A small business recovery grant to help businesses hard-hit by COVID-19 restrictions was announced last Friday, 18 Feb, Source: lli Nadhirah Mansor/ TODAY
On 18 February last Friday, Finance Minister Lawrence Wong delivered the speech on Budget 2022 for Singapore, signalling the Government’s intent to “renew and strengthen its social compact” while transitioning to the post-pandemic world.
It will include additional help for workers and businesses that are still struggling amid the broader economic recovery, as well as schemes for further building digital capabilities in both.
Singapore Budget 2022 statement delivered by Finance Minister Lawrence Wong, Source: YouTube
For owners of small- and medium-sized enterprises (SMEs) such as yourself, Budget 2022 includes plans to help your business deal with rising costs, continued support to encourage the hiring and retention of local employees, and the extension of schemes to promote further digitalisation and innovations in your business.
These are the highlights of particular relevance to SMEs such as yours in Budget 2022:
- Support For Hiring And Retaining Local Employees
- Helping SMEs Deal With Rising Costs
- Investments To Promote Digitalisation And Innovation
Let’s take a good look at the details, and see how Budget 2022 will help your business transition into a post COVID-19 world.
Support For Hiring And Retaining Local Employees
Although the economy in general is beginning to recover from the ravages of the COVID-19 pandemic, businesses in certain sectors are “still struggling”, according to Minister Wong.
Because of this, Budget 2022 will introduce the S$500 million Jobs and Business Support Package, intended to assist works and businesses in sectors that have been most affected by COVID-19 restrictions over the past year.
If your SME is operating in one of the following sectors:
You can expect to receive a one-time cash payout of S$1,000 per local employee on your payroll, up to a maximum cap of S$10,000.
Even if you’re the sole proprietor of your own business, you can still expect to receive a payout of S$1,000 at the minimum.
In addition, although the Jobs Growth Incentive (JGI) was due to expire in March this year, Budget 2022 will extend it by six months, up to September 2022.
First introduced in 2020 to encourage SMEs like yours to hire local employees by providing salary support to eligible businesses and workers, it will now provide “stepped-down support rates” as a result of improved labour market conditions in 2022.
To that effect, the JGI will now offer 15% to 50% salary support for each new local employees hired by SMEs like yours.
Helping SMEs Deal With Rising Costs
Thanks to a recovery in demand, rise in energy prices and ongoing issues with supply chains around the world, the risk of rising inflation is a very real concern.
And SMEs such as yours might have noted steep increases in the cost of materials and electricity prices in recent months, which may have contributed to any cashflow concerns you might currently have with your business.
To help support the cashflow needs of your business, Budget 2022 will extend the Temporary Bridging Loan Programme (TBLP) – which provides SMEs like yours with access to working capital - from 1 April 2022 to 30 September 2022.
The extension of the TBLP also comes with the reduction of the maximum loan quantum from S$3 million to S$1 million, as well as a raise in the interest rate cap from 5% to 5.5%.
To help cover the trade financing needs of your SME, the Trade Loan Scheme (TLS) will also be extended from 1 April 2022 to 30 September 2022, with a maximum loan quantum of S$5 million per borrower, or S$20 million per borrower group.
The TLS will also maintain the enhanced 70% risk-share for SMEs that are venturing into “more nascent markets”, such as Bangladesh and Brazil.
Additionally, the Project Loan Scheme (PLS) – intended to support domestic construction firms in fulfilling domestic projects amid rising costs and cashflow issues – will also be extended from 1 April 2022 to 31 March 2023, with a maximum loan quantum of S$30 million for each borrower or borrower group.
Investments To Promote Digitalisation And Innovation
One effect of the COVID-19 pandemic is how it accelerated the move towards a digital future worldwide. And to ensure that Singapore stays competitive with the rest of the world, the “first priority” of the Government is to strengthen the nation’s digital capabilities.
To that effect, the Government will set aside about S$200 million to enhance schemes that build digital capabilities in both businesses and workers.
Part of this sum will go towards enhancing initiatives such as the Advanced Digital Solutions scheme, which helps SMEs like yours adopt cutting-edge digital solutions.
Another initiative which will benefit from this sum is the Grow Digital scheme, which helps SMEs like yours digitally access markets overseas.
Additionally, Budget 2022 will increase the capabilities of centres that provide research and development (R&D) support to local SMEs.
