- The Singapore Government expects to spend a total of $4.6 billion over three years to drive our economic transformation plans.
- Finance Minister Heng Swee Keat shares the ways the Government is helping startup and SME owners scale up and supporting Singaporeans in upskilling and reskilling.
Before we begin the roundup of the Budget 2019 speech by Finance Minister Heng Swee Keat, let’s briefly recap our past speeches.
In 2017, we placed a focus on enterprises in Singapore and noticed keywords such as “adaptability”, “innovation” and “partnership” being used in the speech.
Mr Heng emphasized the need for businesses to “stay competitive and grow” as they are the “heart of [our] vibrant economies” and encouraged owners to embrace digital innovation and scale up.
Some of the notable highlights for businesses include the SMEs Go Digital Programme that helps small enterprises build digital capabilities and the SME Working Capital Loan where the government will tank 50% of the default risk for loans up to $300,000.
2018 saw the government working towards three major shifts: the rise of Asia, emerging tech, and ageing society.
The government once again shared the need for businesses to innovate and promised to support firms and workers in getting more opportunities as global trade economies face tension following Brexit and China’s Belt and Road Initiative.
Under the SMEs Go Digital Programme, more than 650 SMEs have benefitted last year.
Injection of funds and aid into initiatives that upskill workers in Singapore like the Tech Skills Accelerator (TeSA), SkillsFuture Mid-Career Enhanced Subsidy, and the SkillsFuture Earn and Learn Programme, among others.
Last year also saw more support for helping elderly workers re-enter the workforce.
This year, the Budget casts the spotlight once more on helping SMEs upskill their workers and go digital.
There will also be more information on the Merdeka Generation Package, boosting cybersecurity in Singapore, and a monetary handout from the republic’s overall budget surplus from FY2018 (Bicentennial Bonus), among others.
A 4th Shift And 3 Key Thrusts
On top of the three shifts mentioned above, Mr Heng highlighted one more shift: the decline in support for globalisation.
“Some countries are benefitting from globalisation, while others are questioning its value,” he said.
Noting that Southeast Asia (SEA) has given birth to a number of ‘unicorns’ – companies with valuations in excess of US$1 billion – he shared that improving Singapore’s bilateral relations with our regional neighbours are growing in importance.
Mr Heng stressed that we need to tackle longer-term challenges on home ground such as ageing and economic transformation, among others.
The Government wants Singapore to be a Global-Asia node of technology, innovation, and enterprise.
Changing global and domestic landscape presents both challenges and opportunities so Singapore must always respond to challenges with grit and determination.
“Like Sang Kancil, the small but quick-witted mousedeer, Singapore can make its way in the world,” said Mr Heng, adding that Singapore has turned its size and location into an advantage.
Besides keeping Singapore safe and secure and building a caring and inclusive society, there is a need to keep our economy vibrant, and the Budget aims to achieve these goals in a responsible and fiscally sustainable way.
This year, Mr Heng introduced three new key thrusts to support industry transformation: building deep enterprise capabilities, building deep worker capabilities, and encouraging strong partnerships, within Singapore and across the world.
$100M More To Enable S’pore Startups
To build deep enterprise capabilities, Mr Heng said that startups can only thrive if they scale up and venture into new markets, and to do that, the Government will support them in three ways.
The first way is through providing customised assistance, as part of that move, Enterprise Singapore will launch a Scale-up SG Programme in partnership with the private and public sectors where high-growth firms will get guidance and tools to innovate, grow, and internationalise.
The Government will also launch a pilot Innovation Agents Programme for businesses to consult a pool of experts on opportunities to innovate and commercialise technology.
Next, Mr Heng said better financing options will be made available to startups.
Noting that firms can more effectively scale up if they have smart, patient capital that attracts investors, the Government has worked on improving access to private capital for startups and SMEs.
The Monetary Authority of Singapore (MAS) has simplified regulations for venture capital managers, and launched a US$5 billion private markets programme to encourage international private equity players to invest in local enterprises.
$400 million has been set aside since 2010 by the Government into the Co-Investment Programme (CIP) to invest in SMEs and private sector.
As part of the CIP, this year an additional $100 million will be set aside to establish the SME Co-Investment Fund III.
Mr Heng mentioned that loan financing remains an important source of funding for SMEs and highlighted banks that are meeting this need.
To make it simpler for companies, the Government will streamline existing financial schemes by Enterprise Singapore into one: Enterprise Financing Scheme.
This scheme will be launched in October 2019 and will focus support for companies that have been incorporated for less than five years, with the Government taking up to 70% of the risk for bank loans.
Furthering support for startups in their daily operations, the Government will extend the SME Working Capital Loan scheme for two more years, till March 2021, and this scheme will fall under the Enterprise Financing Scheme from October.
Finally, in supporting technology adoption, Mr Heng announced the expansion of the SMEs Go Digital Programme where the Accountancy, Sea Transport, and Construction fields will get their own industry digital plans.
