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Business costs, labour crunch still key concerns
[SINGAPORE] What Singapore's business leaders most hope for from Budget 2014 has changed little over the past few years of economic restructuring: help with rising business costs and labour shortages.
This call for more assistance, especially for small and medium enterprises (SMEs), came alongside perennial appeals for more investment and grant support for innovation, research and development (R&D) and training, to boost the competitiveness of Singapore's economy.
But this year, over a third of the 40 responses to BT's request for views from CEOs and industry group leaders on the government's Budget statement next month also included non-business concerns: the income gap, Singapore's ageing population and rising healthcare costs.
While many of the business leaders think 2014's Budget will articulate further the government's longer-term priorities - "sustainable growth" and "inclusive growth" - short-term needs still loom large for them. Members of the business community stressed the need to alleviate restructuring pains.
Singapore Manufacturing Federation (SMF) secretary-general Lam Joon Khoi said: "The key thrust in 2014 Budget that I hope to see is one that addresses rising business costs; particularly rental, transportation and manpower costs. Some financial relief from the government can certainly help companies tide over this period of economic restructuring."
Measures from the government are needed to tackle the issue of costs, even as the Singapore economy is slated for modest growth this year.
Xchanging Southeast Asia president Joe Poon said: "Cost pressures and financial challenges do not disappear as the economy improves. Instead, these challenges are accelerated and leave businesses stricken with the pressure of keeping their heads above water."
These and other comments fall in line with a recent report by the Institute of Singapore Chartered Accountants (ISCA), whose survey of more than 400 respondents from the accounting and business community found that most think Budget 2014 ought to help firms with their rising rental, training and other operating costs.
"It appears that respondents are more preoccupied with cost issues rather than activities that may better enable growth or enhance their value-add, such as venturing overseas or branding," the ISCA report said.
Tham Sai Choy, managing partner of KPMG in Singapore, would agree. He thinks less attention has been given to raising productivity through redesign, to generate products and services of better quality that command a higher value. Mr Tham also hopes for enhanced measures to nudge companies into innovation activities such as R&D and branding, which he thinks are seen as risky because they are not well understood.
Deloitte Singapore CEO Philip Yuen thinks a higher level of enhanced tax deduction for qualifying PIC (Productivity and Innovation Credit) expenses for SMEs would give them incentive to move up the value chain more quickly, while ACCA Singapore head Leong Soo Yee thinks that the PIC ought to be extended beyond 2015 and that tax incentives tailored to boost productivity in specific sectors should be introduced.
SMF's Mr Lam said that businesses can take some initiative too. While many companies have already responded to the "clarion call" for higher productivity, more need to do so.
"Many business owners need to get out of the complacent mode that their past formula for success will continue to see them through current and future challenges. They need to be more receptive and open-minded to prepare for the new harsh reality that it is no longer business as usual for many industry players."
Reflecting how the government's Budget extends beyond business interests, several business leaders also flagged social concerns. "The Budget should evolve from the past focus on quantum and scale of spending to laser re-assessment mode: prioritising areas over and above economic growth," said Starcom MediaVest Group Asia's VivaKi Country Chair, Jeffrey Seah, citing palliative care as one area of focus on.
Preventing healthcare costs from spiralling was raised by several. Fircroft board director and head of Asia-Pacific Dhirendra Shantilal thinks that healthcare for the elderly is especially pertinent, given Singapore's ageing population and rising healthcare costs.
SKF Asia Pacific Pte Ltd director Alick Chia would like Singapore to tax the rich more to reduce tension over the income gap. "We should raise the personal income tax rate for those earning more than $1 million a year," he said, proposing a "small increase to 21 per cent" from the current top marginal income tax rate of 20 per cent.
But Best World International co-chairman and group CEO Dora Hoan expressed her hope that Budget 2014 would "be fair to all so that people, especially the high net worth individuals, will continue to stay and contribute to Singapore".
Yet others suggested that addressing such social concerns requires economic strength. "Budget 2014 needs to address these (income disparity, social mobility and rising living costs) and I believe one of the ways is through the further development of high value industries such as the financial services sector," said ICAEW regional director, Southeast Asia, Mark Billington.