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Budget 2024: Managing Rising Costs And The Transition To Green Technology


For small- to medium-sized enterprises (SMEs) or fast-growing businesses, the main highlight of Budget 2024 will be the S$1.3 billion Enterprise Support Package (ESP) to help manage the rising cost of doing business.

According to Deputy Prime Minister and Finance Minister Lawrence Wong, the ESP is intended to provide immediate relief to businesses which are struggling with larger rental and utility bills, as well as the need to pay higher wages to their staff.


fy2024_supporting_businesses_and_driving_growth (1)Overview of initiatives/schemes to support businesses' growth; Source: Ministry Of Finance

The ESP will come in three components, which are;

Apart from the ESP, Budget 2024 will also introduce the following steps to further help businesses;

Let’s take a closer look at how these measures introduced in Budget 2024 helps businesses manage rising costs, access financing more easily, and assist employees in upskilling and transformation to meet the challenges ahead.


Enterprise Support Package (ESP)

New S$1.3b Enterprise Support Package for Singapore businesses; Source: Channel NewsAsia

First, let’s take a look at each of the three components of the Enterprise Support Package (ESP);


Corporate Income Tax (CIT) Rebate

To help businesses manage the rising costs of doing business, the first component of the ESP is a 50% corporate income tax (CIT) rebate for all businesses, capped at S$40,000, for the 2024 year of assessment.

However, businesses which do not make a profit every year risk being excluded from the CIT rebate. Therefore, any business which has employed at least one local employee in 2023 will receive a minimum cash payout of S$2,000, otherwise known as the CIT Rebate Cash Grant.

Businesses which fulfill the above criteria (or the “local employee condition”) will get the cash grant by the third quarter of 2024. A business is considered to have met the local employee condition if it has made CPF contributions to at least one local employee (i.e. Singapore Citizen or Permanent Resident), excluding shareholders who are also directors of the company, in the 2023 calendar year.


Enhancements To The Enterprise Financing Scheme (EFS)

The second component of the ESP are enhancements to the Enterprise Financing Scheme (EFS), which helps businesses like yours access financing more easily no matter which stage of growth it’s in.

Firstly, the EFS – SME Working Capital Loan has been enhanced with a permanent raise of its maximum working capital loan quantum from S$300,000 to S$500,000. This can help businesses manage increased working capital and operational cashflow needs, due to elevated costs in general.

Secondly, the enhanced maximum quantum of S$10 million under the EFS – Trade Loan will be extended by an additional year, to 31 March 2025. This is intended to support any internationalisation efforts a business may be engaged in, especially amidst global supply chain disruptions.

Lastly, the extension of support for domestic construction projects under the EFS – Project Loan, with its maximum loan quantum of S$15 million, will also be extended to 31 March 2025. This helps domestic construction firms overcome the current challenges of the construction industry’s operating environment.


Extension Of The SkillsFuture Enterprise Credit (SFEC)

For the third and last component of the ESP, the SkillsFuture Enterprise Credit (SFEC) scheme will be extended for an additional year, up to 30 June 2025.

The SFEC was first introduced to encourage businesses to undertake enterprise and workforce transformation initiatives. Under the scheme, eligible businesses received a one-off credit of up to S$10,000, to cover up to 90% of out-of-pocket expenses for supported enterprise capability development and workforce transformation programmes – the latter of which S$3,000 of the credit was reserved for, in order to encourage businesses to reskill and upskill their workforce.

With the extension, if a business has already received the SFEC, said business will be able to use it on supportable schemes beyond its original expiration date (30 June 2024), as long as claims are submitted by 30 June 2025.


Other Measures To Support Businesses And Drive Growth

Apart from the ESP, Budget 2024 will also introduce several other measures to support local businesses, and drive further growth in Singapore’s economy. Here’s a look at some of these measures.


Introduction Of The Refundable Investment Credit (RIC)

Introduce new refundable tax credit to attract high-quality investments; Source: Channel NewsAsia

To remain competitive and continue to attract high-quality investments, Budget 2024 will introduce the Refundable Investment Credit (RIC).

