SBF-led SME Committee proposes more holistic SME development in Budget 2015 recommendations
- Calls for a more holistic approach to SME development, including the setting up of a single SME authority
- Proposes a review of plans under the 2010 Economic Strategies Committee (ESC) to assess the achievements of growing Globally Competitive Companies and identify industries which Singapore SMEs have the potential to be global players
- Calls for more targeted policies for strategic sectors including infocomm and services sector
- Proposes measures to help struggling SMEs raise productivity and seek growth through overseas expansion, innovation and collaboration
7 January 2015 [Singapore] - The Singapore Business Federation (SBF) shared the Budget 2015 Recommendations by its SME Committee (SMEC) at a press conference today. It also provided the latest feedback on the Budget from its members.
SBF National Business Survey 2014/2015
This survey conducted during 4Q2014 of 952 SBF members, of which 79% are SMEs revealed that most continue to have a positive outlook of Singapore’s economic growth in 2015, albeit at a marginally lower magnitude compared to previous years. As expected, SMEs are less optimistic compared to the larger companies in view of the tougher operation climate they are facing.
In sharing their views on the pace of restructuring, 59% of SBF members felt that that pace is just nice for their businesses. However, 31% felt that the current pace is too fast. 91% of SBF Members are affected by the economic restructuring with 79% reacting by adopting various measures, such as investing in staff productivity and streamlining processes.
Generally, SBF Members found Budget 2014 measures to be more useful and applicable to them compared to the previous year.
As for their wish list for Budget 2015, reducing business costs (62%) remained the top concern for most members, while 34% also mentioned for Foreign Worker Policies to be more granular. On assistance in other areas to improve productivity, more than half of members (56%) chose Training and Skills Development as the key area for productivity improvement whilst 44% felt that assistance in Securing Skill Manpower will be helpful.
Budget 2015 - Three key considerations
The SMEC maps out the following three underlying considerations for Budget 2015:
Restructuring Pains and Globally Competitive Companies
At the halfway mark of Singapore’s economic restructuring, where productivity growth remains negative for the first three quarters of 2014, SMEs continue to face challenges of tightening manpower, demand for high wages, escalating business costs and increasing competition. While most broad-based SMEs face declining profit margin, the number of loss making SMEs has also increased by 4% based on the results of the SBF National Business Survey 2014/2015. Concurrently, the number of home-grown SMEs that have achieved international status with a global footprint remain few.
Growing the Second Wing
Given domestic constraints of land, labour and a small market, there is greater urgency for SMEs to adopt overseas expansion as a key growth strategy amidst an expanding regional market.
A Pro-SME Ecosystem
Business leaders and representatives from trade associations and chambers (TACs) have highlighted the necessity for the Government to formulate more holistic and pro-SME policies.
Budget 2015 Recommendations
In its Budget 2015 recommendations, the SMEC articulates three key areas of focus:
SME Development Strategy
Adopt a more holistic approach in SME development where the interests of local enterprises are at the centre of economic strategies across whole-of-government.
- Review Economic Strategies Committee (ESC) recommendations
- Provide more comprehensive and coordinated SME Data
- Establish a single SME authority
Implement more targeted measures to help SMEs, particularly those in the domestic-oriented sectors still grappling with challenges of transformation.
- Extend the Productivity and Innovation Credit (PIC) Bonus Scheme
- Review R&D claims under PIC
- Introduce Restructuring Loan Scheme
- Review interest rates for government loan programmes
- Government landlords to lead in adoption of the Fair Tenancy Framework
- Provide financial assistance for SMEs to manage medical costs for older employees
- Facilitate the development of shared services for SMEs
- Extend Wage Credit Scheme for SMEs
- Introduce supplementary productivity measurements for various sectors
- Defer further planned increase in foreign worker levies
- Remove foreign worker levy for S Pass holders
- Expand Job Flexibility Scheme
- Better manage pool of Infocomm Technology (IT) talent
- Update source countries for recruitment of service staff for hospitality and tourism industries
- Allow part-time employment of foreign students from EduTrust-certified institutions
- Extend Long Term Visit Pass to foreign students of selected EduTrust-certified vocational institutions
- Allow utilisation of aggregated unfulfilled period of Man-Year Entitlement
- Upgrade skilled status of the construction sector’s foreign workers holding safety-related occupations
- Provide one or more Construction Hubs to house precast components and machinery
SME Growth Strategy
Help SMEs grow through internationalisation, innovation and collaboration.
- Raise SMEs knowledge and awareness to tap on ASEAN Economic Community (AEC) opportunities
- Enhance government’s overseas expansion assistance programmes
- Facilitate training of overseas-based foreign workforce
- Introduce specific category under iSPRINT to help SMEs adopt eCommerce solutions
- Accelerate establishment of alternative financing platforms
- Raise exclusivity for foreground intellectual property (IP) generated under A*Star Headstart programme
- Align support measures across the innovation chain
- Incentivise large corporates that partner SMEs in overseas projects
“SMEs make up the core of local enterprises. For Budget 2015, the SMEC urges the Government to place SMEs at the heart of economic strategies as we review the next phase of restructuring. SMEC recommends that the Government take more proactive steps to help SMEs overcome business challenges, as well as accelerate the development and growth of the SME sector”, said Mr Lawrence Leow, Chairman of SMEC.
Mr Kurt Wee, Chairman, SMEC Sub-Committee on Cost of Doing Business and President, ASME, said "As we step into a more challenging year in 2015, we continue to seek for s more supportive landscape in the SME scene. We hope that SMEs can continue to grow geographically, gain stronger resilience and successfully tap into the regional markets."
Mr S. S. Teo, Chairman of SBF said "Singapore is undergoing a critical, but challenging and necessary restructuring phase at a near full employment situation. For us to succeed, it is essential that businesses, employees and the government continue to work closely towards a common goal."He added that “There are many SMEs that can evolve from household names to global players in the next decade. As a business community, we should collaborate to work towards more consortium formation. The SMEC Budget 2015 recommendations will allow more SMEs to embrace challenges and assist SMEs to expand overseas.”