Budget debate

Government can help but firms must take initiative

Businesses must compete by relying on productivity and innovation in the long run, instead of depending on low costs, said Mr Heng, as the Government "cannot permanently subsidise costs".
Businesses must compete by relying on productivity and innovation in the long run, instead of depending on low costs, said Mr Heng, as the Government "cannot permanently subsidise costs".ST PHOTO: MARK CHEONG

In his speech yesterday wrapping up the Budget debate, Finance Minister Heng Swee Keat responded to concerns raised by 53 MPs over the past three days. He touched on what businesses and workers need to do, as well as social support measures and the need for a progressive yet sustainable tax system.

Companies are grappling with the slowing economy and mounting cost pressures, but there is only so much the Government can and should do to help, Finance Minister Heng Swee Keat said yesterday.

While the Budget contains some measures to help viable companies tide over the rough patch, Mr Heng said businesses must be able to compete by relying on productivity and innovation in the long run, instead of depending on low costs.

Over three days of debate, MPs had called for more help for small and medium-sized enterprises hit by the economic slowdown.

The minister acknowledged their concerns, noting that it is vital to ensure viable companies survive the current period of cyclical weakness. However, the Government "cannot permanently subsidise costs".

Resources such as space and labour will remain costly here as they are scarce, which means firms cannot treat the Republic as a low-cost location. "Enterprising firms understand this, and build their business models with these hard constraints in mind," Mr Heng added.

  • Support for Singaporeans

  • For children

    •$8,000 or $10,000 Baby Bonus cash gift, depending on birth order

    •$4,000 Medisave grant for newborns

    •$3,000 Child Development Account First Step grant

    •$11,000 a year in education subsidies for primary and secondary school students

    •Pre-school subsidies

    For seniors

    •Quarterly Silver Support payouts

    •Up to 6 per cent interest on the first $30,000 in Central Provident Fund accounts for those aged 55 and older

    •$2,000 income ceiling to qualify for Workfare Income Supplement

    •A household of retirees living in a three-room or larger Housing Board flat received on average $5,000 per retiree in state transfers last year, mostly in the form of healthcare subsidies.

    For the middle-income

    •Low income tax burden

    •Housing, education and healthcare support

The Government's role is to shape macroeconomic conditions to support growth - and companies themselves have to take the initiative to restructure and become more productive to thrive, he said.

LEARNING, GROWING AND SHARING

We must have that resilience in us to face each challenge as an opportunity, to learn and grow, to emerge from setbacks better and stronger.

We must have that humility in us, to respect and learn from everyone no matter what their paper qualification or job title.

And,we must have the generosity to share, be it in actual things, time, or ideas. ''

FINANCE MINISTER HENG SWEE KEAT

JOURNEY AHEAD IS FULL OF UNKNOWABLES'

Budget 2016 is the beginning of our journey towards SG100. We want a future where our economy is abuzz with innovation and enterprise, and where our society is alive with caring and resilience.

After listening to Members, it is clear to me that not only do we know where we are heading, we are committed to getting there to get her. Many Members have rallied to the call for partnership...

So, we know our direction. We also know where we come from, the road we have journeyed to get here...

We know where we want to go. We know where we come from. It is the in-between, the getting-there that is full of unknowables. ''

Mr Heng

He noted that some MPs had warned against government support becoming a crutch for companies. Citing a metaphor used by business leader Stephen Koh, Mr Heng said: "Government support is like push-starting a car that has gotten stuck in a difficult patch.

"It can get the car going again, but the Government cannot be pushing the car for miles and miles... once the car is moving, it has to rely on its own engine to go for the long haul."

In successful economies that have produced many world-leading firms, governments have played "an enabling role" in helping enterprising individuals and businesses go further than they could have on their own, he noted.

Mr Heng quoted Ms Lee Bee Wah (Nee Soon GRC), who had said that in the short term, firms expect some fish from the Government to keep workers fed, but "ultimately, the country will run out of fish if they don't develop eager, smarter and faster ships to get fish from international waters".

He added: "The Government can help businesses to develop bigger, smarter and faster ships, but ultimately, the captains of industry must navigate the ships and help our firms go the distance."

A version of this article appeared in the print edition of The Straits Times on April 07, 2016, with the headline 'Govt can help but firms must take initiative'. Print Edition | Subscribe