Singapore Budget 2020: What’s in it for SMEs?

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Beyond just throwing out a lifeline to help small and medium-sized firms stay afloat in today’s trying times, the Government remains firmly focused on readying companies for the future.

For many small and medium-sized enterprises (SMEs) in Singapore, the unveiling of the Government’s Budget 2020 last week was perhaps one of the most anticipated in recent years.

Businesses are finding themselves buffeted by challenges on several fronts – “major uncertainties”, as Finance Minister Heng Swee Keat himself has put it – amid slowing global trade, geopolitical tensions, and now the hard-hitting and pressing COVID-19 outbreak.

The Government has responded with a hugely expansionary Budget, as it prepares to incur the largest Budget deficit since the 2009 Global Financial Crisis. In particular, it has set aside a S$4 billion Stabilisation and Support Package to help businesses ride out the storm.

But even as the immediate situation may be the most worrying for SMEs, keeping an eye on the longer term is just as important, if not more.

Budget 2020 signals that the Government believes Singapore can get through the short-term pain, but the greater challenge lies in readying the economy for the long-term – one thing it is pushing for even harder this year.

In this respect, the Budget is focused on building two things: People and Processes.

People

Today’s digital landscape spells shorter technology cycles and more intense global competition, which means skills have to be continually updated.

This is why the SkillsFuture movement that has been in place since five years ago is entering its next stage. Employers will soon be able to tap on a new SkillsFuture Enterprise Credit to transform their workforce and company in tandem.

This Enterprise Credit, at $10,000 per enterprise, can be used to defray 90 per cent of out-of-pocket costs of business transformation, job redesign, and skills training. Significantly, the bulk of the 35,000-odd enterprises set to benefit from the initiative will be SMEs – the ones that would need such support the most.

Meanwhile, efforts to raise the skills of workers across SMEs will be under way, as a result of the Government’s efforts to work with 40 large anchor enterprises to support training for their sectors and value chain partners. This move is expected to benefit 4,000 SMEs, and, in turn, lift the entire supply chain as a whole.

Processes

More importantly, the Government is doubling down on processes – specifically, the push for digitalisation.

To drive greater adoption of digital technology, the SMEs Go Digital programme will be expanded under a new Enterprise Grow Package that is aimed at helping enterprises identify business needs, adopt digital technologies, and enter new markets. Industry Digital Plans or equivalents will be rolled out across all 23 Industry Transformation Map (ITM) sectors, and enterprises will be enable to access pre-approved digital solutions.

The GoBusiness platform will also be launched as a single touchpoint for enterprises to transact with the Government digitally.

Notably, the Government has pledged to catalyse investment into deep-tech startups, mainly by setting aside an additional S$300 million under the Startup SG Equity. This move is expected to draw in over S$800 million of private funding over the next 10 years, giving deep-tech startups better access to capital, expertise and industry networks.

On first look, these investments may not mean much for the regular SME, which may not have access to deep-tech capabilities. But over time, the goal will be to create a growing pool of talent, technology and capabilities such that all SMEs will get access to powerful technology.

These investments are also an important signal that all companies, both big and small, should prepare for an economy where digital technology will be the fundamental building blocks of growth. On this front, innovation will be crucial.

Indeed, while SMEs should brace for the short-term, their focus must always be on the long-term. Thinking ahead and avoiding being left behind is the best way to immunise oneself against any future shocks, virus or otherwise.