What are the salient points of the Singapore Budget 2020, what impact did the Coronavirus have on the budget 2020, and what’s in it for Singapore SMEs?
In a nutshell, the government is strengthening its support for an economy that already been straining from the trade war in 2019. With that notion, 800 Million are set aside to fight and contain the coronavirus, and also will provide two economic support packages worth $5.6 billion to assist businesses, and help consumers.
Sadly, there are more than 70 confirmed cases of the Coronavirus recorded in Singapore causing the worst economic impact as compared to the SARS pandemic in 2003.
“The concern is that the impact from the 2019-nCoV could be deeper than SARS. Over the years, the Singapore economy has become much more integrated to China than in 2003. Take tourism for example, the number of China tourists rose by 6x from 568K in 2003 to 3.4mn in 2018. Not surprisingly, China is now Singapore’s largest tourism market, accounting for about 19% of total visitor arrivals.” – DBS
Singapore’s budget 2020 spending primarily for defense, health, and education. (Source: Singapore Ministry of Finance).
Then…What about for SMEs? There are 5 key highlights of Singapore Budget 2020 for you to look at!
Help is coming for global coronavirus outbreak affected workers and businesses especially more relief to be provided to the hard-hit tourism and transport industries.
The 5 key highlights of Singapore Budget 2020 for SMEs
1. Economic Support package
The Health Ministry will receive S$800 million to fight the coronavirus.
Enterprises with wage costs get the S$4 billion out of the S$5.6 billion to help the workers stay employed. There is a corporate income tax rebate at 25% to assist enterprises with cash flow and capped at $15,000 per company.
The remainder is for the consumers, especially with lower-income. That’s to support their households and the cost of living. More supports like property tax rebates and rental waivers will go to sectors such as tourism, aviation, and food because coronavirus affected them directly.
2. Goods & services tax (GST)
The bad news is the government still intends an increase in GST to 9% in 2022-2025. The good news is the GST hike will not take place in the next year!
When the 2% increase in GST comes into force, the government will support the consumers with the enhanced package of subsidies totaling S$6 billion.
Moreover, the government will offer most of the Singaporean families a GST offsets for at least five years period. The lower- & middle-income Singaporeans and also retirees are entitled to 10 years worth of additional supports.
Anyway, Singapore’s GST is among the lowest in the region (Source: Ernst Young, Singapore Ministry of Finance).
3. Foreign Workers
For some industries, the ratio of middle rank skilled foreign workers is about to reduce as the government wants to ensure a balance between job offers for locals and maintaining an open job market at the same time.
For Construction, Marine Shipyard, and Process Industries:
Starting in January 2021, the permitted foreign workers’ threshold will reduce to 15% from 20% of the company’s total workforce in two phases.
For Manufacturing Industry:
The government won’t reduce the ratio of the maximum permitted S Pass workers at the moment. Somehow will plan to do so due to economic instability.
4. Two packages for the Transformation and growth efforts of businesses
A reservation of $8.3 billion for the next 3 years to enable Singapore for its transformation and growth.
- Enterprise Grow Package
To grow the business platform through digital technology adoption and expanding the SME Go Digital Program. The enhancement of the Market Readiness Grant will extend the support coverage to inspire more enterprises to enter new markets.
- Enterprise Transform Package
Aims to help business leaders of SMEs to enter the next leap of development so the government is expected to support around 3,000 projects.
5. SkillsFuture Enterprise credit – Enhancing the role of enterprises in upskilling their workforce
Singapore government will credit $10,000 per enterprise to motivate employers to develop their staff. Well, this helps companies particularly SMEs to reimburse up to 90% of transformation costs. Besides that, the Productivity Solutions Grant will also be extended.
Attention to SMEs’ leaders
We are happy and grateful because the government is working harder to ensure SMEs’ sustainable growth during this economic slowdown. However, it’s important for your organization to be equally cooperative, or equally competitive to display the support towards stabilizing the nation’s economic condition.
“Financial services firms and other large enterprises in the Asia-Pacific region currently face trade wars, interest rates, and shifting regulations that impact both short- and long-term strategies in the region. These types of volatile environments mean it’s imperative that companies have the infrastructure to support an agile business strategy driven by data utilization, digital efficiency, and speed.” – Bloomberg
So, the next BIG thing for your company is to participate in the digital transformation that streamlines your business processes. This can improve efficiencies and will reduce the cost too. Therefore, be certain that your business management is equipped with a comprehensive and affordable ERP system.
We are talking so much about digital transformation right now. What it is and how to digitally transform your SME in Singapore? You will get the answers here: “3 Steps to Digitally Transform your SME in Singapore“.
Additionally, if your ERP system is able to enhance mobility within the framework of your company, that means you can definitely increase your business productivity – ACCESS THE DATA ON THE GO, ANYTIME, ANYWHERE.
Hence, digital transformation has paved a way for increased transparency and chances for collaboration across departments. When everybody has access to valuable information, it becomes easier to work toward goals. Above all, people incline to feel like their efforts matter. Increased productivity and efficiency, together with the ease and transparency provided by the ERP system will improve the overall team and customer experience.