SINGAPORE - The economy is facing stiff headwinds and companies will get immediate relief from slowing demand and more vicious competition but Finance Minister Heng Swee Keat on Thursday (March 24) laid out a far-reaching plan to transform and grow Singapore Inc - especially smaller firms - at a total cost estimated at $4.5 billion.
"The global economy is becoming more interconnected, more diverse and complex," said Mr Heng. "We must work together to muster our resources, to innovate, to scale up and internationalise."
The Industry Transformation Programme will "transform our enterprises, transform industries and transform through innovation", he said.
It will do so by:
- Integrating the different restructuring efforts
- Having measures that are more targeted and sector-focused
- Deepening the partnerships between industry and government and among industry players
- Stressing even harder on technology and innovation.
At company level, Mr Heng outlined four initiatives to help companies build deep capabilities, deploy technology, develop scale and internationalise:
An Automation Support Package will help companies, smaller firms especially, with the huge financial outlay that comes with rolling out or scaling up their business. It involves a grant of up to 50 per cent of project costs, capped at $1 million.
There is also a 100 per cent investment allowance for automation equipment while the Government will improve smaller companies' access to loans to buy equipment under a Spring Singapore scheme by taking on 70 per cent of the risk from 50 per cent currently. For non-SMES, this will be capped at 50 per cent.
Together, the Automation Support Package will provide support of over $400 million over the next three years, said Mr Heng.
He also announced a set of financial and tax incentives to support smaller businesses to grow that include expanding the existing SME Mezzanine Growth Fund by $50 million to $150 million.
This will be done by the Government matching up to $25 million of new private sector investment. To encourage larger firms to grow even bigger, the mergers & acquisitions allowance will rise to deals worth $40 million, twice the current cap of $20 million. The double tax deduction for internationalisation scheme will be extended till March 31, 2020.
To provide upfront certainty to companies as they restructure, the Government will also extend the non-taxation of companies' gains on disposal of their equity investments until May 31, 2022.
Meanwhile, a new Business Grants Portal will help companies access to the many grants available from different agencies by putting them all under one roof but organised under different needs like capability building, training and international expansion.
To get companies to grow and go abroad, industries themselves must also transform and come up with common solutions to common problems. Mr Heng announced several measures to help them do so.
The Government will spend over $450 million over the next three years under the National Robotics Programme to support the development and deployment of robotics in sector such as healthcare, construction, manufacturing and logistics. This should not only help companies cut labour costs with more automation but also create higher value-added jobs.
Two, it will develop a one-stop trade information system with electronic data sharing between businesses and government that will improve communication and cut down on paperwork.
The National Trade Platform will eventually replace existing TradeNet and TradeXchange systems and can bring about over $600 million worth of savings each year for companies in terms of man-hours.
The Government will increase its funding for trade associations and chambers (TACs), spending up to $30 million over the next five years, so that they can increase their outreach to firms, especially SMEs.
The Government will also lead the development of solutions for industry-wide solutions to common challenges with Spring partnering TACs to drive 30 such projects over the next three years to reach out to over 3,000 SMEs.
Transforming through innovation is the third key prong of the long-term growth plan.
The Government will make a S$1.5 billion top-up to National Research Fund to support the Research, Innovation and Enterprise (RIE) 2020 plan.Under RIE 2020, up to S$4 billion will be spent on industry-research collaboration by 2020.
It will also allow businesses the flexibility of writing down the cost of acquiring intellecual property over different periods of five, 10 or 15 years instead of the current five years only.
The Government will also set up SG-Innovate to match budding entrepreneurs with mentors and venture capitalists, help them access talent in research institutes and open up new markets.
It will also create a Jurong Innovation District - an area in Jurong West near Nanyang Technological University that will bring together students, researchers, innovators and industry professionals to create the products and services of the future.
Said Mr Heng: "Fifty years ago, we transformed Jurong from swampland into a thriving hub for the manufacturing industry that powered Singapore's economic growth. Now we will make another leap to create the industrial park of the future."