SINGAPORE - Three in four small and medium-sized enterprises (SMEs) in Singapore believe that the proposed goods and services tax (GST) hike announced during Budget 2018 would only have moderate to no impact on their businesses, in a survey by DBS Bank.
In a poll of 240 SMEs, the majority of respondents said that they were confident of weathering the hike, with the help of new grants such as the Productivity Solutions Grant (PSG) and the Enterprise Development Grant (EDG) to provide some relief.
More than half of SMEs polled said that they were looking to the grants to address some of their business challenges, such as reducing manpower costs, enhancing productivity, and increasing sales and revenue.
Joyce Tee, DBS Bank group head of SME Banking said: "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."
Some 82 per cent of SMEs responded favourably to the extension of the wage credit scheme, even as labour costs continued to plague six in 10 of the SMEs that had taken the poll.
The survey also found that SMEs are concerned about their ability to internationalise.
One in three respondents polled said that the lack of knowledge of new markets is hindering their overseas growth, and 30 per cent cited the lack of capital as one of the biggest challenges when executing their regionalisation plans.
However, eight in 10 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.
Most SMEs polled (67 per cent) felt that the double tax deduction for internationalisation was important when factoring in the opportunity cost of expansion.
Kausshal Dugarr, founder and CEO of Teabox is one such SME owner who has taken the leap. Teabox now operates in Singapore and India, and supplies teas to over 110 countries worldwide.
"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.
The DBS post-Budget SME poll surveyed 240 SME clients with revenues of S$200 million and below.