More time needed to assess if extra support for firms, people is needed: Lawrence Wong

SINGAPORE - Evaluations are ongoing to see if support to businesses and individuals to help defray cost pressures can be rolled out earlier than planned, and more time is needed to assess if additional help is required, Finance Minister Lawrence Wong said on Monday (March 28).

He noted how there have been calls for increased support for small and medium-sized enterprises (SMEs), given the rising pressures they face amid the uncertain global environment.

"Some of these new measures have only been announced recently and funds have yet to be given out. Yet some people are already saying that there is not enough support," Mr Wong said.

The minister also noted that the Government continues to monitor the Ukraine crisis and its impact on the economy and prices closely, assuring that should the situation worsen, it will definitely provide further support to Singaporeans and businesses.

He was speaking at the Lianhe Zaobao Singapore Budget 2022 Business Forum, which was held at the Capitol Theatre in Stamford Road.

Other panellists at the forum were Ms Low Yen Ling, Minister of State for Trade and Industry, as well as Culture, Community and Youth; Singapore Chinese Chamber of Commerce and Industry president Kho Choon Keng; Singapore Business Federation chairman Lim Ming Yan; Association of Small and Medium Enterprises (ASME) president Kurt Wee and UOB research head Suan Teck Kin.

The discussion was conducted in Mandarin and moderated by SPH Media Trust's Chinese Media Group editor-in-chief Lee Huay Leng.

Mr Wong said: "I understand that many SMEs wish that the Government can provide more help. I want to be able to provide SMEs with more help as well, but I hope that everyone understands that if the Government is to give greater support, it will also need to increase its revenue.

"In that case, why don't we discuss who is willing to pay higher taxes?" he added, stressing the need to strike a balance.

The minister explained how smaller enterprises tend to benefit more from support schemes announced in the annual budgets, with some 80 per cent of measures for businesses this year intended to help SMEs in their transformation efforts, in ways such as digitalisation and training support.

During the discussion, he urged firms to embrace transformation and tap government schemes and other support avenues, such as SME Centres, in their journey.

Other topics brought up at the forum included firms' manpower concerns, such as foreign labour constraints and the shortage of skilled tech talent.

In particular, ASME's Mr Wee suggested changes to allow SMEs to employ their first two S Pass holders under a quota of up to 15 per cent of the total workforce - which was the guideline for hiring S Pass workers in the service sector before changes that took effect from Jan 1, 2020.

He explained that in the past, SMEs could hire a foreigner under an S Pass for every six local employees, but the current guidelines capping the number of S Pass holders at 10 per cent of the firm's total workforce mean that they would need to hire nine locals to be eligible to hire one S Pass worker.

"How would an SME be able to hire three more locals?" Mr Wee asked, pointing out that the size and revenue of a smaller enterprise make it difficult for it to deal with such labour policy constraints.

Replying, Mr Wong underscored the importance of driving transformation and to reduce firms' reliance on foreign labour, adding that if S Pass quotas are relaxed too much, this could affect employment opportunities and salaries of local graduates in the relevant sectors.

Government agencies will continue to address the challenges that SMEs face in attracting and retaining talent, and to tackle skills mismatch between employers and job seekers, he added.

UOB's Mr Suan highlighted how Singapore's taxation system was enhanced in the recent Budget to become more progressive and how it is intended to help strengthen the Republic's social compact. But he also raised a concern about the messaging of the moves taken.

He asked if Singapore's actions would send the wrong signals to foreign investors and make the country seem less friendly to foreign corporations, with changes such as higher personal income tax rates for top earners.

Mr Wong acknowledged that Singapore's perceived friendliness to external parties and its resulting competitiveness were a consideration when making tax changes in the Budget, and the ministry sought to ensure that the changes overall would be fair and equitable for society.

Too much of an increase in personal income tax rates would definitely hurt Singapore's competitiveness, he said, noting how some wealthy individuals may move elsewhere should tax rates be increased.

"I think foreign investors need not worry," he said, adding that Singapore's competitiveness should not, and cannot, depend solely on its tax rates.

The Republic has other strengths that appeal to investors, such as its stable governance and robust regulatory environment, Mr Wong added.