To boost technology adoption among SMEs, the programme will have more cost-effective, pre-approved digital solutions.
Introduced in 2016 to help firms implement large-scale automation such as robotics and Internet of Things solutions, the Automation Support Package (ASP) will be extended for two years.
The Minister of Trade and Industry will provide more details at a later date.
Learning Is A Lifelong Journey
Supporting the growth and globalisation of local firms is as important as enabling people and building deep worker capabilities of Singaporeans.
Mr Heng promised that the Government will continue to invest in citizens across all stages of their lives.
On the Adopt and Grow initiatives and the national SkillsFuture movement, he reported that the percentage of residents in the labour force who participated in training grew from 35% in 2015, to 48% in 2018.
76,000 jobseekers found employment through the Adopt and Grow initiative between 2016 and 2018.
He then called for workers, firms, unions, and Trade Associations and Chambers (TACs) to be proactive in continuing this progress, and to embrace upskilling and reskilling.
With that, Mr Heng introduced new Professional Conversion Programmes (PCPs) relating to blockchain, embedded software, and prefabrication.
Implemented in 2007, over 100 PCPs have been launched, covering about 30 sectors.
The Career Support Programme, which was initially launched in 2015, will also be extended for two years, further providing wage support for employers to hire eligible Singaporeans who are mature and retrenched, or are in long-term unemployment.
Mr Heng noted that S Pass and Work Permit holders have increased by 34,000 (3%) every year for the past three years in the service sectors.
“Relying on more and more foreign workers is not the long-term solution – other economies are developing too,” he said seriously.
Our workforce should balance the inflow of foreign workers to local workers and that it is a must to “enhance the complementarities” of both workers.
The Government will adjust the workforce quota for the services sector by reducing the Dependency Ratio Ceiling (DRC) from 40% to 35% in the next two years.
The services sector S Pass Sub-DRC will also be reduced from 15% to 10% in the next two years.
Until FY2022, to help firms as they adjust to these changes, the Government will extend the 70% funding support level for the Enterprise Development Grant for three more years, up to 31 March 2023.
The Productivity Solutions Grant will be expanded to support up to 70% of the out-of-pocket cost for training.
Foreign Worker Levy rates increment for the Marine Shipyard and Process sectors will be deferred for another year as they have just begun showing signs of recovery.
On Partnerships, Research, And Entrepreneurship
Speaking on the third key thrust, building deeper partnerships within Singapore, and across the world, Mr Heng shared that our TACs have done well in helping our companies forge overseas partnerships.
The Government will bolster their support for TACs through the Local Enterprise and Association Development (LEAD) programme and will continue to develop global partnerships at Government-to-Government and Business-to-Business levels.
Free Trade Agreements (FTAs) that the Government has struck up with partner economies will be streamlined and digitised to raise efficiency.
On Singapore’s road to become the Global-Asia node of technology, innovation and enterprise, the Government will set aside $19 billion as part of our five-year Research, Innovation, and Enterprise 2020 plan.
During the speech, Mr Heng lauded Creative Technology’s CEO, Mr Sim Wong Hoo, on his entrepreneurial spirit; how he persevered and how his efforts paid off after 20 years and an investment of $100 million into R&D.
“Mr Sim’s story illustrates the point that to succeed, we must learn, we must walk the ground, and we must persist,” he said.
Like the transformation of our economy, we need talents to draw out the potential of the Government’s investment in research and innovation.
Students currently in Institutes of Higher Learning (IHLs) can participate in the Global Ready Talent Programme, a combination of the existing local and overseas internship programmes.
This programme will also have enhanced funding support for students interning overseas with Singapore firms and will support high-growth local firms to send Singaporeans with up to three years of working experience overseas.
The Minister of Trade and Industry and the Minister for Manpower will provide more details at the Committee of Supply (COS).
Confidence In Economic Transformation
As he wraps up this segment of his speech, Mr Heng stated that our economic transformation is going well and that we must persist with our efforts.
The Government expects to spend $4.6 billion over the next three years on the new and enhanced economic capability-building measures shared in Budget 2019, he said.
He elaborated that $3.6 billion will go towards helping workers to thrive amid industry and technological disruptions and $1 billion will go towards helping firms build deep enterprise capabilities.
“But let me emphasise that supporting companies and supporting workers are mutually reinforcing – stronger companies provide better jobs and pay for workers, and highly skilled workers make companies stronger. I am confident that we can continue to make good progress,” Mr Heng said.
“As long as we stay relevant and useful to the world, we can continue to create opportunities for our people and enterprises.”
This year, the government is getting more proactive in cultivating local businesses, so budding startups and aspiring entrepreneurs should take advantage of these benefits, wherever possible, to get a boost in growth or expansion.
To keep ourselves competitive and our skills relevant in this ever-changing landscape, Singaporean workers should also take the opportunity to upgrade whenever we can, more so now than ever.
Featured Image Credit: Gov.sg