Businesses

More near-term help for companies

Workers at a ASL Marine shipyard.
Workers at a ASL Marine shipyard. PHOTO: ST FILE

Together with existing measures, firms will get more than $1.4b in help in the year ahead

More help is on the way for companies in sectors that are struggling against economic headwinds.

Notably, foreign worker levy increases for the beaten-down marine and process sectors will be deferred by one more year, in view of the continued weakness in these two industries.

The process industry includes firms that manufacture petroleum, petrochemicals, speciality chemicals and pharmaceutical products.

The deferments for these sectors will now be extended from July 1 this year to June 30, 2018.

The levy for marine basic tier R1 workers will stay the same at $300 and, for R2 workers, at $400. The levy for basic tier R2 workers in the process sector will remain at $450.

  • $1.4b

  • Total short-term support for businesses over the next year

The construction sector will also be given a leg up by the Government bringing forward the start date for about $700 million in public-sector infrastructure projects to this year and 2018. Construction firms will be able to bid for these projects, which include the upgrading of community clubs and sports facilities.

But the Government will proceed with planned levy increases for the construction sector, so as to "sustain the momentum for productivity improvement", said Finance Minister Heng Swee Keat.

The levy for basic tier R2 construction workers will be raised from $650 to $700 in the period starting July 1 this year to June 30, 2019.

There will be no change to work permit levies for the manufacturing and services sectors. The levies for S Pass holders across all industries will also remain unchanged.

These targeted measures are part of the Government's increasing focus on providing specific support for firms across various industries.

"Given the uneven performance across different sectors, we need to go beyond general stimulus, and target the specific issues faced by different sectors," said Mr Heng.

More broad-based measures will also be rolled out to support businesses, including raising the cap for the corporate income tax rebate from $20,000 to $25,000 this year.

The rebate, which will remain at 50 per cent of tax payable, has also been extended for another year to 2018, but at a lower rate of 20 per cent of tax payable.

The enhanced and extended corporate income tax rebate will cost the Government an additional $310 million over the next two years.

There will be more support for companies hiring older workers as well, with the Additional Special Employment Credit extended until the end of 2019. Under the scheme, employers receive wage offsets of up to 3 per cent for workers earning less than $4,000 a month, and those not covered by the new re-employment age of 67, which kicks in from July 1 this year. Together with the existing Special Employment Credit, employers will receive support of up to 11 per cent for the wages of their eligible older workers.

The move is set to benefit around 120,000 workers and 55,000 employers, and will cost the Government $160 million.

Meanwhile, firms will continue to receive near-term support from the continuation of existing schemes, such as the Wage Credit Scheme and Special Employment Credit.

The SME Working Capital Loan, where the Government co-shares 50 per cent of the default risk for loans of up to $300,000 for each small and medium-sized enterprise (SME), will also remain available for the next two years.

 

The extra measures, coupled with the existing ones, will allow companies to get more than $1.4 billion in government help in the year ahead.

However, the Singapore Business Federation (SBF) said that the short-term measures were a disappointment, given the "inadequate short-term support to lower business and compliance costs".

Said Mr Lawrence Leow, chairman of the SBF-led SME Committee: "While it is comforting to know that this year's Budget has a strong focus on preparing our SMEs for the future economy, the current business outlook remains challenging. The business community requires immediate stimulus."

A version of this article appeared in the print edition of The Straits Times on February 21, 2017, with the headline 'More near-term help for companies'. Print Edition | Subscribe