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[pullquote]In 2018, Singapore’s economic growth slowed slightly to 3.2 per cent from 2017’s 3.9 per cent.[/pullquote]
If you’re running a local business, you’ll be overwhelmed by this year’s budget announcement.
Out of the five main themes of Budget 2019, Finance Minister Heng Swee Keat spent 45 minutes and 40 seconds out of the 2-hours-and-6-minute announcement talking about one – the economy.
We’ve summarised the Minister’s business-related announcements below.
Modest growth in 2018
He begins the budget announcement with a recap of how Singapore’s economy performed.
In 2018, Singapore’s economic growth slowed slightly to 3.2 per cent from 2017’s 3.9 per cent. Productivity for the past three years grew by 3.6 per cent, more than double the 1.6 per cent growth per year experienced between 2012 and 2015.
Despite a rough year with global political instability and protectionism, Singapore managed a modest growth. If the situation persists, Singapore needs to be ready for tougher times.
A budget for the future
[pullquote]… the government will be committing $1 billion to assist startups and SMEs to increase productivity, scale and internationalise.[/pullquote]
Mr Heng went on to unveil the themes for this year’s budget.
Budget 2019 is a strategic plan to allocate resources to build a strong, united Singapore.
The five main themes are
- A safe and secure Singapore
- A vibrant and innovative economy
- A caring and inclusive society
- A global city and home for all
- A fiscally sustainable future
Specifically for businesses, the government will be committing $1 billion to assist startups and SMEs to increase productivity, scale and internationalise. $3.6 billion will go towards helping workers stay competitive in an industrially and technologically disruptive climate.
Mr Heng outlined 3 key thrusts to support local businesses.
1: Building deep enterprise capabilities
Greater support for startups
Enterprise Singapore will be launching two programmes in response to an increasingly vibrant startup scene.
[pullquote]Scale-up SG Programme assists high-growth local companies with innovation, scaling and internationalisation.[/pullquote]
Scale-up SG Programme assists high-growth local companies with innovation, scaling and internationalisation.
The Innovation Agents is a two-year pilot programme that makes experienced experts available to companies that need advice on innovation opportunities and commercialisation.
Additional $100 million for SME Co-Investment Fund (CIP) III
To help SMEs scale, the government has led the injection of two rounds of funds amounting to $400 million since 2010. The private sector responded by raising an additional $1.3 billion in funding.
The latest round of funds is expected to attract additional funding of at least $200 million.
Financing schemes to be more accessible
[pullquote]Currently, there are eight SME financing schemes, but coming October, it will be simplified to one.[/pullquote]
Currently, there are eight SME financing schemes, but coming October, it will be simplified to one. The new Enterprise Financing Scheme (EFS) will be covering a range of needs across different stages of growth for companies that are incepted for less than five years.
Through the EFS, the government will absorb up to 70 per cent of loan risk, which is an increase from the current 50 per cent under most existing schemes.
SME Working Capital Loan scheme extended
The access to up to $300,000 in unsecured loans will be extended to March 2021. This scheme will be folded into the EFS in October this year.
SMEs Go Digital Programme to be expanded
Introduced in 2016, the programme was only available to the media, wholesale trade and food services industries. This year, accountancy, sea transport and construction will get their own industry digital plans, with more to be added later.
Automation Support Package extended
Introduced in 2016, the Automation Support Package will be extended by two years to March 2021. It provides grant support under the Enterprise Development Grant (EDG), a 100% tax write off on the amount spent on automation equipment and a loan of up to $15 million for automation equipment.
One-stop portals to simplify government transactions
Businesses will only need to go to one point of contact – instead of up to 14 today – when dealing with government agencies.
2: Building deep worker capabilities
Upskilling and supporting workers
[pullquote]The Professional Conversion Programmes (PCPs)facilitate PMETs career switch by equipping them with the necessary skills to move into new occupations.[/pullquote]
The Career Support Programme will be extended for two years. This programme provides wage support, up to $42,000 for up to 18 months, to companies that employ mature, retrenched Singaporeans.
The Special Employment Credit was introduced in 2011 to incentivise employers to hire older workers. Currently, it provides wage offsets to employers hiring Singaporean workers aged 55 and above who are earning up to $4,000. This scheme will be extended to the end of 2020.
The Professional Conversion Programmes (PCPs)facilitate PMETs career switch by equipping them with the necessary skills to move into new occupations. The programmes span industries that have good prospects for career advancements, including the creative industry, hospitality and technology. This year, blockchains, software and pre-fabrication PCPs will be introduced.
Foreign workers inflow in services sector to be tightened
[pullquote]The government will be reducing the Dependency Ratio Ceiling… gradually, from the current 40 per cent to 38 per cent in 2020 and 35 per cent in 2021.[/pullquote]
The government will be reducing the Dependency Ratio Ceiling (the maximum proportion of foreign workers to the total headcount in the company) gradually, from the current 40 per cent to 38 per cent in 2020 and 35 per cent in 2021.
The sector’s S Pass worker ratio will also be lowered from 15 per cent to 13 per cent in 2020 and 10 per cent in 2021.
These limits will apply to companies when they renew their permits. Companies may also apply for flexible manpower arrangement on a case-by-case basis, after giving fair consideration to Singaporeans.
EDG and PSG to be extended
To help companies in the service industry cope with the reduction in foreign workers that are allowed to be employed, the Enterprise Development Grant (EDG) and Productivity Solutions Grant (PSG) will be extended to March 31, 2023.
The PSG is also enhanced to support up to 70 per cent of out-of-pocket training costs.
3: Encouraging strong partnerships within Singapore and across the world
TACs to receive more support
Enterprise Singapore will be working with Trade Associations and Chambers (TACs) that have demonstrated strong leadership and shown ambition to do more for the business community to develop a five-year roadmap under the Local Enterprise and Association Development (LEAD) Programme. This programme gives TACs access to funds and public sector secondees.
Government to develop stronger partnerships globally
Singapore negotiation with the European Union on a Free Trade Agreement and Investment Protection Agreement have received the European Parliament’s consent with a clear majority.
This article has been updated to include the Special Employment Credit scheme and to correct the extension dates for EDG and PSG.
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