Entrepreneurs, startups as well as small and medium enterprises (SMEs) can look forward to a slew of incentives and aid under Singapore’s national Budget 2016, which was tabled by Finance Minister Heng Swee Keat (pix) in Parliament on Thursday.
These incentives is aimed to help the SMEs to succeed in a more competitive environment while contending with tighter labour constraints.
The new budget announced that A new SME Working Capital Loan scheme will be introduced for loans of up to S$300,000 per company.
This measure, said Mr Heng, will support viable SMEs that may have cash flow concerns or wish to continue growing their business.
The government will co-share 50 per cent of the default risk of such loans with participating financial institutions, to encourage lending to Singapore’s SMEs.
Mr Heng said the new scheme will be available for three years, adding that this could catalyse more than S$2 billion worth of loans over this period.
In addition, the Corporate Income Tax rebate will be raised from 30 per cent of tax payable to 50 per cent, with a cap of S$20,000 rebate each year for Year of Assessment 2016 and 2017.
The higher rebate, targeted at SMEs, is expected to cost the Government an additional S$180 million over two years. This brings the total support given to companies under the Corporate Income Tax rebate to close to S$1 billion over two years, Mr Heng said.
The Special Employment Credit (SEC) scheme, which subsidises the wages of older locals earning up to S$4,000 a month and was due to expire on Dec 31, will be extended to 2019. The scheme, however, will now only apply to workers who are 55 and above, instead of 50 and above.
The subsidy has also been reduced for workers below 65. Employers who hire workers aged 55 to 59 will now get tree per cent of these employees’ monthly wages, while those who hire workers between 60 and 64 will get five per cent. Those who hire workers 65 and above will get eight per cent – unchanged from the current subsidy – which will be bumped up to 11 per cent until the re-employment age is raised.
In his maiden Budget speech Mr Heng said the need to restructure is “urgent and critical”, pointing to how technological changes, especially in robotics and automation, are disrupting business models across all sectors.
Mr Heng added that while real wage increases over the past few years have benefited workers and households in Singapore, both businesses and workers will be “worse off” unless productivity improves in tandem.
Singapore is focusing on a new Industry Transformation Programme focusing more on tech adoption and partnership.
“There is no such thing as a sunset industry. There’s only sunset thinking.” – Minister Heng.
There will be a new business grants portal, slated to be launched end of this year. The new portal will make it easier for firms to apply for schemes. Firms of all sizes can go to this portal to find out which schemes apply to them.
“Firms will not need to go from agency to agency, to find out which grants are available to them,” said Mr Heng.
The government is also pushing for firms to automate their business processes. There will be a new support package which will fund up to 50 per cent of project automation cost if the project is approved. This is capped at S$1,000,000 per project. There’s also a 100 per cent investment allowance for automation equipment.
The government is also topping up the SME Mezzanine Growth Fund up from S$100m to S$150m to help SMEs scale up and internationalise. SPRING and IE Singapore tasked to help businesses access overseas markets. In 2016, IE Singapore expects to help 35,000-40,000 companies to venture overseas, up from 35,000 firms last year.
Government announced a S$450 million National Robotics Programme – S$450 million has been allocated to promote and scale up the robotics sector in Singapore. This is great news for startups in the robotics sector.
Government is also allocating up to S$4 billion in Research, Innovation and Enterprise (RIE) 2020 Plan for industry-research collaboration. There’s a top-up of S$1.5 billion to National Research Fund.
There will be a new initiative: “SG Innovate” which will match budding entrepreneurs to mentors.
“The startup scene is now more vibrant than ever before,” noted Mr Heng. However, no details on SG Innovate is available yet.