Analysts from Credit Suisse and Citibank predicted that the 2013 budget would see a cut in the ratio of overseas workers, to be countered by incentives to boost productivity, as well as investment in technology for specific industries.
The REACH consultation exercise also saw a resounding underlying budget 2013 wish: tailored schemes to meet the unique needs of the various industries, namely in the areas of quotas on foreign labour, grants for business costs, and support for business rentals – all of which will impact SMEs the most.
A recent article by ZDNet echoes the wants of tech SMEs, citing easing of the E-Pass, increasing the quota of S-Pass, and providing grants to help counter the rising rents and utilities.
The government’s 2013 budget initiatives announced earlier this week cover some of these needs.
Noting that Singapore “must now go through a new phase of transformation” and that “the restructuring of [the] economy must result in a dynamic and re-energised SME sector”, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam listed a number of promising initiatives:
– strengthening capabilities for new growth industries.
– dedicating $500 million over the next five years to support a “Future of Manufacturing Plan”.
– refining tax incentives for companies in the Maritime sector and Financial sector to ensure the continued growth of high-value activities in Singapore.
– introducing a land productivity grant of $60 million for companies that intensify land use or relocate some operations to immediate region.
– linking up SMEs with research institutions to look into solutions that will give the SMEs a competitive advantage.
– providing productivity incentives to further boost training.
– launching an SME talent programme.
– granting a dollar-for-dollar matching cash bonus to businesses that invest a minimum of $5,000 per year of assessment in the productivity and innovation credit (PIC) qualifying expenditure.
According to a TODAY article, businesses have had mixed reactions to the 2013 budget announcements. Companies are getting substantial help to transform themselves in the long-term, but they have to be willing to go through a process that may create severe short-term challenges.
Ernst & Young have labelled the measures as “Darwinian”: “Not all companies will survive the transition. The Government will not prop up businesses and industries that are uncompetitive, but it will be generous to those with the desire and ambition for productive growth. A plethora of enhanced productivity incentives and other assistance schemes are there for the taking”.
As a city-state with limited space and constraints in the hiring of labour force, there is a need to strike a balance between productivity and business costs.
For instance, a study shows that Singapore CBD rental rates register at half of Hong Kong’s (thus making it more attractive for global and regional companies), but they still may not be well within most SMEs’ capacity.
Overall, while some see the 2013 budget as the sign of a new and improved business environment, others are asking the government to hold off on some of its initiatives.