Government schemes have ‘something for everyone’ to help SMEs transform and grow

IN THESE tough economic times, Singapore’s small and medium-sized enterprises (SMEs) in Singapore can tap various government support schemes to ease their burdens and boost growth, said panellists at a post-Budget webinar.

“We are not expecting each of the 260,000 SMEs to apply for everything,” said Minister of State for Trade and Industry Low Yen Ling. “But there must be something for everyone.”

With the theme of “Transforming for growth against global headwinds”, the roundtable was hosted by The Business Times and presented by global cloud accounting platform Xero Asia.

Panellist Koren Wines, managing director of Xero Asia said: “SMEs bear the brunt of so many stressors.”

These include cash flow challenges, she added. Based on Xero’s research, 83 per cent of SMEs reported having cash flow issues in the last 12 months.

To tackle this, some SME bosses may choose not to draw a salary, dig into their personal savings, or even sell personal assets, said Wines.

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Others may pass on costs to consumers, but this is not a silver bullet, she added. “It can push you into another price bracket, which limits your market.”

Low acknowledged that global volatility and supply chain challenges may cause uncertainties in demand and difficult cash flow situations for SMEs. This is where this Budget’s S$1.3 billion Enterprise Support Package comes in, she said.

It includes a 50 per cent income tax rebate capped at S$40,000, which perhaps “doesn’t sound very sexy” but is actually quite substantial, she said. Companies that are too small or unprofitable do not pay taxes, and thus do not benefit from this, will get a cash payout of S$2,000 as long as they hire at least one local.

This tool in particular is meant to be broad-based, benefitting as many SMEs as possible, she said.

Wines agreed that these rebates are “on the right track”, as businesses may eventually be in the black at the end of a financial year, but may have faced cash flow difficulties in the meantime.

The Budget package also extends the SkillsFuture Enterprise Credit, which will ease cash flow challenges, as SMEs need not foot the full cost of training.

Low raised the example of events company AUX Media, which used the credit to send staff for human resource training and drone piloting courses. The latter resulted in improved photo-taking and videographing abilities, adding value for their customers.

Enhancements to the Enterprise Financing Scheme – such as a higher maximum working capital loan quantum – will also increase banks’ willingness to help SMEs with their financing needs, said Low.

Labour woes

In addition to the rising cost of doing business, another challenge for SMEs is the tight labour market, said Vicky Hwang, chief executive of food and beverage operator Chyau Fwu Wine & Spirits.

Her company operates Atlas, an award-winning bar in Parkview Square. The bar used to operate six days a week, but now only opens for five, due to a lack of manpower after workers left the industry during the pandemic.

“We have the demand there. So it is frustrating and very difficult for our bottom line,” she said.

Low agreed: “Manpower is quite the elephant in the room, for a lot of SMEs.”

Singapore remains open to global talent, she said, but the approach to foreign manpower must be calibrated to ensure that such workers are of quality and can be deployed in productive areas.

She emphasised that companies must also learn to do more with less manpower, through digitalisation and job redesign.

For instance, local restaurant chain Dian Xiao Er applied for the Enterprise Development Grant to transform their central kitchen – reducing its reliance on foreign manpower, shortening preparation time and even preventing injuries.

The improved central kitchen has led to savings of S$60,000 per month in operating expenses, she said.

“Not to say that we can deploy robots to fetch the wine at Atlas,” the minister laughed. Still, digital tools can be used in back-of-house or middle-office operations to make them more effective and productive, she said.

Seeking help

Another helpful source of support, said Hwang, is the Progressive Wage Credit Scheme. This co-funds wage increases for lower-wage workers, thus “putting money back into our accounts” to help with cashflow woes, she said. “Every dollar really counts when you’re in an SME environment.”

For this scheme, the government has increased its co-funding share to 50 per cent in this year’s Budget, Low noted.

Asked whether enough businesses are tapping the variety of initiatives available, Low replied that Singapore’s 11 SME Centres served more than 30,000 SMEs last year, but the government can always do more to raise awareness of the avenues for help. These include the online GoBusiness portal and its e-advisor function.

As for the question of what SMEs should brace themselves for, Wines said: “We all wish that costs would go down, but they won’t.”

Every SME, whether it is doing well or not, should continue to evolve so as not to be caught off guard when the environment changes, she added. “Continue to make deliberate decisions, protect yourself all the time. Even when things are good, be strategic.”

Hwang said SMEs should hold true to their brands, shore up their existing customer bases, and create loyalty. “Look at taking initiatives that are not for short-term gains, but to ensure the longevity of your business and your customers.”