Singapore Budget 2019

 

On 18 Feb 2019, our Minister for Finance – Mr Heng Swee Keat delivered the 2019 Budget Statement. One of the strategic plans is to transform and build a vibrant economy and continue to build Singapore as a global city. 

In this Budget summary, we will be focusing on the plans that are relevant to SMEs.

 

Building Deep Enterprise Capabilities – Local companies can seek assistance through various schemes and programmes in the following three areas to help them scale up and venture into new markets.

1.      Supporting innovation and providing customized assistance

Companies can seek customized support from Enterprise Singapore to identify and overcome business challenges as well as tap on various resources to support innovations.

    • Scale-up SG programme: will help aspiring, high-potential local companies identify and develop new capabilities, to innovate, grow and internationalise.
    • Innovation Agents programme: The two-year pilot programme enables companies to obtain advice from experienced industry leaders who are equipped with both technology and business expertise. The Innovation Agents will mentor and assist aspiring companies to tap on available resources.
    • Centres of Innovation (COIs) in Aquaculture and Energy: COIs support SMEs with technology innovation by assisting them in the development and testing of technology products, through access to laboratory facilities, consultancy services and training courses. The Aquaculture COI aims to support the growth and internationalisation of local enterprises in the aquaculture sector while the Energy COI aims to drive industry-led innovation in energy efficiency, renewable energy and electric mobility.

 

2.      Enhance access to patient capital and financing

Companies can access government co-investment scheme and loan financing schemes, enabling them to scale up and venture into new growth markets.

    • SME Co-Investment Fund III: Government will set aside an additional $100 million to co-invest in private companies to help local companies to scale up quickly. To access this fund, companies need to have revenue of up to $500 million, and have their key management functions and headquarter activities based in Singapore.
    • Enterprise Financing Scheme (EFS): The existing financing schemes will be streamlined into a single EFS to simplify and enhance the accessibility of loan funding. The EFS will cover the whole spectrum of financing needs, including trade, working capital, fixed assets, venture debt, mergers and acquisitions, and project financing. The EFS will provide a higher level of support of up to 70% of the risk for bank loans that will be extended to companies incorporated for less than five years.
    • SME Working Capital Loan Scheme: The loan scheme of up to $300,000 will be extended till 31 March 2021 and will be subsumed by the EFS which will launch in October 2019.

 

 

3.      Support firms to go digital

The following initiatives will provide support to companies embracing digitalisation, which is increasingly important due to the impending tightening of foreign worker ratios in the services sector.

    • SMEs Go Digital Programme: As of 2018, Industry Digital Plans (IDPs) have been developed for seven sectors: Environmental Services, Retail, Food Services, Wholesale Trade, Logistics, Security, and Media. This programme will be expanded by developing IDPs for the Accountancy, Sea Transport and Construction sectors to guide SMEs on relevant digital technologies and skills training programme. It will also expand the suite of pre-approved digital solutions to include AI-infused and cybersecurity solutions to boost technology adoption among SMEs.
    • Digital Services Lab (DSL): This three-year pilot programme aims to develop new technology solutions for companies in the services sector through collaborations with DSL engineers and industry partners. Funding support of up to 70% of qualifying costs will be available for companies participating as demand users and technology solutions providers.
    • Automation Support Package (ASP): The ASP aims to encourage companies to embark on large-scale automation projects for increased productivity. It is extended for two years up to 31 March 2021.
Grant Tax Loan
Provided through EDG supporting up to 50% of qualifying costs for automation projects, capped at $1 million. 100% investment allowance on Enterprise Singapore approved capital expenditure (net of grants), capped at $10 million per project. Risk sharing by Enterprise Singapore with participating financial institutions of up to 70% for SMEs in the event of loan default.

 

    • Pilot one-stop portal for food services: A one-stop portal will be launched for the food services sector by 3Q 2019 to ease transactions with the Government, The Ministry of Trade and Industry, and relevant agencies.

 

Helping Our People Seize Opportunities – Companies are encouraged to raise the capabilities of their workers as these capabilities are key to the companies’ successes.

    • Career Support Programme: Wage support will be provided for companies hiring eligible Singaporeans who are mature and retrenched, or are in long-term unemployment for Professional, Manager, Executive and Technician (PMET) jobs. It will be extended for two years till March 2021.
Salary support for Singapore Citizen PMETs 1st 6 months of employment 2nd 6 months of employment 3rd 6 months of employment
> 40 years old, unemployed and looking for jobs >12 months 50% 30% 20%
> 40 years old, unemployed and actively looking for jobs for 6 months to <12 months OR made redundant 40% 20% N.A.
<40 years old, unemployed and actively looking for jobs ?6 months 20% 10% N.A.

Gross monthly salary: At least $3,600 per month for SMEs

(Funded gross monthly salary capped at $7,000 per month)

    • New Professional Conversion Programmes (PCP): New PCPs relating to blockchain, embedded software and prefabrication will be launched to prepare Singaporeans to move into new growth areas. PCPs are targeted at PMETs to undergo skills conversion and move into new occupations or sectors that have good prospects.
    • Reduce Dependency Ratio Ceiling (DRC): The maximum permitted ratio of foreign workers to the total workforce will be reduced for the services sector.

 

  Current 1 January 2020 1 January 2021
DRC 40% 38% 35%
S Pass sub-DRC 15% 13% 10%
  • Enterprise Development Grant (EDG): The enhanced support level for the EDG will be extended for three years up to 31 March 2023 to encourage companies to undertake digital transformation projects to strengthen business capabilities, improve operational efficiencies and reduce reliance on labour. The EDG provides funding support of up to 70% of qualifying project costs and up to 50% for software and equipment costs for SMEs. With effect from 1 April 2020, companies must commit to outcomes for workers, such as wage increases as an added qualifying condition.
    • Productivity Solutions Grant (PSG): The PSG is available to SMEs registered and operating in Singapore with at least 30% local shareholding who use the digital solutions/ equipment in Singapore. The 70% funding support for adoption of pre-scoped, off-the-shelf technologies will be extended to 31 March 2023. The support for pre-approved solutions under the SMEs Go Digital Programme will be streamlined into the PSG. PSG is also expanded to support 70% of out-of-pocket training expenses (net of other subsidies), capped at $10,000. Companies applying for the training subsidy under the enhanced PSG must submit a training plan.
    • Foreign Worker Levy: The previously announced increases in Foreign Worker Levy for the Marine Shipyard and Process sectors will be deferred for another year as these sectors have only begun showing early signs of recovery from the years of depressed oil prices.
    • Global Ready Talent Programme (GRTP): The GRTP aims to support Singapore SMEs looking to internationalise. Funding support of up to 70% will be provided for the costs of deploying interns (Singaporeans or permanent residents). Funding support will also be provided to companies that send young employees with up to three years of working experience on job postings in key overseas markets.

 

Partnering to Win – Forming partnerships and cooperation can benefit companies through solving common challenges and accessing new markets.

  • Local Enterprise and Association Development (LEAD) programme: Enterprise Singapore will be developing five-year roadmaps with Trade Associations and Chambers (TACs). This will enable them to take on a more strategic and longer-term approach in driving industry transformation as well as to access funding and potentially take in public sector secondees through LEAD.
  • Streamline and digitize trade processes: To enable easier access to overseas markets and help companies make better use of the Free Trade Agreements (FTAs), the government will be working with partners to facilitate the secure exchange of electronic trade documents.

 

Are you still rushing to get your accounts up to date?

Get in touch with us.
Top