practices, enhance resource efficiency, and develop products and services to capture new business opportunities in sustainability.
Corporate Venture Launchpad (CPV)
The CPV is intended to spur the growth of innovative ventures and to stimulate a startup mindset among large corporations. The CPV will be piloted this year and it will provide co-funding for companies to build new ventures through collaborative venture studios. More details are awaited.
Extraordinary times call for extraordinary measures. While the budget is keen to address the immediate concerns of the businesses during the crisis, it also has its eyes on the horizon by preparing businesses for long-term growth. The pandemic may not have ended but it is not going to last forever. The competitiveness of Singapore and its businesses cannot be taken for granted or let to lag due to the preoccupation with the crisis, the budget committee to prepare Singapore businesses for future growth with the schemes aimed at enterprise development is commendable.
Double Tax Deduction for Internationalisation (DTDi)
The scheme has been enhanced to include expenses incurred to participate in approved virtual trade fairs:
- Package fees charged by event organisers for virtual exhibition hall and booth access, collateral creation, business meeting/match sessions, pitches/product launches/speaking slots, webinar/conference, and post event analytics;
- Third-party costs for design and production of digital collaterals and promotion materials for virtual fairs; and
- Logistics costs incurred to send materials/samples overseas to potential clients met at virtual trade fairs
The list of qualifying expenses for overseas investment study trips has been expanded to include logistics costs to transport materials/samples used during the investment trips.
Budget 2021 has enhanced the scope of qualifying activities that do not require prior approval from Enterprise Singapore or STB and the expenses are capped at $150,000. It now covers the following additional activities.
- Product/service certification (primarily to increase buyer’s acceptance in overseas markets) approved by Enterprise Singapore;
- Overseas advertising and promotional campaign;
- Design of packaging for overseas markets;
- Advertising in approved local trade publication; and
- Participation in virtual trade fairs approved by Enterprise Singapore.
The above enhancements will take effect for qualifying expenses incurred on or after 17 February 2021.
Under the DTDi scheme, companies that are expanding beyond Singapore borders enjoy a tax deduction on qualifying market expansion expenses. The scheme allows the deduction of qualifying expenses incurred on overseas business development or investment study trips/missions, participation in overseas trade fairs as well as approved local trade fairs. The scheme that allows 200% tax deduction is available until 31 December 2025.
Global Innovation Alliance (GIA)
The joint initiative between Enterprise Singapore and the Singapore Economic Development Board is a network of Singapore and overseas partners in major innovation hubs and key demand markets. The network focuses on technology and innovation. The alliance helps businesses to connect with tech companies and overseas businesses. Thus Singapore companies, especially SMEs and startups, can expand overseas with the GIA. The GIA also helps foreign companies to scale up in Asia using Singapore as the springboard.
Over the next five years GIA will be expanded to more than 25 cities across the globe. It will also be enhanced through the Co-innovation Programme which will support up to 70% of qualifying costs for cross-innovation and partnership projects.
Market Readiness Assistance (MRA)
The grant helps Small and medium enterprises (SMEs) in their internationalisation efforts. SMEs aspiring to take their businesses overseas are given up to 70% of eligible costs, capped at S$100,000 per company per new market from 1 April 2020 to 31 March 2023.
The grant covers costs incurred for the following activities;
- Overseas market promotion (capped at S$20,000)
- Overseas business development (capped at S$50,000)
- Overseas market set-up (capped at S$30,000)
It must be noted that each application is limited to one activity in a single overseas market (e.g. market entry, or participation in a trade fair).
As per budget, the enhanced maximum support of up to 80% will be extended for 6 months, until 31 March 2022. Also, effective 1 April 2021, MRA will also be enhanced to include Trade Credit Insurance (TCI) as a supportable area under the overseas market set-up pillar.
While the pandemic has undoubtedly wrecked the business expansion and internationalisation plans of several companies, it has also opened new avenues of expanding beyond borders by moving a significant share of the markets online. The disruption has in several ways aided and accelerated the internationalisation efforts of companies and many companies have discovered their potential to expand overseas. The schemes for internationalisation being extended and enhanced are undoubtedly uplifting at times when physical borders are shut but the opportunities in the borderless virtual world are growing.
Let us help you expand internationally and benefit widely from the MRA grant.
Productivity Solutions Grant (PSG)
Administered by Enterprise Singapore, PSG supports companies to adopt pre-scoped IT solutions or equipment that enhance process efficiency and productivity. PSG covers pre-scoped sector-specific solutions including the retail, food, logistics, precision engineering, construction and landscaping industries. It also supports adoption of solutions that cut across industries, such as in areas of customer management, data analytics, financial management and inventory tracking.
