2020 has hurt many businesses financially. While government help was immediately forthcoming, spending is set to be trimmed in Budget 2021.
This Budget will be “a lot more targeted and differentiated than before,” Liang Eng Hwa, chairman of the Government Parliamentary Committee for Finance, Trade and Industry believes.
“We will still have to help, but the numbers will taper off along the way,” he told a roundtable in January.
What can be done to ensure the long-term viability of Singapore SMEs, and keep them financially afloat in uncertain times? Experts and observers have some ideas:
Target specific industries with funds and loans
The Jobs Support Scheme was launched during the pandemic to help businesses retain local employees. Badly-hit sectors will receive more support, and the scheme covers wages paid up to March 2021.
Deloitte has proposed that the scheme be extended to specific sectors, such as aerospace, aviation and tourism for another six months, at a lowered scale.
“These industries have been hit hard by the COVID-19 pandemic and we must continue to help them preserve their core capabilities,” said Liew Li Mei, tax partner at Deloitte Singapore. “They are key sectors that have a multiplier effect on Singapore’s overall economy.”
The Singapore Business Federation (SBF) has also asked for the Temporary Bridging Loan Programme to be extended from September 2021 to March 2022. SMEs can borrow up to $5 million under the scheme, at an interest rate of 5% per annum.
Improve grant application processes and reduce red tape
SMEs can learn about and apply for grants on the Business Grants Portal. Although having a one-stop portal is ideal, some businesses have yet to come on board.
Cutting red tape has also become more urgent with the pandemic, said Senior Minister of State for Foreign Affairs and Transport Chee Hong Tat.
It can be done by removing redundant steps, overlapping licences, and making good use of technology, he told an online discussion last July.
Improvements on either front in Budget 2021 will be closely watched, as this could result in cost savings on the part of SMEs.
Specific tax relief for SMEs
There are several tax relief schemes that SMEs can already tap on. This includes a Corporate Income Tax rebate for the Year of Assessment 2020. The rebate is for 25% of payable tax, capped at $15,000 per company.
The Government has also boosted the Property Tax Rebate. In addition, businesses were automatically given a deferment of their income tax payments last year.
Only time will tell if a similar deferment will be offered this year, or if SME-specific tax reliefs will be mounted.
Speed up public sector’s payments
Timely payments can ensure that a business stays sustainable in difficult times. This is why the SBF has asked the Government to pay its suppliers in 14 days, instead of the current 30.
For contracts below $100,000, it is asking for payment to be made within five working days, if the service or product is satisfactory. In the case of SMEs, payments may need to be directly channelled to wages and bills.
Shorter payment periods will give business owners the resources – and peace of mind – to ride out the storm.
Extend foreign worker levy rebates to more sectors
Last August, the Ministry of Manpower set aside $320 million for foreign worker levy rebates.
The rebates, which will last until December, were for firms in the construction, marine shipyard and process sectors.
The sectors were heavily affected by the pandemic. But businesses in other sectors need help too and the rebates should be offered to them, SBF said.
SMEs in sectors such as food and beverage, hospitality and logistics services are experiencing difficulties around manpower and cash flow, according to the group.
Government support has been vital for the survival of many Singapore’s small businesses. While economic conditions are improving financial help is still important to ensure a thriving SME sector.
