Not all SMEs may benefit from Budget 2025’s business support measures: companies

WHILE Budget 2025 features many business support measures, most seem geared towards larger enterprises, several small and medium-sized enterprises (SMEs) told The Business Times.

Increased support for mergers and acquisitions (M&As), for instance, would not be that relevant, said Andrew Tan, owner of furniture store atomi.

He said: “Realistically, how many brands can acquire other brands? In any case, we’re more likely the target to be acquired.”

Brian Stampe, chief operating officer of food and beverage (F&B) group Commonwealth Concepts, said that, apart from training support, there did not seem to be enough incentives for smaller firms.

What does help

He conceded that Budget 2025’s support for training is particularly useful for F&B businesses, given the industry’s persistent labour crunch: “We are already balancing slowing demand and rising costs; at least now, we have more support to send more of our workforce for training and to tap these grants.”

The existing SkillsFuture Enterprise Credit, for instance, is being redesigned to be immediately accessible, instead of operating on its current reimbursement model.

Edy Tan, the chief executive officer of Chye Thiam Maintenance, also welcomed the enhanced training subsidies, noting the ongoing “human capital challenge”.

Other SMEs welcomed the extension of the enhanced cap for the Market Readiness Assistance grant, which defrays certain internationalisation costs. Also extended were schemes with double tax deductions for qualifying market expansion and investment development expenses; and M&A-related tax allowances and deductions.

With these moves, the government sends a “positive signal” to SMEs to go abroad – crucial given Singapore’s limited market, said Ang Khim Wee, head of business development at Lim Kee Food Manufacturing.

“It’s either you look outside, or you can forget about surviving,” he said. The food manufacturer recently entered the Philippines and aims to go to the US.

Helping consumers help SMEs

Although some SMEs say that Budget 2025 is geared towards individuals, some of these social measures should still help businesses – by encouraging consumption.

This year’s handouts include S$800 in Community Development Council (CDC) Vouchers to citizen households, as well as SG60 Vouchers of S$600 for citizens aged 21 to 59, and S$800 for those 60 and older.

These vouchers can only be used at participating supermarkets and heartland stores – thus potentially boosting their sales.

In a report, BofA Global Research economists noted that the use of vouchers “marks a shift from the cash handouts of the past – perhaps aimed at raising fiscal multipliers and reducing leakages” from overseas spending, for example.

The Singapore Retailers Association expects the vouchers to boost domestic retail sales, especially in the heartlands. It said in a statement on Tuesday (Feb 18) night that these vouchers “address the industry’s concerns of shopper pilferage to Johor Bahru (JB) as a result of the JB-Singapore Rapid Transit System link”.

Similarly, the S$100 SG Culture Pass credits – for use in local arts and heritage activities – will trickle down, said David Toh, founder of events solutions provider The Ebenex Group.

“It’s a very good stimulus for our local arts and culture industry. The pass will entice more people to attend more events, which would, we hope, give event organisers the confidence to put on more shows,” he said.

Yet some SMEs are still left out. Eyewear chain Nanyang Optical, which has outlets in malls, has not been able to reap the benefit of CDC vouchers.

Managing director Bernard Yang hopes the government can tweak the voucher rules to let them be spent on SMEs, regardless of location.

“I do see help extended to the people, but in terms of (businesses), there could have been more done,” he added, suggesting that Budget 2025 could have included rental rebates.

Tan sees atomi as part of a “sandwich class” of SMEs that are outside the heartlands, but have yet remained small. “Smaller retailers like us in shopping malls are neglected to a certain extent, especially when it comes to mid- to long-term transformation initiatives.”

And as atomi sells furniture, it will not benefit from new LifeSG credits for large families either, because these credits can be used only for groceries, utilities, pharmacy items and transport.

Bigger players benefit

Similar to last year, Budget 2025 included a corporate tax rebate of 50 per cent, capped at S$40,000. Even if non-profitable, active companies will get a minimum cash grant of S$2,000 if they had at least one local employee in 2024.

Kiztopia deputy chief executive and chief financial officer Danny Chan expects this rebate to largely relieve the tax burden on the children’s indoor playground in the upcoming financial year, which is “a substantial amount in terms of savings”.

But Wei Chan, managing director of heartland bakery The Pine Garden, said the rebate would be “limited” for smaller businesses such as his.

atomi’s Tan, referring to the new Enterprise Compute Initiative of up to S$150 million to help eligible enterprises leverage artificial intelligence, asked: “Will this sum even be able to reach the likes of smaller businesses?”

What SMEs want instead

Notably missing from Budget 2025 were foreign worker policy tweaks, noted Adeline Wong, general manager of magnetic product manufacturer Superworld Electronics.

With the semiconductor sector still facing a talent shortage, she had hoped for more access to foreign talent.

Beyond broad-based measures, PBA Group chief executive Derrick Yap had hoped for tailored support for high-growth industries such as semiconductors, photonics and medical technology. His precision motion solutions firm would have benefited from grants, credits or other strategic financial support, he suggested.

And even as the government aims to attract multinationals, it could give local SMEs more help to set up at home, said Wong.

She suggested rebates for utilities, manpower and land acquisition. The company recently set up a manufacturing plant in Johor.

Similarly, atomi’s Tan wanted more support for local companies to sharpen their competitive edge at home, in areas such as innovation or intellectual property development.

This would put them in a better position to go abroad, he added. “If you don’t have a strong local market, how can you compete overseas? You need to have a core local base before you’re ready to head out.”