Budget 2022: Local enterprise measures will help companies as costs rise, observers say

THE government's initiatives to strengthen the local enterprise ecosystem will help to boost the global competitiveness of small and medium-sized enterprises (SMEs), as well as large local enterprises (LLEs) in particular, industry observers said, in what they deemed as a "timely" and "targeted" roll-out.

This is because companies are set to face an increasingly challenging operating environment with higher business costs, as a result of tighter labour market conditions and supply chain disruptions, they told The Business Times.

In his Budget 2022 speech on Friday (Feb 18), Finance Minister Lawrence Wong announced the launch of a suite of measures to support Singapore's enterprise ecosystem.

These include 2 new programmes - the Singapore Global Enterprises initiative for promising LLEs, which will provide them with customised assistance in areas such as innovation, internationalisation and fostering of partnerships with other firms; and the Singapore Global Executive Programme, which will help companies with talent development through industry and overseas attachments, mentorships and peer support networks.

An additional S$600 million will also be set aside over the next 4 years under the Productivity Solutions Grant (PSG) for SMEs. The S$600 million will be used to support more than 100,000 productivity projects over the period, Wong said.

Dr Wilson Chew, who leads the strategy team in PwC's entrepreneurial and private clients practice, said the launch of the Singapore Global Enterprises initiative comes at a "perfect" timing for LLEs, as markets across the world gradually open and the Covid-19 pandemic stabilises.

In his view, to address rising costs, companies will need to embark on capability development, build innovation, find differentiation, and expand to markets they can scale in.

"The Singapore Global Enterprises initiative will help them to secure a stronger place with their customers by jointly innovating, and in so doing, seal stronger partnerships for growth and scale both on the supply side as well as the demand side," Dr Chew said.

Kurt Wee, president of the Association of Small and Medium Enterprises, noted a lack of "meaningful" packages for LLEs in the last 2 years, a group he feels has been excluded from some of the substantial support programmes targeted at SMEs or micro enterprises.

"As an LLE, you find that the burden you face is multifold that of an SME. From that perspective, some LLEs might have hoped for a package that can help them with their costs and losses and unfortunately, that part is still missing, especially as we enter into a more costly business environment," he said.

While he acknowledged the government's continued efforts to support digitalisation and overseas market expansion across companies, he said more can still be done for existing LLEs, considering their substantial headcount and infrastructure costs.

Commenting on the launch of the Singapore Global Executive Programme, Chan Wai Fook, tax services partner at Ernst & Young Solutions LLP, said the government was adopting a more targeted approach by focusing on talent development, a key area that many companies, especially SMEs, face a "handicap" in.

"With the Singapore Global Executive Programme, it completes a jigsaw puzzle for business enterprises in strengthening their capabilities. Developing future business leaders will go a long way in shaping the overall competitiveness of Singapore enterprises," Chan said.

In addition, the government announced that initiatives under the Enterprise Financing Scheme will be enhanced to support businesses with their financing needs.

The M&A loan programme will be expanded to include domestic M&A activities from Apr 1 this year to Mar 31, 2026.

LLEs seeking to deepen their footprint in the region would welcome the expansion of the M&A loan programme, as this will allow them to "augment their speed to market", Dr Chew observed.

"An expedient way to grow is through M&A with synergistic companies, which can increase economies of scale and shorten the learning curve in new markets," he said.

In addition to extending the enhanced Trade Loan, the government will also maintain the enhanced 70 per cent risk-share under the loan for enterprises venturing into more nascent markets like Bangladesh and Brazil, in a bid to encourage them to explore untapped opportunities.

"To this end, trade financing will also support post-M&A trade activities. This will certainly allow our enterprises to move their products deeper and further into their chosen markets swiftly," Dr Chew added.

READ MORE:

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