According to DPM Wong, the RIC – which will work as a tax credit with a refundable cash feature – is aimed at supporting “high-value and substantive economic activities”.

Specifically, these would include the setting up or expansion of manufacturing facilities, new innovation and research and development (R&D) activities, as well as activities supporting the transition to green technology.

The RIC will be given out based on qualifying expenditures a business incurs for a qualifying project over a period of up to 10 years, according to the Finance Ministry. These may include capital expenditure, manpower and training costs, and business can receive up to 50% of support on each category of qualifying expenditure.

If a business is awarded the RIC, it will be able to use the credit to offset against its payable corporate income tax. Any unutilised credits will be refunded to the business in cash within four years, from when it first satisfied the conditions for receiving the credits.


Expansion Of The Energy Efficiency Grant (EEG) To More Sectors

The Energy Efficiency Grant, which was first introduced in 2022 to support businesses in the food services, food manufacturing, and retail sectors in their sustainability journey by co-funding investment in energy-efficient equipment, will be expanded to more sectors with Budget 2024.

These new sectors include the manufacturing, construction, and maritime industries, as well as data centres and their users.

The EEG will also be enhanced to provide two tiers of support:

  • A base tier for pre-approved energy-efficient equipment up to a S$30,000 cap, and
  • An advanced tier to support companies that wish to make larger investments to drive energy efficiency.


Enhancement Of PACT Scheme To Support SME And MNC Collaboration

The current Partnerships for Capability Transformation (PACT) scheme supports collaborations between multi-national corporations (MNCs) and local SMEs in the areas of supplier development and co-innovation.

From Budget 2024 onward, the PACT scheme will be enhanced to support partnerships in additional areas, such as capability training, internationalization, and corporate venturing.

According to DPM Wong, this enhancement is to “help more of our firms plug global supply chains, compete in markets abroad and grow to become industry leaders in their own right.”


No New Grants Or Enhancements To Existing Grants?

S$1 billion to be invested in Singapore's AI development; Source: Channel NewsAsia

Like Budget 2023 before it, and unlike the previous Budgets that came before, Budget 2024 did not introduce any new government grants intended to help businesses digitalise their operations, nor does it expand any of the existing grants currently available. 

In our view, this is indicative that most businesses in Singapore have already embarked on, or even completed their digital transformation journey over the past few years, due in large part to the necessity imposed by the COVID-19 pandemic.

Indeed, Budget 2024 seems to be a sign that the Government has shifted its focus towards encouraging businesses to adopt artificial intelligence (AI) technologies, with its S$1 billion investment to support the National AI Strategy 2.0 and further catalyse AI activities.

The Government has also pivoted to encouraging businesses to adopt green technology in their operations. This is indicated not just by the expansion of the EEG, but also the establishment of the S$5 billion Future Energy Fund to power Singapore's transition to clean fuels.


It's Still Possible To Undertake A Digital Transformation With Help From The PSG And EDG

shutterstock_116283283_1920_compressed (3) (1) (1)


That said, if a business has not yet embarked onto the path towards digital transformation, the owner or proprietor can still apply for either the Productivity Solutions Grant (PSG) or the Enterprise Development Grant (EDG) for an ERP software implementation project, to help the business strengthen core capabilities and innovate on operational processes. 

With the PSG in particular, businesses can get a rebate of up to 50% off your costs for such a project. That's still a great deal to acquire the single source of truth that it needs to optimise your operations.

While we’re at it, do you know that AFON is a pre-approved PSG vendor for Microsoft Dynamics 365 Business Central – one of the most popular ERP software solutions? 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 Business Central, as well.

However, with the Government's pivot away from promoting the digital transformation of businesses towards encouraging their adoption of AI and green technologies, there's no telling how much longer ERP software implementations will remain supported under the PSG or EDG.

Therefore, if you've been thinking about implementing an ERP software for your business, this might be your last chance to acquire PSG or EDG funding for such a project. Don't hesitate, arrange for a consultation with us today!

Last but not least, the PSG and EDG may not be the only government grants that you can take advantage of. Depending on the industry your business operates within, there may be other grants that are available to you.

To find out about any government grants that might be available to fund your business's digital efforts, click on the image below to learn more.






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