It's that time of the year again. And if you're from a small-to-midsized enterprise (SME), you'd find this year's Singapore Budget fairly assuring in its attempt to address both economic worries and local businesses' desire for growth.
Deputy Prime Minister and Finance Minister Heng Swee Keat delivered the Singapore Budget 2020 speech on 18 February, which covered the many financial packages that have been announced to help Singaporeans face a new decade full of “major uncertainties”.
Amongst these are packages designed to tackle recurring issues such as rising wage costs and cash flow during this rocky economic period, as well as measures for promoting digital transformation and growth.
DPM Heng Swee Keat in his 2020 Budget speech for Businesses (Source: CNA)
These include funding you can use to help your business ride out rough economic waters in the short term, as well as measures to encourage digital transformation and growth in businesses like yours for the next 10 years.
With so many goodies to unpack, we've zeroed in on some key points below that'd be of interest to SMEs seeking growth in these challenging times:
Easing Cash Flow Concerns With The Stabilisation And Support Package
As part of Budget 2020, the Finance Minister announced that the Government will set aside S$4 billion under the Stabilisation and Support Package to help businesses like yours:
- Retain Singaporean and PR employees in your payroll
- Deal with any cash flow issues you’re facing
1. Budget 2020 Assistance for Retaining Workforce
The programmes under the Package include the S$1.3 billion Jobs Support Scheme, which will help you retain your local employees (Citizens or PRs) by offsetting 8% of their wages on their CPF payroll from October to December 2019, up to a monthly cap of S$3,600. Your business will receive this offset by the end of July 2020.
The monthly wage ceiling for the Wage Credit Scheme will also be raised from S$4,000 to S$5,000 for qualifying wage increases that you have given your employees in 2019 and 2020, and the Government’s co-funding levels will increase to 20% and 15% for 2019 and 2020 respectively. This will help further offset any increase in wage costs incurred by your businesses.
You can get further wage offsets should your business hire any Singaporean workers above the age of 55 with the new Senior Employment Credit scheme, which will replace the existing Special Employment Credit and Additional Special Employment Credit plans slated to expire at the end of the year.
And if you need to send your employees for reskilling programmes to keep them relevant to your business, you can make use of the Adapt and Grow redeployment programmes to help defray the costs of doing so.
The Package also includes programmes to help businesses like yours with cash flow issues, particularly for sectors that have been hit especially hard by the COVID-19 outbreak:
- Enterprises in tourism can get cash flow support through the Temporary Bridging Loan Programme, and up to 30% property tax rebate for 2020.
- In the aviation sector, airlines can expect rebates on aircraft landing and parking charges and assistance to ground handlers, while shops and cargo agents at Changi Airport will get rental rebates.
- In the F&B sector, hawkers operating in Government hawker centres get one month’s rental waiver.
- Qualifying commercial tenants in Government-managed properties will get a half-month rental waiver.
2. Budget 2020 Assistance for Cash Flow Issues
Apart from these, all businesses will receive help with their cash flow issues through a corporate income tax rebate for the assessment year 2020; this will be 25% of tax payable, and capped at S$15,000 per company.
In addition, there will be several year-long enhancements for tax treatments under the corporate tax system to provide further cash flow support for your business. One of these is the SME Working Capital Loan component of the Enterprise Finance Scheme; it will be increased to a maximum of S$300,000 to S$600,000, while the Government’s risk-share will be increased from 50-70% up to 80%.
Driving Transformation and Growth In Uncertain Times
The Government has also allocated S$8.3 billion within Budget 2020, to be distributed over the next three years to encourage digital transformation and growth in local businesses and the economy as a whole.
This is a timely measure, as the uncertainty caused by present economic conditions and digital disruption is all the more reason to invest in upgrading the digital capabilities of your business.
To help you with the costs associated with digital transformation, Budget 2020 includes the Enterprise Grow Package, which includes new grants as well as enhancing current support measures for promoting growth in your business.
It includes the expansion of the SMEs Go Digital Programme, which can help you deal with business challenges caused by digital disruption by building digital capabilities in your business.
And if you’re worried about the out-of-pocket costs of providing your workforce with the necessary training to complete your business’s digital transformation initiative, you can take heart in the introduction of SkillsFuture Enterprise Credit, which promises to defray 90% of your expenses for any enterprise or workforce transformation schemes that are eligible
Take Advantage Of The EDG Expansion For Your ERP Implementation Project
One particularly interesting highlight of Budget 2020 is that the Enterprise Development Grant (EDG) – which defrays up to 70% of qualifying project costs – will be expanded to support another 3,000 projects for this financial year.
Since the EDG is designed to encourage local businesses like yours to strengthen its core capabilities, adopt new technology and innovate on your processes to boost productivity, and expand to overseas markets, you may see this as an opportunity for your business to get a slice of the pie
And embarking on an ERP implementation project for your business counts for all of the above.
That’s because a modern ERP software uses the latest technology to integrate your business processes, establishing a single view of your business that eases the management of any subsidiaries you have established overseas.
And here’s an interesting fact; many of AFON’s clients used EDG funding to help pay for the ERP implementation projects we have carried out for them.
Therefore, if you’ve been planning to implement a modern ERP software to integrate your business processes or replace your existing legacy ERP system, 2020 is as good a year as any to consider applying for the EDG and embarking on the implementation project with us.
While a large part of Budget 2020 is aimed at helping businesses deal with more pressing concerns, it also offers a helping hand for those looking to take the next steps in digital transformation.
Thus, we highly recommend that you seize the opportunity!