Singapore SMEs in Need of Government Support

On February 17^th, the government of Singapore will announce the 2012 country budget. Of great interest is what will have been decided on the policy proposals from The Singapore Business Federation-led Small- and Medium-Sized Enterprise (SME) Committee.

The government has been asked to put a focus and make decisions based on the following high priority challenges affecting SMEs:

The cost of doing business
Productivity and manpower
Financing
Internationalization and market access.

The proposal highlights that SMEs form a strong part of Singapore’s business fabric, and that they are experiencing the most challenges during times like the present.

The SME Committee projects that 2012 will undoubtedly be a very difficult year for Singaporean SMEs. The economy is largely driven by exports and with developed economies becoming weaker this directly affects the demand for exports from Singapore.

Of greatest concern is the increasing cost to do business. Price for rent, manpower, raw materials and other ancillary costs have seen steady increase.

The SME Committee’s recommendations in that respect include the introduction of a SME cash pay-out scheme of up to SGD10,000 (USD8,000) per year to help smaller SMEs for the next five years, and, for other businesses, an extension of the corporate income tax rebate for another year.

The SMEs would also welcome changes to the Productivity and Innovation Credit (PIC) such that, for example, the maximum cash pay-out could be increased from SGD30,000 to SGD60,000; smaller SMEs could benefit more from the cash pay-out by increasing the tax deduction cash conversion rate to beyond 30%; and the cash pay-out option could be extended from 2013 to 2015.

With regard to the businesses’ credit requirements, the Committee also looked for the government to prepare for a reinstatement of the Special Risks Sharing Financing Schemes, if the economic situation deteriorates further, to ensure that SMEs are able to access affordable financing, and of the Bridging Loan Programme, with an enhancement to its loan conditions so as to address the needs of start-ups and the services sector.

Lawrence Leow, Chairman of the SME Committee, commented that “the weak and volatile external environment will have adverse effects on businesses, with SMEs being particularly vulnerable in the face of sluggish demand and weak consumer confidence. We hope that the government will give due consideration to all the recommendations put forth by the SME Committee which we believe will benefit the SME sector and our economy as a whole.”

Ho Meng Kit, Chief Executive Officer of The Singapore Business Federation, added that “many of the issues are long-term and cannot be solved with this set of budget measures alone. They will require careful deliberation and engagements between the SME Committee and the government agencies.”


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