You are here
Panel calls for third growth engine and broad-based support for SMEs
THE recommendations for Budget 2017 proposed by the Singapore Business Federation (SBF) fall into two main categories - developing globally competitive companies (GCCs) as a third engine of growth, and giving broad-based support to small and medium-sized enterprises (SMEs) so they can ride out this rough period.
The recommendations by the federation's SME Committee (SMEC) come on the back of an uncertain global outlook, slowing growth and increased pessimism among SMEs.
A survey commissioned by SBF, the results of which were released last week, has found that the economic climate worsened for 63 per cent of businesses last year; 48 per cent said they believe 2017 will be even worse.
SMEC chairman Lawrence Leow, who is also chairman and chief executive of Crescendas Group, called for the creation of a new growth engine among GCCs, driven by "technology, innovation and entrepreneurial talent". This growth engine will complement the twin engines of multinational corporations and government-linked corporations, which have powered the economy all these years.
He said: "We will need to create a business environment that is conducive for the development of globally competitive companies and provide the necessary support and resources to cultivate innovation and technology, two aspects of which are financing and asset protection."
The SMEC had a recommendation in this respect - the setting up of a private bourse for innovative companies to raise capital. Koh Tat Liang, assistant executive director of SBF, cited the example of the New Third Board in China, which has attracted many companies and investors.
It is hoped that the setting up of a successful private exchange would attract not only good companies and talent to Singapore, but also the necessary financial and funding support from accredited investors.
To develop local businesses, another recommendation was for agencies in charge of the respective Industry Transformation Maps to be assigned a target on the number of GCCs to be developed.
Another recommendation was to introduce incentives to attract innovative foreign companies to anchor in Singapore, on condition that they enter into joint ventures with local firms; the SMEC also proposed that entrepreneurs with innovative or disruptive technologies be granted the Entrepass to set up new businesses, also on condition that they enter into tie-ups with businesses here.
Aside from creating a new growth engine through GCCs, another lot of SMEC recommendations - 15 out of 21 - homed in on giving broad-based support to SMEs.
Among the items on businesses' wish list in this category were measures that will help them with manpower issues; these were top of the list at 72 per cent, followed by the wish for lower government compliance costs at 63 per cent.
In the area of helping SMEs manage costs, the SMEC suggested that the government hold back on any planned increase in the foreign worker levy across all sectors for 36 months. Another recommendation was for government landlords to give rental rebates on industrial, commercial and retail properties.
The SMEC also urged the government to review compliance, regulatory-related costs and requirements, starting with pilot sectors such as advanced manufacturing and food services.
Mr Koh added that expediting approvals would enhance ease of doing business in Singapore.
As more businesses struggle with financing needs, the SMEC proposed enhancing the existing Working Capital Loan by raising the loan cap beyond S$300,000 and increasing the risk quantum co-shared - currently at 50 per cent - by the government.
To encourage and support internationalisation, the SMEC recommended enhancing the current Global Company Partnership (GCP) programme by redefining new markets as those in which a company has not had sales of more than S$300,000, instead of S$100,000. It also proposed allowing SMEs to claim costs for up to five staff, inclusive of staff hired from the new market, instead of the current two under the GCP.
Another recommendation was that the government provide support through tax credits or special tax rebates to spur collaboration for large local enterprises to partner SMEs for overseas projects.
Senior Minister of State for Trade and Industry Sim Ann and Minister of State for Manpower Teo Ser Luck, as advisors of the SMEC, welcomed the committee's ideas.
Ms Sim said: "I think they are well-considered recommendations… I'm particularly encouraged by the fact that this set of recommendations places a lot of importance on the promotion of competitiveness to set the stage before tackling broad-based measures. As we enter a time of uncertainty, the fundamentals have to be there… We must not lose sight of competitiveness - that's key."
She added that the government will study the suggestions.
The Singapore Budget 2017 will be delivered by Finance Minister Heng Swee Keat on Feb 20.