This year's Budget is a good one, being forward-looking and future-oriented. The Government is doubling down on transformation and innovation, which is the right thing to do to get Singapore to where it needs to be. For me, four themes stand out:
Successfully launching the Industry Transformation Maps (ITMs) for 23 sectors covering about 80 per cent of the economy is the singular most important thing that Singapore needs to drive. I am pleased that the Government will launch the remaining 17 ITMs this financial year. Putting an additional $1 billion into the National Productivity Fund for industry transformation gives teeth to ensure these ITMs succeed.
Various measures announced point to the continued development of an innovation culture - the injection of $500 million into the National Research Fund, the establishment of the Global Innovation Alliance, and the creation of the SMEs Go Digital Programme to help SMEs build digital solutions.
Innovation ensures Singapore companies remain relevant at a time when whole industries are getting disrupted. It also improves productivity, drives efficiencies and potentially lowers costs. At DBS, our digitalisation efforts in recent years have enabled us to improve our cost-to-income ratio by 2 percentage points to 43 per cent, even as we expanded our business and customer base. In the same vein, the Government's commit- ment to a permanent 2 per cent downward adjustment to the budget caps of ministries, in part by driving innovation in delivery, is laudable.
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Singapore's strategy in the early stages of its development was to attract multinational corporations to invest and create
Putting an additional $1 billion into the National Productivity Fund for industry transformation gives teeth to ensure the Industry Transformation Maps succeed.
jobs here. But increasingly, it needs an outward- bound strategy; and to switch from a gross domestic product orientation to a gross national product one. To this end, the $600 million International Partnership Fund to help Singapore-based firms scale up and internationalise will be helpful, particularly for smaller SMEs (small and medium-sized enterprises).
Implementing a carbon tax on the emission of greenhouse gases, restructuring diesel taxes and increasing water prices are all important steps that underline Singapore's commitment to sustainability.
While these four thrusts are focused on the future, initiatives announced for the shorter term are also useful.
For instance, the acceleration of $700 million worth of public-sector infrastructure projects is helpful, particularly since foreign worker levies for the sector will still be raised. At the same time, SMEs do need help, and measures such as the continuation of the Wage Credit Scheme will be beneficial.
Still, these measures might not be adequate for all SMEs. The Singapore Business Federation, for instance, has said it was disappointed with the Budget's short-term measures. I believe SMEs that are willing to adapt and be part of the transformation agenda will find the Budget to be more useful as they leverage government incentives, but those that stay traditional will find it lacking.
- Piyush Gupta is DBS Group's chief executive officer.