Singapore has a government who recognises the potentials of what Small & medium Enterprises (SMEs) can do for the economy and likes to support them accordingly. Since June 2014, Singapore has been chairing the ASEAN SME Working Group. Singapore hopes to lead fellow ASEAN members into the realisation of the ASEAN Economic Community for SMEs in 2015.
The 2015 SME development survey depicts the challenges met by SMEs in Singapore such as manpower issues, increasing competition and high rental costs. In order to sustain growth and compete effectively, SMEs need to restructure their business models and build up new capabilities. These include pursuing productivity improvements, strengthening technology, embracing innovation and expanding overseas. Develop, Progress, Advance, growth.
In the past few budgets, the assistance to the SMEs came in the form of initiatives such as the Productivity and Innovation Credit Plus (PIC +) scheme, tax deduction schemes, the angel investors scheme, government-backed cash grants and tax incentives schemes.
This package was implemented with aims to assist business restructuring and share productivity gains with employees in the form of higher wages. The TSP will be phased out gradually after being extended for a few more years.
The TSP consists of:
The TEC provides employers an offset of 0.5% of wages to help them adjust to the increase of Medisave contribution rates.
The TEC will be:
In an attempt to help SMEs with the labour crunch, the government said it would defer planned levy increases for ‘S’ pass holders.
The Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam stated it is crucial for Singapore to find new and more innovative ways of doing business which is crucial for Singapore to restructure towards reducing reliance on manpower.
The Singapore government backs up innovation by making the Capability Development Grant (CDG) more accessible to companies via a more simplified application process for projects below S$30,000. The CDG’s enhanced funding support level of up to 70% of qualifying costs will also be extended for three years additionally.
To ensure that promising companies have access to funding they need to expand and to promote industry collaborations, the SPRING’s Collaborative Industry projects will be extended to all industry sectors in order to develop productive and innovative solutions. The Partnerships for Capability Transformation (PACT) Scheme will also be enhanced to encourage collaborations between large companies and SMEs in their supply chain.
A venture debt-risk sharing programme will also be piloted with several financial institutions. This aims to provide high-growth companies with an alternative to equity financing and traditional bank loans.
The government is also increasing the co-investment cap for SPRING’s Startup Enterprise Development and Business Angel Scheme (BAS).
Now, looking into Internationalisation, the government has announced three new measures:
The government also wants to assist in encouraging Merger and Acquisitions (M&A) so that companies can acquire greater scale, attract talent and compete effectively overseas.
The scale will be encouraged by:
In addition, companies will be able to claim M&A benefits for acquisitions that result in at least a 20% shareholding in the target company. This is a down from the current threshold of 50% shareholding. This scheme will be extended for another five years.
IE Singapore’s Internationalisation Finance scheme (IFS) will also be extended to support M&A that will aid a company’s overseas expansion.
The tax deductions for qualifying donations made to Institutions of Public Character (IPCs) and other qualifying recipients in 2015 is increased from 250% to 300%. The government extended the 250% tax deduction for donations which will expire on December 31st 2015 by a further three years for qualifying donations made from January 1st 2016 to December 31st 2018.
The National Research Fund will introduce a further S$1 billion this year with greater efforts to help companies develop and commercialise new products.
In Singapore’s next phase of development, the government has a new initiative called SkillsFuture. This scheme will encourage continued learning and on-going skill improvement for Singaporeans in the workforce.
SkillsFuture Leadership Development Initiative: Collaborations with strategic companies will be enhanced in order to prepare Singaporeans to take on corporate leadership roles and responsibilities.
Sectoral Manpower Plans (SMP): Tighter efforts with industry and unions to encourage employers to develop employees career pathways and value the mastering of skills by 2020 in all sectors.
SkillsFuture Mentors: A central pool of mentors who specialise in industry relevant skills will provide guidance to SMEs.