Business entities registered and operating in Singapore with at least 30% local shareholding and annual turnover of at least $100 million and less than 200 employees are eligible for the grant. Enhanced maximum support level of up to 80% has been extended from 30 September 2021 to 31 March 2022.
Productivity Solutions Grant – Job Redesign (PSG-JR)
As part of the PSG, the PSG-JR helps businesses to transform their workforce along with changing needs of their transforming businesses. To meet the business transformation needs and make job redesigning easier for businesses the programme designed by the Workforce Singapore provides JR consultancy along with financial support. Eligible companies can work with pre-approved job redesign consultants to redesign work processes, tasks and responsibilities. Eligibility criteria is the same as PSG, in addition, at least three of the employees must be locals.
Enhanced PSG-JR funding of 80% of consultancy cost, capped at $30,000 per enterprise till 31 March 2022. Thereafter, the PSG-JR funding rate will revert to 70% of consultancy cost, capped at $30,000 per enterprise. Funding is on a reimbursement basis upon completion of PSG-JR project. Participating companies have up to one year from the date of application approval to complete their job redesign project.
In addition, eligible enterprises can also tap on the SkillsFuture Enterprise Credit (SFEC) to defray out-of-pocket (OOP) expenses. Eligible companies will receive a one-off $10,000 credit per firm to cover up to 90% of OOP expenses of pre-approved programmes.
Singapore’s government has been advocating economic restructuring and growth through productivity enhancement. With the dampening of demand due to economic uncertainties and potential of revenue growth looking diminished, businesses are under pressure to sustain profitability by enhancing efficiency and productivity. The enhanced funding support will be a shot in the arm for businesses hit by the pandemic to recoup their growth and profit potential.
Open Innovation Platform (OIP)
This is intended to aid companies to access quality and multi-disciplinary solutions for their business and digital innovation challenges. OIP accelerates digital innovation by matching problem owners, SMEs enterprises and government agencies, with problem solvers such as tech-innovators, researchers, startups and enterprises providing digital solutions. Innovation calls comprising a set of problems faced by problem owners from diverse sectors are launched on OIP every few months. Each problem offers a Prize money to winning solutions selected by the problem owners. Both sector-wide and enterprise-specific problems are addressed on the OIP.
Emerging Technology Programme (ETP)
The programme co-funds the costs of trials and the adoption of frontier technologies such as 5G, artificial intelligence and trust technologies. The ETP is intended to promote the commercialisation of innovative technologies and adoption and diffusion of technologies. More information is awaited from the administering authority – Infocomm and Media Development Authority (IMDA).
Digital Leaders Programme (DLP)
It supports local companies that are promising and willing across all industries to integrate digital capabilities into their business models. The programme is to help qualifying companies build their digital capabilities and talent to develop new business models and capture new growth opportunities. More information is awaited from the administering authority – Infocomm and Media Development Authority (IMDA).
Chief Technology Officer as a Service (CTOaaS)
It provides quick access to relevant digitalisation resources via a new one-stop touchpoint. SMEs will be able to tap on this for professional IT consultancies to receive end-to-end digital advice. More information is awaited from the administering authority – Infocomm and Media Development Authority (IMDA).
The Singapore government has been committed to driving digitalisation since long back. The pandemic-induced disruption has intensified the need to accelerate the digitalisation efforts. It is encouraging to note that the government has not let the crisis dilute digitalisation drive and is more than ever keen on bringing the SMEs and micro SMEs on board.
Senior Worker Early Adopter Grant
The grant provides funding support of up to $125,000 ($2,500 per eligible senior worker) to employers who are willing and able to increase internal retirement and re-employment ages by at least 3 years above the prevailing statutory ages.
Part-time Re-employment Grant
The grant provides up to $125,000 ($2,500 per eligible senior worker) to employers who commit to a re-employment policy where they would provide part-time re-employment opportunities to eligible and willing senior workers.
Any company registered or incorporated in Singapore, including societies and non-profit organisations, such as charities and voluntary welfare organisations, is eligible for the above grants. To qualify for the grant, companies will need to have at least 1 senior worker aged 60 years and above. The total eligible funding is capped at 50 senior workers per company.
It must be noted that the minimum Retirement Age (RA) and Re-employment Age (REA) will be raised to 65 and 70 respectively by 2030. The first increases to 63 and 68 respectively will take effect from 1 July 2022.
Jobs Support Scheme(JSS)
The scheme is to support employers to help retain their local employees (Singapore Citizens and Permanent Residents) during the challenging times of economic uncertainty. The government co-funds a proportion of the first $4,600 of gross monthly wages paid to each local employee up to March 2021. In Budget 2021, JSS was extended by up to 6 months for firms in Tiers 1 and 2 sectors, covering wages paid from April 2021 to September 2021.
