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Singapore : Selected Budget 2013 measures for SMEs

3.29.2 Selected Budget 2013 measures for SMES Programs Details Wage credit The government co-funding 40% of the wage increase for a Singaporean employee with a gross monthly salary of up to S$4,000 scheme · A business spending at least S$5,000 on a credit- qualified activity receiving a matching bonus up to S$15,000 Productivity and innovation credit bonus Corporate • Each year, 30% of corporate income tax refunded, subject to a cap of S$30,000 per company income tax rebate · Enhanced productivity Helping SMES upgrade productivity, innovation, and innovation credit scheme Collaborative industry and projects • Technology adoption саpability program • Land productivity grant SME talent program • Workforce and training support • Market readiness assistance grant • Enhanced partnerships for capability transformation Support to enhance companies' access to financing • Increase in central provident fund and lower contribution rates for low- Helping SMES tap opportunities for growth and others wage workers • Lower tax on household benefits • Road tax rebate SMES = small and medium-sized enterprises. Source: Standards, Productivity, and Innovation Board of Singapore. 3.29.2 Selected Budget 2013 measures for SMES Programs Details Wage credit The government co-funding 40% of the wage increase for a Singaporean employee with a gross monthly salary of up to S$4,000 scheme · A business spending at least S$5,000 on a credit- qualified activity receiving a matching bonus up to S$15,000 Productivity and innovation credit bonus Corporate • Each year, 30% of corporate income tax refunded, subject to a cap of S$30,000 per company income tax rebate · Enhanced productivity Helping SMES upgrade productivity, innovation, and innovation credit scheme Collaborative industry and projects • Technology adoption саpability program • Land productivity grant SME talent program • Workforce and training support • Market readiness assistance grant • Enhanced partnerships for capability transformation Support to enhance companies' access to financing • Increase in central provident fund and lower contribution rates for low- Helping SMES tap opportunities for growth and others wage workers • Lower tax on household benefits • Road tax rebate SMES = small and medium-sized enterprises. Source: Standards, Productivity, and Innovation Board of Singapore.

Singapore : Selected Budget 2013 measures for SMEs

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Policy challenge—supporting small and medium-sized enterprises ---------- Small and medium-sized enterprises (SMEs)—businesses with annual sales of up to S$100 million or up to 200 employees—ar... e an integral part of the Singapore economy. SMEs account for 99% of all enterprises, more than 50% of output, and 70% of employment. Recent years have been particularly challenging for SMEs in Singapore. In addition to weak demand in the protracted global recession, SMEs face a labor supply squeeze and rising domestic costs, which are largely induced by the government’s economic restructuring policy. SMEs feel the consequences of these shocks more strongly because of their limited access to finance and their less-developed financial and management capabilities. Recent surveys indicate that profits margins have narrowed, the number of SMEs reporting losses has risen, and enterprises are less optimistic regarding sales, profits, hiring, and capital investment in the coming months. Recognizing SMEs’ predicament, the FY2013 budget introduces a 3-year package worth S$5.35 billion to help businesses cope with rising costs (Table 3.29.2). It provides incentives for firms to invest in raising productivity and pay correspondingly competitive wages. Other programs specifically for SMEs are being implemented by a government agency facilitating the development and growth of indigenous firms. While these incentives will not fully offset costs in the short run, they provide a buffer for firms adjusting to the economic restructuring program. The recent economic situation in Singapore, though not as severe as during the 2008–2009 global financial crisis, calls for more attention to the complex challenges that SMEs face. In the short term, SMEs must be willing to trim their margins and pay more for labor while building new business models. The measures announced in FY2013 will be helpful, but more needs to be done. Going forward, the government’s policy of pushing firms toward less reliance on foreign labor, capital deepening, knowledge and systems upgrades, and innovation could be taxing for SMEs. Any shrinkage of the sector would have important unemployment and inequality consequences. The challenge is to get the right balance such that restructuring toward higher productivity and sustainable growth does not happen at a very high social cost, while ensuring that policies do not encourage long-term dependency. This objective warrants well-targeted and incentive-compatible transfers to the most vulnerable firms, especially micro enterprises. Rigorous evaluations of government support are necessary to assess actual impact on SMEs as a guide to policy makers. With a comfortable fiscal cushion, the government is well positioned, despite the sluggish global economy, to push for reforms toward a more sustainable and inclusive growth path that takes SMEs’ requirements into account. Source: Standards, Productivity, and Innovation Board of Singapore - http://www.spring.gov.sg/Pages/homepage.aspx

Singapore : Selected Budget 2013 measures for SMEs

Singapore : Selected Budget 2013 measures for SMEs

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