Budget 2019: Building a stronger, more united Singapore

BUDGET 2019 seeks to strengthen Singapore's positioning as we move into a different phase of globalisation. It leverages energy from emerging startups, high-growth local medium-size enterprises (what we at PwC Singapore call "fast growing medium enterprises") and local talent to propel the country to new heights. For Singapore's core enterprises, it supports their transformation through the ongoing Industry Transformation Roadmaps and strengthening of both domestic and global partnerships. At the same time, this Budget demonstrates the government's empathy with Singaporeans' bread-and-butter issues, especially in areas of health care and cost of living, while developing a more inclusive community.

Building on the foundation of previous budgets, it extends successful programmes such as the Small Medium Enterprise (SME) Go Digital programme and Automation Support Package, sharpens initiatives such as the Productivity Solutions Grant after industry feedback, and phases in measures such as tightening of foreign worker limits in the services sector to allow businesses time to adjust.

Possibly Heng Swee Keat's boldest Budget yet since he became Minister for Finance four years ago, Budget 2019 outlines Singapore's aspirations to be among the global best. It outlines the government's commitment to invest alongside the private sectorso that no willing and deserving Singapore enterprise (or Singaporean) should walk alone. It charts Singapore's desire to be the Global-Asia Node of Technology, Innovation and Enterprise.

Given limited resources, this Budget provides targeted support for potential champions. Local enterprises will get access to experienced industry experts on innovation and commercialisation opportunities through a pilot Innovation Agents Programme administered by Enterprise Singapore. More partnerships will be driven through efforts of the trade associations and chambers such as the Singapore Chinese Chamber of Commerce and Industry's Trade Association Hub. These fast- growing medium-size enterprises could then collaborate with other Singapore enterprises in their growth and internationalisation journeys.

Beyond the emerging champions, the government is looking to capitalise on the increased venture capital and startup activity in Singapore to identify the next wave of winners. Building on our success in the fintech arena, more startups, incubators, accelerators and investors will be gathered through events such as the Singapore Week of Innovation and Technology (SWITCH) and Singapore Fintech Festival, with the hope that this culture of innovation can permeate the Singapore economy.

Driving innovation remains a key focus. The government has already set aside S$19 billion as part of the five-year Research, Innovation and Enterprise 2020 plan. To strengthen this research & development (R&D) push, Budget 2019 announced centres of innovation in aquaculture and energy to translate R&D into deployable solutions in these strategic areas of importance.

TRANSITIONAL CHALLENGES

While Singapore enterprises are encouraged to transform, this Budget acknowledges transitional challenges for certain industries. For instance, the government has deferred the foreign worker levy rate hikes previously announced by a year for the marine shipyard and process sectors given global head winds.

From a financing point of view, an additional S$100 million will be set aside to fund SMEs that are ready to scale up. For SMEs looking to access bank financing, existing schemes will be streamlined into a single programme with extension of enhanced working capital support until 2021. To encourage further digitalisation measures, a pilot Digital Services Lab will be set up to address challenges in services sectors through collaboration with industry and research partners.

Ultimately, talent is key for Singapore's long-term growth. To remain relevant, Singapore has to be the gateway to the world for Asia; and "Asia 101" for the world. The Budget aims to future-ready young Singaporeans by consolidating local and overseas internships programmes into a Global Talent Ready Programme and funding more overseas job postings by high-growth Singapore firms, especially in the key markets of Asean, China and India. It however, remains up to them to embrace these opportunities and demonstrate the resilience required to excel in our fast-changing, new world. Punitive measures such as restructuring of diesel and carbon taxes, and the planned investments to address rising sea levels are some of the necessary measure to safeguard the environment and our infrastructure.

While supporting the young and emerging, the government has clearly signalled its commitment to all Singaporeans. For the Merdeka Generation (MG) between ages 60 to 69 today, S$6.1 billion has been set aside in a MG Fund to cover lifetime healthcare benefits; for parents with school-going children, there are Edusave top-ups; for lower-income Singaporeans, there are Goods and Services Tax (GST) cash vouchers and Workfare Bicentennial Bonuses announced; for income earners, a 50 per cent personal income tax rebate capped at S$200 will be available for the Year of Assessment 2019.

It is notable that while generous, Budget 2019 continues to work within government surpluses without a need to draw on past reserves. The planned GST hike of two percentage points between 2021 and 2025 is part of a gradual move to fund the expected increase in recurring social, defence and healthcare needs.

Mr Heng also said that Singapore's tax system will continue to be competitive and pro-growth with enhanced tax systems. We applaud the various announcements to promote investment in automation, development of intellectual property and to further improve the funds industry that will provide more capital for investment. This is in line with this government's prudent fiscal approach for a sustainable future.

Budget 2019 provides valuable platforms for potential winners while supporting Singapore enterprises and Singaporeans in their aspirations and day-to-day challenges so Singapore can be a "home for all". It positions our little red dot to continue shining on the global stage in the days ahead. Nonetheless, whether Singapore can collectively succeed will depend on whether we capitalise on these measures and the opportunities to come.