Businesses expected more help in Budget for short term

Mr Ho, SBF's chief executive, said survival remains a question for many companies.
Mr Ho, SBF's chief executive, said survival remains a question for many companies.

SMEs upset at the lack of support to ride out headwinds amid rising costs

Many companies and business associations here are only lukewarm over measures for businesses unveiled in this year's Budget.

Small and medium-sized enterprises (SMEs), in particular, had been hoping for more help in a tough economy but feel dissatisfied given the lack of support to ride out current headwinds.

The Singapore Business Federation (SBF) said it is "disappointed" with the lack of short-term measures for companies this year, given that rising business costs have been a persistent concern.

"For example, the deferment of foreign worker levy (increases) by one year for only the marine and process sectors should have been extended across other sectors which are still experiencing cost challenges," it said. "There is also an absence of measures on rental rebates for businesses in general."

SBF chief executive Ho Meng Kit told The Straits Times the latest measures - coming as industries, including oil and gas, retail, and food and beverage, remain heavily challenged - are simply "not enough", as survival remains a question for many companies.

Rising business costs remains a major bugbear for many firms. Home-grown chemical company Tee Hai Chem expects its utilities bill to climb around 5 per cent due to higher tariffs, said executive director Han Koon Juan. While "manageable", it comes after business costs have grown by an average of 5 per cent annually over the past two to three years, he added.

The Government has said it will take steps to alleviate the problem of rising costs with measures such as the enhanced and extended corporate income tax rebate. But the move may benefit only those reporting corporate income in Singapore.

For 3D-printing firm EOS Singapore, for example, the rebate is unlikely to help much, said Mr Terence Oh, vice-president of Asia-Pacific operations. "In our current business dealings, customers are invoiced through our headquarters in Munich. As such, the profit registered here is minimal and the tax rebate would have minimal impact on our bottom line for the Singapore entity."

Still, the firm is converting its Singapore entity into its regional headquarters, which will allow it to better benefit from the tax rebate, he said.

Deloitte Singapore tax partner Ong Siok Peng noted it would have been more helpful to reintroduce the SME cash grant to help firms which are not tax-paying to cope with rising business costs.

DBS Bank economist Irvin Seah said it is understandable some sectors see the Budget as more muted than previous ones, given the lack of "a big key thrust" for firms. Still, he noted the Government's primary deficit is set to deepen to $5.62 billion this year, more than double last year's $2.72 billion - meaning it will be spending much more in the year ahead.

"What people have forgotten is that a lot of the help measures were put in place two to three years ago, and that they still remain in place. Singaporeans need to understand that we can't afford to have a 'big bang' Budget every year."

Recovery will come, added Mr Seah, citing the Republic's strong 2.9 per cent uptick in gross domestic product for the fourth quarter last year.

"Most of that growth was likely driven by the bigger players... It will take time, but the recovery will eventually spill over to our domestic companies."

That said, some firms are fairly upbeat. Mr Francis Koh, managing director and group chief executive of construction firm Koh Brothers Group, said the $700 million in public infrastructure projects to be brought forward will be an industry impetus.

And while foreign worker levies are set to rise this year, the firm is confident this will not have a major impact on the business, given technology initiatives it has put in place to cut reliance on manpower.

•Additional reporting by Lee Xin En

A version of this article appeared in the print edition of The Straits Times on February 22, 2017, with the headline 'Businesses expected more help in Budget for short term'. Print Edition | Subscribe