Singapore Budget 2020: What SMBs need to know

19 February 2020 | SMB | 10 min read

As Mr Heng noted, Singapore’s economy grew by a modest 0.7% in 2019 − the weakest growth since the 2008 Financial Crisis.

After reviewing revenue and expenditure projections, he announced that the GST rate will remain at 7%, with no increase taking effect in 2021. On the whole, an overall budget deficit of $10.9 billion or 2.1% of GDP is to be expected this year.

Given the outbreak of COVID-19, Mr Heng also acknowledged current concerns over businesses and jobs. He explained that the government would help workers and enterprises weather economic uncertainties.

We’ve rounded up some key points from his speech that may impact SMBs:

Provision of Stabilisation and Support Package

Amounting to $4 billion, the Stabilisation and Support Package will help workers stay in their jobs and aid enterprises with cash flow.

Under the package, the Jobs Support Scheme will enable enterprises to retain their local workers. For every local worker in employment, 8% of the wages (up to a monthly cap of $3,600 for three months) will be offset. This payment will be given to employers by the end of July this year.

An enhanced Wage Credit Scheme will support wage increases for Singaporean employees. The monthly wage ceiling will be raised from $4,000 to $5,000, for qualifying wage increases given in 2019 and 2020.

A Corporate Income Tax Rebate will be granted for Year of Assessment 2020, at a rate of 25% of tax payable, capped at $15,000 per company. This rebate will benefit all tax-paying companies.

Several tax treatments under the corporate tax system will also be enhanced for one year. For example, enterprises will be given a faster write-down of their investments in plant and machinery, and renovation and refurbishment, incurred for Year of Assessment 2021.

The Enterprise Financing Scheme’s Working Capital Loan will be enhanced for one year, so enterprises can access working capital more easily. The maximum loan quantum will be raised from $300,000 to $600,000.

There will also be more support for tenants and lessees of government-managed properties, in the form of flexible rental payments. Specifically, those under JTC, HDB, SLA, STB, and SDC.

Support for sectors affected by COVID-19

Additionally, Mr Heng announced enhanced support under the Adapt and Grow initiative for sectors affected by COVID-19. Support will include redeployment programmes, and an extension of the re-skilling funding period from three months to a maximum of six months.

To help enterprises in the tourism sector, a Temporary Bridging Loan Programme will be introduced for a year, with a loan quantum of up to $1 million and interest rate capped at 5%. The government will take on 80% of the loan risk.

To support aviation sector enterprises, rental rebates will be given to shops and cargo agents at Changi Airport, as well as a 15% Property Tax Rebate for Changi Airport.

As for commercial establishments in the food services and retail business, NEA will provide a full month of rental waiver to stallholders in NEA-managed hawker centres and markets. A 15% Property Tax Rebate will also be given to qualifying commercial properties. Other Government agencies, like HDB, will provide half a month of rental waiver to its commercial tenants.

$8.3 Billion will be allocated over the next 3 years to enable the Transformation and Growth strategy. The 3 key thrusts of the strategy are:

1. Enabling stronger partnerships
2. Deepening enterprise capabilities
3. Developing our people

Launch of pilot Executive-in-Residence programme

Launched by Enterprise Singapore, the programme will fund more than 10 Trade Associations and Chambers (TACs) covering all sectors of the economy, helping them hire experienced executives and provide expert advice to enterprises in their respective industries.

Launch of Heartland Enterprise Upgrading Programme

Enterprise Singapore will launch the new programme to support Merchants’ Associations, so they can drive transformation of heartland SMBs.

Support for deep-tech startups

To catalyse investment into deep-tech startups, an additional $300 million will be set aside under the Startup SG Equity, giving deep-tech startups better access to capital, expertise and industry networks.

Enterprise Grow package

The package will support new and established SMBs, by helping them identify business needs, adopt pre-approved digital technologies, and take the first steps to enter new markets.

It includes the launch of the GoBusiness platform, a single touchpoint for enterprises to transact with the government digitally.

The SMEs Go Digital programme will be expanded as well. Industry Digital Plans will be implemented across all 23 ITM sectors, with enterprises enabled to access pre-approved digital solutions.

To help more enterprises enter new markets, funding support and coverage of the Market Readiness Assistance grant will be expanding.

Introduction of Enterprise Leadership for Transformation Programme

Enterprise Singapore will launch the programme to support business leaders of promising SMBs in achieving growth.

In tandem, the Enterprise Development Grant, which provides integrated support for enterprises to innovate, will expand its reach. It will support about 3,000 projects in FY 2020, an increase of around 10% from the number today.

New SkillsFuture Enterprise Credit

At $10,000 per enterprise, the SkillsFuture Enterprise Credit will benefit over 35,000 enterprises, mostly SMBs. Employers can use this enterprise credit to defray 90% of out-of-pocket costs of business transformation, job redesign and skills training.

Expanded Productivity Solutions Grant

Currently helping enterprises adopt pre-approved digital solutions and equipment, the expanded grant will include job redesign consultancy services.

More support for large anchor enterprises

Given that anchor enterprises are supported by many SMBs, more training will be provided for their sectors and value chain partners.  The aim is to partner up to 40 such anchor enterprises, benefitting 4,000 SMBs over the next five years.

Deepening workplace learning capabilities

To train workers, MOE launched the National Centre of Excellence for Workplace Learning in July 2018. The centre will be expanded to two more Institutes of Higher Learning (IHL) over the next few years, benefitting over 1,200 enterprises, especially SMBs.

Government funding will also be recalibrated towards training providers and courses with a stronger link to job and wage outcomes.

Supporting SMBs in hiring and retraining mid-career workers

A hiring incentive will be provided to employers hiring local jobseekers aged 40 and above, through a reskilling programme. For each eligible worker, the government will provide 20% salary support to the employer for six months, capped at $6,000 in total.

To improve access to reskilling programmes, a special SkillsFuture Credit top-up of $500 will be provided to every Singaporean aged 40 to 60 in 2020.

A group of volunteer Career Advisors will also be assembled, providing peer-level support and career guidance to local workers.

Senior Worker Support Package

To enable support of senior workers, the Senior Employment Credit will provide employers with wage offsets when Singaporean workers aged 55 and above are employed.

Additionally, a CPF Transition Offset will be given to employers, when employer CPF contribution rates go up in 2021.

The Senior Worker Early Adopter Grant will be introduced, supporting SMBs that raise their own Retirement and Re-employment ages ahead of the legislated changes.

The Part-Time Re-employment Grant will also encourage enterprises to formalise part-time re-employment provisions.

Foreign worker policy

To regulate the inflow of foreign workers, the government will reduce the S Pass sub-DRCs of the Construction, Marine Shipyard, and Process sectors from 20% to 15%.

Given economic uncertainties, the S-Pass sub-DRC for the Manufacturing sector will not be reduced at this point. However, Manufacturing companies are encouraged to recruit local skilled workers.

In light of current economic conditions, foreign worker levy rates for all sectors for 2020 will remain the same.

For the full transcript of the Singapore Budget 2020 speech, please visit the Singapore Budget website.