Balancing act in helping firms

In something of an annual pre-Budget ritual, small and medium-sized enterprises are crying out for government help to tackle the high cost of doing business here, especially manpower costs.

But they note that this year, the local economy - hit by weaker global demand, low oil prices and stock market volatility - looks set to take a turn for the worse. Some firms are already said to be facing problems collecting payments from customers.

As firms brace themselves for tougher times, they hope the Government will offer timely relief in its March 24 Budget, just as it did in 2009 at the height of the global financial crisis.


But they might have to moderate their expectations, given that Finance Minister Heng Swee Keat notes this is a slowdown, not a recession.

The Government will look to help firms get through this rough patch but the focus will still be on helping them restructure to deal with changes in the global and regional economies, he said last Friday.

Economists say any short-term help the Government could offer is unlikely to amount to much. But some business leaders argue that while things may not look as bad as the sudden shocks sparked by the 2008 US housing crisis, it could turn out to be a sharper and more prolonged downturn.

Still, as with any other Budget, the Government faces finite resources and has to balance the competing demands of easing short-term pain and investing in the future. And, as experts have noted, this slow economic growth environment may be here to stay, as Singapore's economy matures. That means pain that may seem to be short-term may, in fact, turn out to be longstanding. If this is the new reality, just how much - and for how long - can the Government keep using taxpayers' money to help businesses?

Business operators here are very much aware of this too, and want the Government to help them help themselves - to innovate and to go overseas.

So this tussle between allocating public resources to fight short-term fires and growing stronger to ensure longer-term survival looks to be an ongoing storyline for businesses here in the years ahead.

A version of this article appeared in the print edition of The Straits Times on March 09, 2016, with the headline 'Balancing act in helping firms'. Print Edition | Subscribe