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Xeroing in on business transformation with Singapore Budget 2019
In his New Year message on 31 December 2018, Prime Minister Lee Hsien Loong revealed that the Singapore economy performed beyond expectations last year, with Gross Domestic Product (GDP) growing at a rate of 3.3%, falling just short of 2017’s strong manufacturing-fuelled 3.6% expansion. The winds of positivity are expected to persist this year, with a positive – though more moderate – pace of growth of 1.5 to 3.5% forecasted.
As we herald the Bicentennial this year, marking the 200th anniversary of the modern founding of our nation, it is a poignant juncture to ask the big question: where do businesses, particularly small and medium-sized enterprises (SMEs) and start-ups, go from here?
SMEs are the cornerstone of our labour force, comprising 99% of all enterprises in Singapore and accounting for 65% of employment. That said, as our economy makes its push towards Industry 4.0, many SMEs do not have a particularly rosy outlook in the face of high manpower costs, an increasingly complex and competitive global business environment, and the ongoing trade tussle between China and the United States. The 2018 SME Development Survey by DP Info (the 16th edition with 2,557 SMEs respondents surveyed) reported that 15% of SMEs projected negative turnover growth for 2018 – a marginal increase from 11% in 2017.
The budget for change
Singapore Budget 2019 may provide more clarity as to what lies ahead for SMEs. On the ground, the pervasive sentiment of small business owners is that more support can be rendered by the government to help companies tap on financial assistance schemes and gain a foothold in the opportunity-laden Asian markets, which United Overseas Bank economist Francis Tan deemed as ‘the rising star’. “We are in the right place at the right time now,” he explained. “This shift towards Asia is also a nudge or a push for our local companies to think hard (about expanding overseas).”
Based on the latest National Business Survey findings by the Singapore Business Federation (SBF), firms also look to new government measures to facilitate the adoption of critical new technologies to aid their operations, with a reexamination of foreign manpower quotas (53%), support for digital transformation (49%), foreign work levies (45%), and lower compliance costs and regulatory fees (42%) rounding out their Budget 2019 wish list. Additionally, over 71% of companies polled hoped for more favourable financing mechanisms which would offer reprieve from business fees and rising interest rates.
“Despite some risk coverage by the government, the outcome is that smaller companies who need more financing help may not get the necessary support regardless of their product innovation or business ideas,” said DBS economist Irvin Seah.
Decoding the future
To help unpack the latest Budget initiatives and what they mean for businesses, Xero has put together the Xero Community: Budget Edition Forum on 1 March 2019, 10am - 12pm at Distrii, Republic Plaza. An esteemed panel of experts will be providing insights and their analyses on the Budget’s implications for the SME landscape, the continued transformation of Singapore’s economy, and how small businesses can leverage banks and third parties for success moving forward.
The event is part of Xero’s ongoing efforts to support the small business community by shedding light on the challenges that SMEs and startups face amidst a rapidly a shifting global economy.
Since 2006, Xero has been an advocate for the notion that small businesses are the engines that drive the economy. Recognised by the Financial Times in their F1000 High-Growth Companies Asia Pacific List 2018 - Fastest growing tech company ($200 million segment), the cloud accounting company seeks to help small businesses thrive by providing them with better tools, information, and connections to enable the drive towards innovation. With over 1.6 million subscribers around the world, Xero is proud to be changing the game for small businesses and helping them find afoothold in today’s economic climate.
Seats for the Xero Singapore Budget forum are limited and available on a first-come-first-serve basis. Register and secure your seat for Xero Community: Budget Edition today at peatix.com/event/597746/view. Networking and refreshments to follow.