These centres work closely with SMEs to undertake industry projects, which regularly leads to new innovations. There are more than 80 such centres currently located across polytechnics and Institutes of Technical Education (ITEs),
The capabilities of these centres will be increased, allowing them to undertake almost 2,000 innovations projects across the following five pilot sectors over the next 5 years:
- Food Manufacturing
- Precision Engineering
Last but not least, Budget 2022 will earmark S$600 million to expand the range of solutions that are available under the Productivity Solutions Grant (PSG).
This is intended to encourage SMEs like yours to take up productivity-enhancing solutions, and is estimated to support more than 10,000 implementation projects over the next four years – more than double the figure since the PSG was launched.
Last Chance To Take Advantage Of The Enhanced PSG and EDG For Your ERP Software Implementation
With the details laid out by Budget 2022, it’s now confirmed that the enhanced maximum support level of up to 80% for both the PSG and the Enterprise Development Grant (EDG) would now be ending by 31 March 2022.
This means the window is closing for you to take advantage of the enhanced PSG to fund the digital transformation of your SME.
Whether you’re looking at a first-time implementation of a digital productivity solution for your SME, or have plans to strengthen core capabilities and innovate on business processes, an ERP software implementation project could be the key to achieving your goals.
And it’s because with a modern ERP software, your business processes will be integrated with the latest business technology available on the market today, by giving you the single source of truth into your SME that you need to optimise your operations.
While we’re at it, do you know that AFON is a pre-approved PSG vendor for SAP Business One, Oracle NetSuite, and Microsoft Dynamics 365 Business Central – three of the most popular ERP software for SMEs like yours?
Many of our clients have also taken advantage of the EDG to fund the numerous implementation projects we have undertaken for their ERP software of choice, as well.
With that in mind, there’s only about one month left to take advantage of the enhanced support level of both the PSG and the EDG, and embarking on an implementation project with us.
Budget 2022 may be the plan to transition Singapore into a post COVID-19 pandemic world, but not only does it extend support to sectors that are still in particular need, but have not skimped on support to help SMEs like yours build digital capabilities through transformation either.
With so little time left to take advantage, we highly recommend that you grasp this last chance, and arrange for a consultation with us today!
Highlights Of Budget 2021
On 16 February, Deputy Prime Minister and Finance Minister Heng Swee Keat delivered the speech on Singapore’s Budget 2021, which sets a hopeful tone with the theme "Emerging Stronger, Together".
This year's Budget is aimed at providing targeted support for sectors that were worst-hit by the pandemic, as well as revitalising the economy through supporting the upskilling of workers and encouraging innovation in businesses.
As the owner or decision-maker in your local small- and medium-sized enterprise (SME), you'd find that Budget 2021 will provide plenty of support to help your business retain employees and funding much-needed digital transformation efforts.
We've identified several highlights of Budget 2021 that would be especially relevant to SMEs such as yours:
- Targeted Support For Sectors Most Affected By COVID-19
- Expansion Of Jobs Support Scheme For Targeted Sectors
- Extension Of The Jobs Growth Incentive And Wage Credit Scheme
- Digitally Transforming Businesses For A Post COVID-19 World
Let’s dive into the details, and find out just how Budget 2021 will help your business emerge stronger than ever into the post-pandemic new normal.
Targeted Support For Sectors Most Affected By COVID-19
As part of a three-pronged strategy to bolster the recovery from the effects of the COVID-19 pandemic, S$11 billion will be set aside for the COVID-19 Resilience Package.
One of the three prongs of this package is to extend support to specific sectors that have been hit especially hard by COVID-19. This is a more targeted approach than the support packages introduced with the Unity, Solidarity, Resilience and Fortitude Budgets of 2020.
Source: Straits Times
Because global air travel recovery will still “take some time” according to DPM Heng, the aviation sector will receive S$870 million in support to preserve its core capabilities and extend cost relief.
This amount will go towards funding a 10% landing charge rebate for all scheduled passenger flights landing in Singapore for airlines, as well as a 50% rebate on rentals paid for ground handling companies’ lounges and offices within the terminal buildings of Changi Airport and Seletar Airport.
In the land transport sector, taxi and private hire drivers who are eligible for the S$133 million COVID-19 Driver Relief Fund will receive:
- $600/vehicle per month from January to March 2021, and
- $450/vehicle per month from April to June 2021
A total of S$45 million will also be earmarked to support both the arts and culture sector, as well as the sports sector. For the former, the Arts and Culture Resilience Package (ACRP) introduced back in April 2020 will be extended to provide support for artists and art groups until the end of 2021.
As for the sports sector, a new S$13.6 million Sports Resilience Package will be introduced to help private clubs and academies, league and facility operators, and other organisations in the sector defray their operating costs.
