Go forth and multiply

BUSINESSES of all sizes should be rejoicing over the goodies distributed in this year's Budget announcement. Particularly, the measures targeted at helping Singapore companies internationalise send a clear message that local businesses need to look beyond the domestic market in order to achieve breakthroughs in growth.

Foreign revenue generated by the top 1,000 companies in Singapore by revenue (Singapore 1000) has increased steadily from S$149.9 billion in 2011 to S$223.9 billion in 2014. This upward trend is similarly seen in the SMEs. The top 50 SMEs ranked as having the highest overseas turnover derived revenue of S$1.78 billion in 2014, a 29 per cent increase from S$1.38 billion in 2011.

With the expected formation of the Asean Economic Community (AEC) by the end of 2015, it will not be a surprise that international revenues will continue along the upward trend.

To further encourage internationalisation by Singapore companies big and small, three measures, costing the government S$240 million in total, were introduced.

Firstly, there would be an increase in support to 70 per cent of grants awarded by IE Singapore. Secondly, double tax deductions will be enhanced to cover salaries paid to Singaporeans working overseas. Lastly, a new tax incentive, the International Growth Scheme with concessionary tax rates on incremental income, will be accorded to qualifying companies that embark on a journey to internationalise.

It remains to be seen the conditions that need to be met by companies to enjoy these benefits. There was also no sunset clause announced by the finance minister on the International Growth Scheme. As with all other tax incentives, we expect that there will be a sunset clause, which we hope will take into consideration that the internationalisation of a company is not a short-term effort that reaps rewards immediately, but one that will likely yield results and returns only after a period of time.

Recognising that mergers and acquisitions are possibly a faster strategy by companies to acquire scale and forge alliances both locally and internationally, the current Mergers and Acquisition (M&A) allowance will be extended for another five years and will be enhanced to 25 per cent of the value of a qualifying investment, up from the 5 per cent threshold previously allowed.

The maximum tax deduction of S$5 million is unchanged though. The 50 per cent shareholding condition will also be relaxed to allow for the M&A allowance to be accorded so long as there is an acquisition of at least 20 per cent shareholding.

The reduction in the shareholding threshold is a welcomed enhancement on two fronts. It makes the now increased M&A allowance more accessible to companies where a less than 50 per cent stake is acquired. The enhancement also makes the M&A allowance more accessible to SMEs in particular, making the adoption of M&A as a strategy to internationalise more attractive.

The changes to the M&A Scheme are aligned with the clear theme in this year's Budget on assisting SMEs and making their access to fiscal assistance for expansion easier.

But this year's Budget is not just about focusing on companies - in fact, it is one of the most holistic, touching on every aspect of the economy and life, from overseas growth to continued education through the years to social support for various segments of the society. It is a special SG50 Budget indeed.

As Education Minister Heng Swee Keat, who is also chairman of the SG50 Steering Committee, said: "SG50 is about celebrating the enduring values that we share as Singaporeans, values that undergird the Singapore Spirit . . . reflecting on how far we've come as a nation in the last 50 years, celebrating where we are now, and committing to an even better next 50 years."

In the same light, as much as Budget 2015 is about reflecting on our achievements to date as a nation and redistributing the fruits of our nation's labour back to our people, it is also about propelling this little red dot to greater heights and further beyond the shores of Singapore.

It is a truly a progress plan that underpins Singapore's readiness for her next 50 years of successful nation-building.

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