Ahead of Singapore Budget 2020: A recap for SMBs

Singapore businesses have a wishlist for Budget 2020 that Finance Minister Heng Swee Keat will unveil in February. Topping the list is tax relief. Here is a recap of what was announced a year ago.

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Ahead of Singapore Budget 2020: A recap for SMBs

Business benefits-at-a-glance

  • An AI-enhanced platform, Business sans Borders, will allow SMBs to digitally connect with domestic and overseas business partners.
  • Announced in 2019 SMEs Go Digital was expanded in 2019 giving SMBs access to pre-approved digital solutions.
  • Scale up SG gives SMBs the opportunity to learn from experts to develop and grow their leadership teams.
  • All financing schemes were integrated into the Enterprise Financing Scheme, meaning the government will cover up to 70% of the risk of bank loans for approved businesses.
  • The foreign work quota was lowered to 38% of business’ workforce. 

3 February 2020 | SMB, Digitalisation | 5 min read

Around 55% of businesses in Singapore placed corporate and income tax rate cuts, and rebates allowing them to upskill staff at the top of their wishlists for Budget 2020. That is according to a survey by the Singapore Business Federation (SBF), which polled more than 1,000 large companies and SMBs.

Among their wishes were easier access to government resources and incentives for business expansion. The survey also found that 78% of SMBs had an overseas presence, up from 68% in 2018.

“It is encouraging that our SMBs are extending their global footprints more aggressively despite the economic uncertainty that shrouded 2019,” said SBF chairman Teo Siong Seng.

Here were some highlights of Budget 2019 for SMBs:

New business data and solutions hub

It was announced that The Monetary Authority of Singapore and Info-communications Media Development Authority will jointly pilot Business sans Borders, an artificial intelligence-enabled platform for Fintech companies and SMBs.

The platform allows SMBs to access domestic and cross-border business opportunities, and connect digitally with one another.

The agencies completed a nine-month Proof-of-Concept last November. They will proceed with the pilot in the first half of 2020.

SMEs Go Digital expands

Digitalisation can be a long journey for many SMBs. Still, the adoption of digital tools can raise a firm's productivity by an average of 16%, a 2019 study by the Ministry of Trade and Industry found.

SMEs Go Digital, which was first announced at Budget 2017, was expanded last year. Through the programme, SMBs can adopt pre-approved digital solutions and raise their digital capabilities.

Finance Minister Heng Swee Keat said the number of pre-approved digital solutions under the programme will be raised.

In addition, accountancy, sea transport and construction sectors will get their own industry digital plans. SMBs can use these as a guide for their own digital journeys.

Start Digital was launched under the SMEs Go Digital programme and several banks and ICT providers now offer subscription discounts off digital solutions in the areas of accounting, cybersecurity, digital marketing, digital transactions and HR management. 

The Productivity Solutions Grant now also covers cybersecurity solutions to help SMBs mitigate potential cyber threats. This grant allows SMBs to get up to 70% subsidies on selected cybersecurity solutions from pre-approved vendors.

Scale-up SG takes off

Enterprise Singapore runs the 2.5 year programme that was introduced at Budget 2019. The Scale Up SG programme encourages peer learning, partnerships and the development of leadership teams.

Businesses can also tap on the agency's expertise and networks to further their growth objectives.

The first run of the programme had 25 participants. The second run kicked off last December with 18 local businesses, including Ademco Security Group and Tai Sin Electric.

Financing schemes join up

Mr Heng announced that all financing schemes by Enterprise Singapore will be integrated by October 2019, into the Enterprise Financing Scheme.

Under the scheme, the government will bear as much as 70% of the risk of bank loans to businesses that have been incorporated for less than five years, up from 50%.

Businesses must have at least 30% of local equity held directly or indirectly by Singaporeans or Singapore permanent residents to qualify.

Lower foreign worker quota

The lower quota that applies to the service sector was implemented in January.

Foreign workers can only make up 38% of a business' workforce, down from 40%. The quota will fall to 35% next January.

Meanwhile, S Pass workers – foreigners who earn at least $2,300 a month – can only account for 13% of a business' workforce, from the previous 15%. The figure will fall to 10% in January 2021.

To help small businesses adjust, Mr Heng said the 70% cap for funding under the Enterprise Development Grant will be extended for three more years.

Eligible businesses can also claim up to 70% of out-of-pocket training expenses, capped at $10,000, under the Productivity Solutions Grant.

For the full transcript of the Singapore Budget 2019 speech, please visit the Singapore Budget website.

We will be publishing updates on Budget 2020 after it is delivered on February 18.

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