Budget 2017

Budget 2017: Short-term help with costs top on firms' wish list

The pre-Budget roundtable was co-chaired by Mr Liang (left) and Mr Ee. The 15 members in the discussion said long-term economic transformation is key but businesses also need short-term help to tide over the current period of slow growth.
The pre-Budget roundtable was co-chaired by Mr Liang (left) and Mr Ee. The 15 members in the discussion said long-term economic transformation is key but businesses also need short-term help to tide over the current period of slow growth.PHOTO: INSTITUTE OF SINGAPORE CHARTERED ACCOUNTANTS

Panellists also call for incentives to spur R&D, regional growth during period of slow growth

Help with rising manpower costs and soaring rents, better incentives for research and development (R&D) and a more collaborative approach to regional expansion.

These topped the wish lists of panellists at a pre-Budget roundtable organised by the Institute of Singapore Chartered Accountants (Isca) at the Four Seasons Hotel yesterday.

The 15-member discussion - co-chaired by Isca president Gerard Ee and MP (Holland-Bukit Timah GRC) Liang Eng Hwa - said long-term economic transformation is key but businesses also need short-term help to tide over this period of slow growth.

Singapore Business Federation chief executive Ho Meng Kit said the business climate has been difficult and is expected to worsen, with many companies hoping next month's Budget will contain measures to help them manage costs in the short-term.

"Longer-term issues are important but sentiment among businesses is more focused on short-term issues...The Budget (will hopefully) contain some immediate help for businesses," he added.

Panellists including Singapore Retailers Association president R. Dhinakaran and Singapore Management University Professor of Accounting (Practice) Sum Yee Loong, noted that rent is a significant component of business costs and called for government agencies such as the Housing Board and JTC to take the lead on making it more affordable for small- and medium-sized enterprises (SMEs).

 

Panellists also almost unanimously called for the popular Productivity and Innovation Credit (PIC) scheme to be extended - or at least not completely terminated - to help firms cope with rising costs and the lacklustre business outlook.

The scheme encourages SMEs to invest in productivity by offering them cash and tax deductions for costs like worker training, automation and research. The scheme is set to expire at the end of the year.

After the PIC expires, tax deductions for R&D will be reduced from 400 per cent to 150 per cent, noted Mr Low Hwee Chua, regional managing partner for tax at Deloitte Singapore and South-east Asia.

"This is quite uncompetitive compared with some other countries in the region," he said, adding that more can be done to continue encouraging companies, especially SMEs, to engage in R&D.

Helping firms grow overseas also emerged as a key theme at yesterday's discussion. Mr Victor Mills, chief executive of the Singapore International Chamber of Commerce, said the Asean region offers a "glimmer of hope" amid a morass of geopolitical and economic uncertainty. "We've focused too widely in our internationalisation ambitions to the detriment of understanding the Asean region better."

Given that Singapore is facing mounting economic and geopolitical challenges globally and at home, "we need to focus on the region... Much more work needs to be done in our own backyard".

A number of panellists, including Mr Jimmy Koh, head of investor relations and research at United Overseas Bank (UOB), suggested that Singapore companies venture abroad in consortia comprising both large firms and SMEs, to facilitate international expansion.

Mr Liang, who is the chairman of the Government Parliamentary Committee for Finance and Trade and Industry, said he was heartened to see business leaders not just raise issues but also offer solutions.

He told The Straits Times after the event: "The key thrusts of our economic transformation are already in place. It's now about how we all work together, as part of a concerted effort.

"Short-term issues are there every year. There will be some resources allocated to short-term issues but we cannot lose sight of the long-term."

A version of this article appeared in the print edition of The Straits Times on January 12, 2017, with the headline 'Top of business wish list: Some help with soaring costs'. Print Edition | Subscribe