Budget 2019 gives businesses extra fuel to last the transformation journey

FINANCE Minister Heng Swee Keat started on a happy note, reminding us that this is Singapore's bicentennial year. This would be followed later in the speech by some initiatives for society to positively mark this year.

However, he next emphasised the global political and economic currents of change - the centre of economic gravity moving towards Asia, rapid advances in technology, ageing populations and even a backlash against globalisation in some quarters.

There is a strong seam of optimism in opportunity for Singapore if it can build on growing the economic importance of South-east Asia and the inherent strengths of Singapore policy, diversity and society. We can move forward with confidence, grit and determination.

Other macro themes stood out, in particular, those of security, defence and the need for expenditure on infrastructure. The minister prudently identified the distinction between financing long-term investment and paying for current expenditure.

As with prior Budgets, the target business beneficiaries of the budget measures are small and medium enterprises (SMEs) as they lack the financial muscle and ability to access resources compared to multinational corporations (MNCs).

SMEs are aware that they need to innovate, train their employees and embrace technology to stay relevant and grow. However, they have also voiced their concerns about the challenges they face, such as rising cost structures, obtaining financing, attracting and retaining talent, and getting expert advice to internationalise.

The measures announced in the Budget 2019 demonstrate that the government has taken the feedback into account. It has introduced new programmes and enhanced existing schemes to help businesses to deepen their capabilities to transform via these initiatives.

Embracing technology

Businesses understand the need to digitise. SMEs in particular wish to embrace technology in the early stages of the business as it will be more costly to do so when processes are entrenched. However, SMEs face inertia because of the high costs involved and uncertainty of success.

As SMEs employ 65 per cent of Singapore's working population, their success is critical to the health of the Singapore economy. Hence supporting SMEs on their digitisation journey has always been a key objective of the government.

Under Budget 2019, this has come in the form of an expanded number and range of pre-approved solutions under the SMEs Go Digital Programme, a two-year extension of the Automation Support Packages, and a new cross-border innovation platform for SMEs to digitally help them match with buyers and vendors on a global scale, to name a few. Government agencies are also going digital to enhance services to businesses. All these measures look to defray costs and increase efficiency in particular for SMEs.

Improving access to financing

Lack of financing is often a roadblock to upscaling and expansion. Compared to MNCs, SMEs face more difficulties attracting investors and obtaining loan financing given their lack of size and track record. They may also find it confusing to navigate the multitude of financing schemes offered by different government agencies.

To address this, Enterprise Financing Scheme, a single programme to be launched in October 2019 covering multiple aspects of funding requirements, will replace existing financing schemes. This simplification should be welcomed. SMEs will also be happy to note that the SME working capital loan scheme, which has been well-utilised, will be extended to March 2021. In addition, qualifying SMEs can tap into the Co-Investment Fund III to help fund efforts to upscale and internationalise.

Supporting talent

While it is important for firms to harness technology in their business operations, Finance Minister Heng also highlighted the need for individuals to adopt a lifelong-learning mindset. This is essential, given the need for an agile workforce equipped with the relevant skills to combat the changing economic landscape.

The government aims to give a leg-up to the people through new Professional Conversion Programmes. Foreign workforce measures hope to spur businesses to look to local talent in order to meet the dependency ratio ceiling.

The extension of the Career Support Programme should also encourage SMEs to employ qualified Singapore citizen PMETs by funding a portion of their salary costs for up to 18 months. These measures aim to help Singaporeans stay employed while helping SMEs to attract talent.

Encouraging entrepreneurial spirit and partnerships

Singapore has a vibrant startup ecosystem. As Mr Heng shared, there are more than 150 global venture capital funds, incubators and accelerators based in Singapore, and deals amount to US$4.2 billion per year.

The government wishes to continue this momentum and position Singapore as a startup hub to incubate entrepreneurial talent. This will in turn attract talent, funds and business opportunities for Singapore-based companies.

The Innovation Agents pilot programme and the Scale-up SG programme - a partnership by Enterprise Singapore, private and public sector partners - will enable startups to tap on a support system to facilitate growth and internationalisation.

Overall, the Budget views the big-picture challenges and opportunities while covering the necessary details of government policy to guide and take care of the nation. Transformation is a long-haul journey. Budget 2019 gives businesses the extra fuel to last the journey.