DPM Gan to visit US for trade talks; new grant of up to S$100,000 for tariff-hit businesses
To be launched by October, the Business Adaptation Grant will help companies review and reconfigure their operations
[SINGAPORE] Deputy Prime Minister Gan Kim Yong will head to the United States later this month for trade talks, while his tariff task force prepares to launch a grant of up to S$100,000 for affected businesses.
DPM Gan intends to continue discussions on Singapore’s pharmaceutical exports with his counterparts in the Trump administration, he said at a media briefing on Thursday (Jul 10).
“We are discussing with the Department of Commerce on how we can evolve a system (and) practices that are practical and implementable, because pharmaceuticals has a very complex… and a very long supply chain,” he said, adding that he could not share more details.
In May, DPM Gan said talks were ongoing on whether Singapore’s pharma exports could be tariff-free, in exchange for the security of supply chains.
Singapore and the US have not discussed semiconductor exports yet, he said on Thursday, adding that this would likely be discussed only after pharma-related discussions are “settled”.
On his trip, DPM Gan also plans to meet business representatives and academics, to get “a better understanding of the US concerns, priorities and interests, and to explore opportunities that we can work together to strengthen the bilateral relationship”.
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At Thursday’s briefing, the Singapore Economic Resilience Taskforce (Sert) – chaired by DPM Gan – gave updates on efforts, including fresh graduates’ employment outlook and the new grant for businesses, to be launched by October.
DPM Gan, who is also minister for trade and industry, expects Singapore’s growth to slow in the second half of the year.
Growth is “likely to hold up relatively well” in the first half, partly as some businesses took advantage of the 90-day pause in reciprocal tariffs to front-load exports to the US, he said.
“However, given the expectation of higher tariffs going forward, as well as the diminishing front-loading effect, we will likely see slower economic growth over the next six to 12 months.”
Adaptation grant for affected businesses
Amid the new tariff environment, the upcoming Business Adaptation Grant will help businesses review their existing overseas footprint over a period of two years, said Manpower Minister Tan See Leng, who is also part of the task force.
The grant is meant, in large part, for advisory services, he noted. “And subsequently, if some of the moves are more permanent, to eventually help facilitate that diversification – whether it is in supply chain (or) logistics,” he said.
The grant is for two types of enterprises: those that export goods or have operations overseas, and are affected by tariffs; and those with local or overseas manufacturing operations.
For the first group, the grant will support advisory services in three areas: free trade agreements and trade compliance; legal and contracts; as well as supply chain optimisation and market diversification.
For the second group, the grant will cover costs of reconfiguring supply chains, such as those related to logistics or holding inventory.
The grant will provide co-funding, capped at S$100,000. Small and medium-sized enterprises (SMEs) will get a higher proportion of co-funding than larger companies.
For SMEs, “we will be more generous in terms of allocation of the grant”, he said, noting that these smaller firms account for about two-thirds of employment.
The grant’s two-year window provides “some form of assurance” to businesses that it can cover the duration of negotiations, even if these are protracted, he added.
DPM Gan noted that Singapore is a top investor in many regional countries and is a major investor in China, which is now facing significant headwinds.
“We can foresee that some of the (Singapore) companies in China may have to think about how they reconfigure their supply chain, whether in a practical way or a compliant way, to be able to be more competitive,” he said.
As these are investments by Singapore companies, it is important to make sure they continue to survive and do well, he added.
The grant is based on feedback and suggestions from the government’s tripartite partners, Dr Tan noted.
Minister for Digital Development and Information Josephine Teo, a fellow task force member, said Sert has engaged very widely – with over 3,000 touch points – including business leaders, union leaders, workers and fresh graduates.
“These engagements have been very useful because Sert does not want to rely only on what economic indicators are telling us,” she said, adding that they are “almost always a rear view mirror”.
She noted that there are three main types of responses from businesses. Some are monitoring the situation, some are deferring major investment decisions, and others are re-evaluating their business plans and product mix. Some companies have a combination of these responses.
“Companies in outward-oriented sectors feel the impact more imminently and their plans, therefore, will be much more likely to have to be adjusted sooner rather than later,” she said.
Singapore Business Federation (SBF) chairman Teo Siong Seng, also a task force member, said its members, especially those embedded in US and China supply chains, have given feedback of “significant disruption” since US tariffs were imposed.
“Affected companies report deferral in future orders, order cancellations and increased costs that render certain exports unviable,” he said.
Conducting market diversifications and reconfiguring supply chains have become a need for businesses – a concern that the SBF has raised to Sert.
“SBF is very heartened to see that the government has taken swift and decisive action in response to the needs of the business community,” he said.
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