Around 75 per cent of small and medium-sized enterprises (SMEs) believe the proposed goods and services tax (GST) hike will have little impact on their businesses, according to a new survey.
It also found that most respondents were confident of weathering the rise with the help of new initiatives such as the Productivity Solutions Grant and the Enterprise Development Grant.
Finance Minister Heng Swee Keat announced in his Feb 19 Budget speech that the GST will go up from 7 per cent to 9 per cent between 2021 and 2025.
"The early proposal of the GST hike means that SME owners have enough lead time to plan ahead and ensure that they have the necessary provisions when the tax is implemented," said Ms Joyce Tee, group head of SME Banking at DBS, which polled 240 SME clients with revenues up to $200 million.
Small retailers and economists had earlier expressed concern that a sudden spike in GST would hurt consumer spending and impact Singapore's economic recovery.
Another Budget measure was the extension of the Wage Credit Scheme. About 82 per cent of SMEs responded favourably to this move, as labour costs continued to be a bugbear for 60 per cent of those polled.
The survey also revealed that expanding abroad is not a concern, with 48 per cent saying that growing outside Singapore was a low priority. This compares with 33 per cent, who said the same about innovating their business model to reduce costs.
Only 17 per cent said focusing on innovating their business model to grow market share was a low priority. But the survey also revealed that the lack of urgency to internationalise could be linked to the ability of SMEs to undertake such a challenge.
ENOUGH LEAD TIME
The early proposal of the GST hike means that SME owners have enough lead time to plan ahead and ensure that they have the necessary provisions when the tax is implemented.
MS JOYCE TEE, group head of SME Banking at DBS.
About 33 per cent said that insufficient knowledge of new markets is hindering their overseas growth, while 30 per cent cited the lack of capital as one of the biggest issues when executing regionalisation plans.
However, 80 per cent said that they would be more confident about accessing regional market opportunities if given the right resources, such as access to capital and market insights.
Mr Kausshal Dugarr, founder and chief executive of Teabox, is one SME owner who has taken the leap. Teabox now operates in Singapore and India, and supplies teas to more than 110 countries.
"Expanding into new markets is a priority for us. However, breaking into overseas markets can be costly and the double tax deduction scheme will help me to save costs which I can then use to reinvest in my business," Mr Dugarr said.