Budget 2025: Enhancements to internationalisation and M&A schemes will help local enterprises compete on a global scale

• Extensions to the enhanced grant cap for Market Readiness Assistance grant; Double Tax Deduction for Internationalisation scheme; Mergers & Acquisitions (M&A) scheme
• Maximum loan quantum under the Enterprise Financing Scheme (EFS) - Trade Loan raised to S$10 million; EFS - M&A Loan extended beyond equity acquisitions to support targeted asset acquisitions
• New S$150 million Enterprise Compute Initiative to help businesses leverage artificial intelligence

AMID trade disruptions and increasing global competition, enhancements to schemes related to internationalisation and mergers and acquisitions (M&As) will help enterprises scale up and remain globally competitive, say industry observers.

To help small and medium-sized enterprises (SMEs) expand into new markets, Finance Minister Lawrence Wong announced in his Budget speech on Tuesday (Feb 18) that the enhanced S$100,000 cap per new market under the Market Readiness Assistance (MRA) grant will be extended to Mar 31, 2026.

The grant helps companies defray the costs of overseas market promotion, business development and market set-up.

Meanwhile, the Double Tax Deduction for Internationalisation (DTDi) scheme – which allows businesses to claim a tax deduction of 200 per cent on qualifying market expansion and investment development expenses – will be extended till Dec 31, 2030.

Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore Business School, said: “The Singapore domestic economy is limited, and a rapid sustained boost is needed to propel companies to pursue investments and reach consumer markets, particularly those overseas.

“Global and regional competition is constantly heating up and there cannot be any slowdown in international business activities.”

Business displacements and reorientations will also give rise to more opportunities for companies to expand overseas, he noted, citing the example of the relocation of supply chains from, say, China to India or Vietnam.

Ang Yuit, president of the Association of Small and Medium Enterprises (Asme), said that the push for Singapore businesses to head abroad has become “stronger than ever before”, amid trade disruptions and more foreign competition in the domestic market.

But, he pointed out, many local players are too small to compete effectively on a global scale – which is where M&A as a growth strategy comes in.

To support companies to pursue inorganic growth opportunities, the finance minister announced the extension of the M&A scheme till Dec 31, 2030. The scheme allows a Singapore company that makes a qualifying acquisition of the ordinary shares of another company to claim an M&A allowance and tax deduction on transaction costs.

Both the DTDi and M&A schemes are ultimately “complementary”, said Daniel Ho, Deloitte Singapore’s tax and legal leader.

The two aim to support Singapore businesses to scale up amid global uncertainties, whether by growing through acquisitions or expanding to new markets, he noted. “The extension of these schemes sends a strong signal that the government will continue to support companies looking to venture out and expand overseas, in the hope that these companies can compete better and become more resilient.”

David Toh, leader for PwC Singapore’s entrepreneurial and private business practice, said that focused acquisition will bring “greater flexibility and agility” for SMEs looking to internationalise.

They can also manage risk more effectively by strategically acquiring assets “without committing to excessive financial exposure”, he added.

Two enhancements to the Enterprise Financing Scheme (EFS), which enables Singapore businesses to access financing more readily across all growth stages, were also introduced on Tuesday.

First, the maximum loan quantum under the scheme’s trade loan will be permanently raised from S$5 million to S$10 million, to support businesses’ increased trade-financing needs and internationalisation efforts.

Second, the scope of the scheme’s M&A loan will be enhanced beyond equity acquisitions to support targeted asset acquisitions from Apr 1, 2025, to Mar 31, 2030.

Helping SMEs leverage AI

Observers also lauded the launch of a new S$150 million Enterprise Compute Initiative, which aims to help businesses leverage artificial intelligence (AI) more effectively.

Under this, eligible enterprises will be partnered with major cloud service providers to access AI tools and computing power, as well as expert consultancy services.

Prof Loh noted that such an initiative is “even more critical” at this juncture, given AI’s rapid pace of development.

“Businesses will benefit from immediate assistance to leverage high technologies to maintain or even enhance their competitiveness,” he said.

Similarly, PwC’s Toh urged companies to develop AI capabilities to remain relevant and seize new markets against a backdrop of greater uncertainties and rising costs.

While Asme’s Ang sees the initiative as a step in the right direction, its success will ultimately boil down to the “nuts and bolts” of its execution – of which details are currently lacking.

This will depend on the scope of the AI projects the initiative intends to support, he said, noting that S$150 million is “not a lot to go around”, especially after taking consultancy fees into account.

“The question is whether the initiative can help enterprises, both big and small, level up proportionally.”