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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:
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.
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:
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.
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.
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.
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.
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!