On 20 February 2017, Finance Minister Heng Swee Keat laid out his budget for the coming year. It builds on previous years, with a strong focus on technological advancement to support companies faced with the challenges of digital disruption and shifting dynamics in the business environment. The government has highlighted, in particular, the need to support Singapore’s small and medium-sized businesses (SMBs) to allow them to build their internal capabilities as they grow. We list the benefits to SMBs in the coming year resulting from the key initiatives outlined in the budget.
Build digital capabilities
The greatest opportunity for SMBs lies in the government’s goal of promoting digitisation. The new SMEs Go Digital programme will commit over S$80 million to help SMBs modernise their services and adopt digital technology to provide greater access to data and manage cybersecurity issues. The scheme will commence in sectors that have a significant opportunity to improve productivity, including food services, retail, security and logistics. It will also establish centres where SMBs can receive practical advice on technology and even receive funding to help them bring their business into the digital age and prepare them to scale up globally.
Support for international expansion
For businesses with an eye on expanding overseas, the government has committed up to S$600 million to the International Partnership Fund. The intention is to not just help Singaporean companies expand but to allow them to immerse themselves in new markets to gain a deeper understanding of potential customers.
Continued tax benefits
SMBs currently enjoy a Corporate Income Tax (CIT) rebate. While the rebate remains unchanged from 2016 at 50 percent of the corporate tax payable, the CIT rebate cap will be raised from S$20,000 to S$25,000 in 2017. The tax rebate will continue into 2018, but the rebate will be reduced to 20 percent and the cap lowered to S$10,000.
Continued Wage Credit Scheme
To help companies cope with rising wages, the Wage Credit Scheme will continue at a cost of S$600 million, of which about 70 percent is expected to go to SMEs. The scheme co-funds 20 per cent of wage increases for Singapore citizens who earn up to S$4,000 a month.
Boosting intellectual property development
To encourage innovation, the government is enabling SMBs to develop intellectual property (IP) in conjunction with A*Star (Agency for Science, Technology and Research) through the Headstart Programme. Under this initiative, recipients will benefit from royalty-free and exclusive licenses for the first 18 months, with the possibility of expanding this to 36 months depending on industry feedback. In addition, the Intellectual Property Intermediary (IPI) helps match the businesses with the right IP for their business. IPI will work with the Intellectual Property Office of Singapore to analyse and bundle complementary intellectual property both locally and overseas.
Continued Working Capital Loan
The SME Working Capital Loan scheme was initiated on 1 June 2016 and will be available until 31 May 2019. It helps SMBs manage their financial risk as the government co-shares 50 per cent of the default risk on loans of up to S$300,000 for SMBs.
The 2017 Singapore Budget supports the country’s long-term goals of developing innovation and capability to deal with a changing world while addressing the near-term needs of SMBs. Even as the rest of the world starts facing inwards, Singapore is looking to strengthen its core of SMBs so they can face the challenges that lie ahead.