Budget 2024: SME schemes will drive sustainability but guidance, implementation ‘crucial’

• Energy Efficiency Grant expanded to manufacturing, construction, maritime as well as data centres and their users; new advanced tier
• Partnerships for Capability Transformation (PACT) to cover capability training, internationalisation and corporate venturing.
• Enterprise Financing Scheme - Green extended, expanded

IMPROVEMENTS to existing schemes will help small and medium-sized enterprises (SMEs) pursue sustainability and partner multinational enterprises (MNEs), said industry watchers.

But they noted that many SMEs may not be able to maximise the benefits – and guidance for those who do qualify remains important.

In the Budget speech on Friday (Feb 16), Finance Minister Lawrence Wong announced expansions to several existing SME schemes.

The Energy Efficiency Grant was initially only for food services, food manufacturing and retail. It will now be expanded to include companies in manufacturing, construction, maritime, as well as data centres and their users.

On top of the existing base tier with a S$30,000 cap per company, a new advanced tier will be introduced to support companies that wish to make larger investments to drive greater energy efficiency. Total support across both tiers is capped at S$350,000 per company. (*see amendment note)

Singapore Business Federation chief executive officer Kok Ping Soon noted that these newly included sectors are all significant energy consumers. As greener equipment is more widely adopted, its cost could come down – helping companies outside these sectors, he added.

Lee Swee Siong, vice-president for strategies and development at the Association of SMEs, said this will drive quicker adoption of sustainability measures, as energy cost savings will aid SMEs’ bottom lines.

But he noted that many SMEs are service providers and do not operate equipment, but might rent offices – so the grant might be even more beneficial if extended to commercial landlords.

The enhanced support level for the Enterprise Financing Scheme - Green will be extended for two years, and its scope will be expanded to help more SMEs adopt green solutions.

Besides going green, SMEs are encouraged to partner larger companies. The PACT scheme, which defrays the costs of collaborations between larger companies and SMEs, will now apply to more areas: capability training, internationalisation and corporate venturing.

However, the latter two areas involve “a lot of risks” for SMEs, said ASME’s Lee, adding that the exact mechanics of how support is given would be crucial.

Dr Faizal Bin Yahya, a senior research fellow at the Institute of Policy Studies, Lee Kuan Yew School of Public Policy, said that the scheme expansions are positive but their implementation is not straightforward.

Both the SMEs receiving grants and the agencies implementing them need time to acquire expertise, he added.

“No two sectors are alike, even companies in the same sector can have different business models,” he said. “It’s not that easy or straightforward, it takes time, resources and knowledge…It takes a certain level of commitment and resources, which some SMEs may lack.

“In the case of a green loan, there must be a clear strategy on the part of the SME, they must understand if they have the capabilities, if it supports the lifecycle of their business.” Working with consultants or other advisory bodies will be key for SMEs, he added.

Clarification note: The article has been edited for clarity to reflect the total cap on the EEG.