In February, Minister for Finance Lawrence Wong announced the Singapore Budget 2022. The announcement was timely, with significant changes announced for Singaporean businesses. GST hikes, carbon and income tax increases, and rising inflation were on the agenda for the island nation.

Despite these challenges, Singaporean SMBs remain positive about their outlook following a challenging couple of years. DBS conducted its SME Pulse Check Survey to gauge their reaction to the latest set of announcements by Minister Wong. Here are some of the top revelations from that survey.

GST hikes unlikely to cause major concern for SMBs

One of the most consequential announcements from the Budget speech involved increasing GST in two steps, raising the rate to 7% in January 2023 followed by another hike to 9% in January 2024. According to DBS’ Pulse Check Survey, 100% of medium businesses and 80% of small and micro businesses are confident in their ability to manage this cost increase. This confidence comes following a successful year of recovery for many businesses in 2021. Businesses are in a much more secure position financially compared to a year ago.

Support for SMBs set to continue for businesses still affected by the pandemic

SMBs have modernised their processes in the past couple of years due to the pandemic. In the recent Budget speech, Minister Wong announced support for SMBs to continue this innovation. The Advanced Digital Solutions scheme and the Grow Digital scheme will help SMBs adopt cutting edge technologies to engage with the digital economy. Businesses that continue to be affected by the pandemic will also receive support in the form of cash grants via the Jobs and Business Support package.

Labour and supply chain challenges are set to continue due to geopolitical strife

Geopolitical issues have caused some concern among business leaders. Supply chain and labour issues have been a major challenge for businesses throughout the pandemic and recovery has been inconsistent due to external challenges. This pain point is further entrenched with increases to the minimum salary for S Pass and Employment Pass holders.

Effective cost management is a major business priority this year

With rising costs impacting the bottom line, 85% of Singaporean SMBs say that managing cash flow will be a top priority this year. Cost drivers such as tax and interest rate hikes will have to be managed carefully in the coming months. Businesses must learn to manage their resources more effectively and any potential business disruption will have to be planned for. Systems that protect business continuity such as cybersecurity will also continue to be a big part of business plans in the near future.

Ultimately, 2022 will be a year of recovery for many businesses. SMBs are cautiously optimistic that profits will continue to grow after experiencing positive change in 2021. Despite cost drivers announced in the latest Budget announcement, SMBs are well poised to weather the storm and thrive this year.