Budget 2016

Budget 2016: Thumbs-up for moves to spur innovation

Business groups hail long-term transformation initiatives but SMEs would like to have more help in managing costs

Mr Kumar is concerned about the cost of doing business in Singapore. His hope is that business sentiment improves so there can be more investments flowing here and new projects to work on.
Mr Kumar is concerned about the cost of doing business in Singapore. His hope is that business sentiment improves so there can be more investments flowing here and new projects to work on. ST PHOTO: AZMI ATHNI

Business groups cheered the long-term measures in the Budget that support the goal of transforming industries, but many small and medium-sized enterprises (SMEs) felt that more could have been done on the issue of costs.

Singapore Business Federation chairman Teo Siong Seng supported the long-term moves that would help companies innovate and scale up.

Among the measures announced by Finance Minister Heng Swee Keat on Thursday was a $400 million automation package.

Mr Teo also welcomed the importance that Mr Heng had placed on the partnerships among companies, industries, chambers and the Government.

The minister announced a $30 million programme, which will support trade associations and chambers in working with businesses to transform.

The president of the Singapore Chinese Chamber of Commerce and Industry (SCCCI), Mr Thomas Chua, said "we are glad that the Government recognises the key role that trade associations and chambers can play".

However, SMEs had hoped for more help with the slowing economy, instead of the targeted measures announced on Thursday.

For example, there was a deferment of foreign worker levies for the badly affected marine and process sectors but none for the service and construction sectors.

One of those companies which did not get any deferment was Techgems Engineering and Construction.

But for its managing director, Mr Birendra Kumar, the bigger issue is the cost of doing business.

Mr Kumar's mid-sized construction company has 235 workers and helps multinational companies in the petrochemical and pharmaceutical industries build and maintain their factories.

His view is that if costs were lower, "we can see more investors coming to Singapore, and we could have newer projects to work on", he said.

He has heeded the Government's call on productivity and invested in a $1 million excavator but if there are fewer projects from MNCs, his business suffers correspondingly.

Getting easy access to financing is very much on the mind of Mr Peter Chua, who owns three spectacles shops - two in Singapore and one in China.

While he welcomed the $300,000 SME Working Capital Loan scheme highlighted in the Budget, Mr Chua said that "the banks are quite unwilling to take risks nowadays, and with the Government taking only a 50 per cent share of the risk", he is still concerned that he may not get a loan.

"It would be better if we could apply for such loans directly from the Government," he suggested.

But the heads of chambers also cautioned about expecting the Government to do too much for companies. SBF's Mr Teo said: "The businesses cannot always expect the Government to give (handouts)."

The founder of sushi chain Sakae Holdings, Mr Douglas Foo, who is also Singapore Manufacturing Federation president, said that if the Government had deferred levies for more sectors, "it helps to bring business costs down... then, if this happens, the companies may start asking for more, and this begs the question of how much is enough?"

Mr Foo noted that it is unrealistic to expect the Government to help SMEs to ride out the rough patch with "immediate pain relief" every time the economy undergoes a downturn.

"We need to consider the costs to the nation, and balance between taking resources to help the enterprises and the interests of the country as a whole," he said.

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A version of this article appeared in the print edition of The Straits Times on March 26, 2016, with the headline Budget 2016: Thumbs-up for moves to spur innovation. Subscribe