The payouts are intended to offset local employees’ wages and help protect their jobs. All active employers, except for Government organisations (local and foreign) and representative offices, are eligible for the JSS.
Jobs Growth Incentive (JGI)
It supports employers to expand local employees in their workforce (Singapore Citizens and Permanent Residents). The purpose is to create good and long-term jobs for locals. It provides up to 12 months of salary support for each non-mature local hire and 18 months of salary support for each mature local hire aged 40 and above, person with disability (PwD) or ex-offender hired by employers that managed to increase their local workforce within the qualifying window.
The support is 25% for non-mature local hires or 50% for mature local hires aged 40 and above, persons with disabilities (PwDs) or ex-offenders of the first $5,000 of gross monthly wages paid to all new local hires. The supportable gross monthly wages will be increased to the first $6,000 in the case of the latter.
The qualifying window for new local hires will be:
- Phase 1 of the JGI: September 2020 to February 2021
- Phase 2 of the JGI: March 2021 to September 2021
To be eligible for the JGI, the following two conditions must be met:
- there must be an increase in overall local workforce size; and
- an increase in local workforce size earning ≥$1,400/month, compared to the August 2020 local workforce for Phase 1, or the February 2021 local workforce for Phase 2.
Wage Credit Scheme (WCS)
Introduced in 2013, the government co-funds the wage increases given by employers to Singapore Citizen employees. The proportion of co-funding and salary ceiling of employees have been adjusted by the government over the years. As per the latest, revisions government funds 15% of the wage increase provided to employees earning a gross monthly salary of S$5000.
Employers giving wage increases to Singapore Citizen employees who satisfy the following conditions are qualified for WCS:
- Received CPF contributions from a single employer for at least 3 calendar months (need not be continuous) in the preceding year;
- Have been on the employer’s payroll and have received CPF contributions for at least 3 calendar months in the qualifying year;
- Have at least $50 gross monthly wage increase;
- Must not be the business owner of the same entity
Under Budget 2021, the Scheme is extended by one year to 2021, with the government co-funding ratio remaining and the qualifying gross wage ceiling remaining unchanged. Gross monthly wage increases (at least $50) previously given in 2019 and 2020 by the same employer will continue to be co-funded if they are sustained in 2020 and 2021.
Amidst economic recession and no sign of significant recovery with the threat of subsequent waves of the pandemic still looming large, businesses and people are pinning their hopes on vaccines. Though the priority is to keep the heads above water, the demographic reality of Singapore as an ageing country and its dependence on immigrant labour cannot be overlooked. Therefore the schemes to protect and increase jobs for locals while sustaining wage growth being extended is very reassuring to not just employers but also the employees.
S$870 million has been allocated to support the aviation sector businesses to overcome the challenges posed by COVID-19. Measures for the sector include the following:
- 10% rebate on the landing charge for all scheduled passenger flights landing in Singapore.
- 50% rental rebate for ground handling companies’ lounges and offices within Changi Airport.
- Aviation sector companies principally operating from Changi Airport will get a 50% support for wages paid to local employees from April to September capped at S$4,600 of gross monthly wages.
- Ground handlers will additionally receive a 50% rebate on licence fees payable for ground handling and catering services at the airport.
- The cargo agent tenant in the Changi Airfreight Centre will also get a 20% rebate on rent.
- Pilots, air traffic controllers and aircraft maintenance engineers will also get a full rebate on their licence and medical evaluation fees.
- The 1% increase in landing, parking and aerobridge charges at Changi Airport will be waived.
Land Transport Sector
Eligible taxi and private hire car drivers will receive $600/vehicle/month from January to March 2021 and S$450/vehicle/month from Apr to Jun 2021.
Arts & Culture and Sports
$45 million has been set aside for the Arts & Culture Resilience Package and Sports Resilience Package to support businesses and self-employed persons in these sectors
S Pass sub-Dependency Ratio Ceiling (sub-DRC) for manufacturing will be cut from 20% to 18% in 2022 and to 15% in 2023. Notably, in last year’s budget it was announced that the sub-DRC for the construction, process and marine shipyard sectors will be reduced from 18% to 15% in 2023.
The targeted approach to help the hard-hit industries with cost-relief schemes while remarkable, the stringent move to cut down the dependency ratio for the manufacturing sector is a let-down for the players in the sector. However, the government has apparently declared that the dependence on foreign workers will be progressively reduced in line with the economic restructuring. The present challenging times call for measures to secure the job opportunities for locals, hence the move is not surprising.