Under this new package, the Ministry of Culture, Community and Youth (MCCY) will help cover 25% of total operating expenses for eligible organisations from October 2020 to March 2021, capped at S$15,000 per month.
Extension Of Jobs Support Scheme For Targeted Sectors
The Jobs Support Scheme (JSS) has been extended three times over the course of 2020, and will continue to cover the wage costs of employers like yourself up to March 2021.
However, as part of another prong of the COVID-19 Resilience Package aimed at supporting workers and businesses, the JSS will be extended for sectors that were hit hardest and continue to be affected by the impact of the COVID-19 pandemic.
If your SME is in one of the sectors designated as Tier 1 – namely aviation, aerospace and tourism – the JSS will cover 30% of your wage costs from April to June 2021, and 10% of said costs from July to September 2021.
On the other hand, if your SME operates in a Tier 2 sector – namely retail, arts and culture, food services, and built environment – then the JSS will cover 10% of your wage costs for three months only, from April to June 2021.
Extension Of The Jobs Growth Incentive And Wage Credit Scheme
An additional allocation of S$5.4 billion will also be allocated for a second tranche of the SGUnited Jobs and Skills Package, in order to support hiring of 200,000 locals and provide up to 35,000 traineeship and training opportunities in 2021
Of this amount, S$5.2 billion will be set aside for an extension to the Jobs Growth Incentive (JGI) scheme for an additional seven months.
If your SME is eligible for the JGI and hires a local worker between now to end-September 2021, the scheme will provide wage support of 25% of the first S$5,000 of the worker’s gross monthly salary for 12 months.
However, should your business hire mature workers (age 40 and above), persons with disabilities and ex-offenders, the JGI will instead cover 50% of the first S$6,000 of the worker’s gross monthly salary for up to 18 months instead.
The increased S$5,000 monthly wage ceiling and 15% government co-funding ratio of the Wage Credit Scheme will also be extended by one year, for qualifying wage increases that you give your employees in 2021 as well.
Digitally Transforming Businesses For A Post COVID-19 World
Apart from supporting economic recovery from the COVID-19 pandemic, the Government has also announced a S$24 billion plan to help businesses and workers alike transform and adapt to the post-pandemic world.
Of this amount, S$1 billion will be set aside to extend the enhanced maximum support level of up to 80% for both the Productivity Solutions Grant (PSG) and the Enterprise Development Grant (EDG) to 31 March 2022.
Apart from existing schemes, the plan will also fund the launch of new schemes to assist SMEs like yours in your digital transformation efforts.
One of these new schemes is the CTO-as-a-Service initiative, which will provide your business access to professional IT consultancies to help identify and adopt the right digital solutions.
Another such scheme is the Digital Leaders Programme, which will support your business in hiring a core digital team to develop and implement a digital transformation roadmap.
And last but not least, the new Emerging Technology Programme will be established to co-fund any costs your business incurs for trials and adoption of frontier technologies, such as 5G and artificial intelligence (AI) in your business processes.
Capitalise On The Enhanced PSG And EDG For Your ERP Implementation
The extension of the enhanced maximum support for both the PSG and EDG to March 2022 is likely to be the last such extension, as the end of the pandemic (and its effects on the economy) is in sight with the impending availability of the COVID-19 vaccines to the general populace.
This means you have a limited window of opportunity to take advantage of either grant for the digital transformation of your business.
Whether you’re planning on implementing a digital solution in your business for the first time, or seizing the chance to strengthen your core capabilities and innovate on your processes, opting for an ERP implementation project could be exactly what you need to achieve your goals.
That’s because a modern ERP software uses the latest technology to integrate your business processes, establishing a single view of your business that greatly eases the management of your business.
Here’s an interesting fact for you; AFON is a pre-approved PSG vendor for SAP Business One, Oracle NetSuite and Microsoft Dynamics 365 Business Central – three of the most popular ERP software for SMEs like yours today.
In addition, many of our clients have also made use of funding from the EDG to help pay for the ERP implementation projects we have carried out for them as well.
Therefore, 2021 may just be your last chance to take advantage of the enhanced support, and apply for either the PSG or EDG and embarking on an implementation project with us.
Budget 2021 may be focused on supporting sectors that are still greatly affected by the COVID-19 pandemic, but it certainly doesn’t skimp on the support it offers for businesses like yours looking to digitally transform and adapt to the post-pandemic world.
Therefore, we highly recommend that you don’t miss out on this opportunity, and arrange for a consultation with us today!