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S'pore Clawed Back S$11 Million In Abused PIC Claims - Is The Scheme Really Effective?

In a recent parliament session in Singapore, Senior Minister of State for Finance Indranee Rajah revealed that Singapore’s Inland Revenue Authority, or more commonly known as IRAS, has clawed back about S$11 million in grant money which was disbursed under the Productivity and Innovation Credit (PIC) Scheme so far.

Image Credit: 1stleap
Image Credit: 1stleap

Here are some numbers revealed by Ms Indranee:

  1. 71,000 cash payout claims were made from 2011 to 2015.
  2. 1,470 out of the 71,000 claims required clawback.
  3. In 2014, out of 10,000 claims audited, IRAS clawed back S$7 million worth of improper claims from 500 cases. S$5 million has been recovered to date.
  4. To date, about 102,000 firms have benefited from the scheme since it was introduced in 2010.

Ms Indranee mentioned that since the scheme is very beneficial, it is “expected that some people will deliberately attempt to abuse the system”.

“That’s why IRAS does investigate and audit as well. We would have no hesitation in prosecuting those that are found to be abusing the system,” added Ms Indranee, according to a report on Channel News Asia.

Double Edged Sword

For the longest time, since the introduction of the PIC scheme, which allows SMEs to claim up to 60% cash payout for any productivity related expenses from the government, there has been comments on how companies have been abusing the system.

First, there are some service providers who are gaming the system by increasing their prices to SMEs, and telling them to take advantage of the grant before it is discontinued. This is pointed out by a commenter on Facebook, who shared that SMEs are actually paying what the services are supposed to cost and without ever benefitting from any cost savings from the grant.

“The actual beneficiaries are the unscrupulous service providers who benefit from the highly inflated prices. It’s also futile to seek a few quotes from other service providers since many are also taking advantage of this loophole as SMEs have no further avenues to turn to for price verification. As such, not only does the grant fail in its intended purpose, it indirectly cause prices to go up due to this form of gaming. Really hope that the authorities look into this.”

Image Credit: Channel News Asia
Image Credit: Channel News Asia

Another Facebook user also said that the scheme “obviously only benefits the big companies, who doesn’t have manpower (cpf contribution) issue. This scheme should help all entrepreneurs be it big or small, setting the rule of 3 employees is a loophole waiting to trap genuine smaller businesses.” Another commenter also concurred, saying that she was “very disappointed with this scheme”.

“Some companies genuinely need the PIC but just short of 1 employee headcount & therefore not qualified. Those who qualified are abusing it.”

Of course, the original intention behind the scheme is to ensure that companies who are genuinely looking to increase their productivity get all the help they need from the government. While there are bound to be a few black sheeps around, if majority of the companies benefit from the PIC scheme, that definitely counts for something, though Singapore is still falling behind in terms of productivity, admitted Minister for Trade and Industry Lim Hng Kiang last year.

Mr Lim shared that Singapore was “not achieving the two to three percent (labour productivity) growth rate that we’re aiming for.”

So perhaps the bigger question to ask is, is the PIC scheme an effective one?

What do you think?

 

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