How supportive is the Singapore 2023 Budget to businesses?
Singapore announced its 2023 Budget on 14 February 2023. The budget included a multibillion-dollar support scheme for businesses, in four key areas:
- Building capabilities and anchoring quality investments ($4 billion top up for the National Productivity Fund, whose scope will be expanded to support investment promotion).
- Develop local enterprises (additional $150 million for the SME co-investment fund, to invest in promising SMEs).
- Enterprise Innovation Scheme (enhanced tax deductions/allowances to support businesses’ innovation activities).
- Deal with cost pressures (extended support for enterprises’ financing needs and extended support for SMEs to adopt energy-efficient equipment).
Businesses that SG:Indian spoke to with regards to the 2023 Budget felt that while the overall spirit and intent of the support measures were encouraging, the devil is in the details.
Qualifying for financial assistance
Sudave Ramachanderan, Director, Business Development & Strategic Partnerships, for Business Engineers Asia (BEA), said: “I think the focus on where to give support is in the right direction. The overall combined figures look sizable and impressive also. However, the process of qualifying for the grants, and the actual amounts the companies eventually get may be too little, and I say this from personal experience.”
According to Sudave, BEA had previously applied for a trade loan for a food sourcing project at the start of COVID-19. While they had received a delivery order from a government appointed company, they were unable to secure the loan because BEA had only converted from sole proprietorship to a private limited company less than two years before, he explained.
Sudave further added: “Typically companies are expected to pay for any kind of cost involved in improving productivity and efficiency first, and then claim back up to a certain percentage, after the project is completed or after a few months. The process also involves lots of paperwork and there could be language issues as well. SMEs may not be able to afford the time or money to go through the process and then wait for reimbursement.
Sudave said: “While there is much needed in the current context, I feel financial institutions should practice more heart & less focus on rigid conditions & profits when they listen to a company’s needs.
… the process of qualifying for the grants, and the actual amounts the companies eventually get may be too little…”
Manpower shortage issues
P Ruthirapathy, Director at Celebration of Arts, a handicraft shop at Little India Arcade, expressed scepticism about the extent to which the support programmes would be beneficial to small businesses. He highlighted manpower shortage as a key issue that small businesses struggle with.
He said: “The manpower shortage issue has not been dealt with. Furthermore, it has been compounded by the increase in CPF contributions, which is added costs to businesses. We do hope that as small businesses, that we can get more help to rein in our costs and also be able to get the necessary manpower. There are many jobs that are not taken up by locals and these jobs are essential to keeping up the businesses operations.”
Ruthirapathy also referenced the $1 billion set aside for the Singapore Global Enterprises Initiative, which helps promising companies with customised assistance in areas such as innovation, internationalisation, and partnerships. “We would probably need more information to see how small businesses can benefit from this too,” he said.
The manpower shortage issue has not been dealt with. Furthermore, it has been compounded by the increase in CPF contributions, which is added costs to businesses.”
To continue to encourage businesses to transform through automation, Budget 2023 extended the existing 100% investment allowance scheme by three years.
“While on the outset this seems helpful, for many businesses who are reliant more on labour rather than automation, it might not have the desired impact,” Ruthirapathy commented.
“Industries such as retail and food & beverages can only use that much automation. The robots that were gotten through grants and co-sharing by many businesses are rarely used now,” he added.
Technology implementation is an important area to Thenappan V, Director of Unisoft Infotech Pte Ltd, a provider of integrated business solutions. He said: “Having started our e-commerce business just two years ago, while we have grown the business, we face high manpower costs. As a result, we are struggling to remain profitable. We need help to keep manpower costs down. We look forward to the Enterprise Financing Scheme to secure easy credit at reasonable interest rates to help us automate, digitalise and source for working capital.”
“We are also looking for support in the e-commerce business as that is where we can provide job opportunities for the local workforce,” he added.
We look forward to the Enterprise Financing Scheme to secure easy credit at reasonable interest rates to help us automate, digitalise and source for working capital.”
Comment on this Topic
Government is not going to easily give out financing.. after all, it’s taxpayer money, they need to be extra-kiasu on how funds are disbursed…