A top global consultancy is urging the Government to tweak its policies in areas such as tax and pay schemes offering stock as incentives to liven up local enterprise.
The proposals from PricewaterhouseCoopers echo the Government's own call for Singapore to reinvent itself in its next phase of economic restructuring.
"To spur innovation, new ventures could be accorded a more liberal tax treatment of expenses," suggested Mr Chris Woo, tax leader at PwC Singapore. The tax system should accommodate the evolving nature of businesses today by allowing firms in an existing trade to deduct expenses incurred in their new business ventures against profits from their older ones, PwC suggested in a proposal out on Wednesday.
Another idea was for the Government to promote the use of share option and stock award schemes at smaller and younger firms to incentivise workers to be more entrepreneurial. This could be restricted to workers of start-ups or small and medium-sized enterprises, said PwC.
The Manpower Ministry should also let firms use the value of these equity-based remuneration schemes to meet the minimum salary requirements for employment pass applications, PwC said, thus lowering the cost of foreign hires.
LIBERAL TAX TREATMENT WANTED
To spur innovation, new ventures could be accorded a more liberal tax treatment of expenses.
MR CHRIS WOO, tax leader at PwC Singapore, on the consultancy's proposals to the Government
The flurry of recommendations comes ahead of next month's Budget, the first to be delivered in Parliament in the new term of government after last year's elections.
Firms will also be watching keenly when the Future Economy Committee submits its report - setting the tone for the next phase of restructuring - at the end of the year.
Budget 2016 comes at a critical crossroads, said DBS economist Irvin Seah. "Growth averaged a whopping 7.6 per cent per year for the past 50 years - and lifted per capita gross domestic product to one of the world's highest - but it has dropped to half that over the past five years."
The path ahead is all the more daunting as firms anticipate a departure from Singapore's model of foreign investment-led growth.
"Historically, Singapore's growth was largely driven by foreign multinationals (MNCs). This will likely prove more challenging as the population ages," said Mr Seah. "Although MNCs will remain key, having a pool of Singapore-based global companies with unique value propositions will help to deepen competitiveness."
Mr Seah added: "The emphasis will be on domestic capability development, which encourages growth to be more 'organic' and holistic in nature. This will differ from past policies of 'picking winners', which tended to stress pre-selected sectors for promotion."