Singapore Budget 2019: $4.6 billion over next 3 years committed to building business capabilities and helping workers

There will be $3.6 billion earmarked to assist workers during industrial disruptions while $1 billion will enable firms to grow their deep enterprise capabilities.
There will be $3.6 billion earmarked to assist workers during industrial disruptions while $1 billion will enable firms to grow their deep enterprise capabilities.PHOTO: ST FILE

SINGAPORE - Around $4.6 billion will be invested to boost businesses and support Singaporean workers over the next three years.

There will be $3.6 billion of this earmarked to assist workers during industrial disruptions while $1 billion will enable firms to grow their deep enterprise capabilities.

"But let me emphasise that supporting companies and supporting workers are mutually reinforcing," said Finance Minister Heng Swee Keat. "Stronger companies provide better jobs and pay for workers, and highly skilled workers make companies stronger."

Start-ups and small- and medium-sized enterprises were also given help to boost business.

Trade promotion agency Enterprise Singapore (ESG) in partnership with the public and private sector will launch a Scale-up SG programme to assist high-growth local firms identify how they can innovate, grow and venture overseas.

ESG will also run a two-year pilot to help firms obtain advice on innovation opportunities and ways to commercialise technology from "Innovation Agents" - industry veterans with expertise in technology and business.

Mr Heng said another way to help companies is to draw in "smart, patient capital that attracts investors with the expertise and the right time horizon".

To this end, an additional $100 million will be set aside for a new SME Co-Investment Fund III, adding to the $400 million already earmarked through two rounds of fund injections in the Co-Investment Programme launched in 2010.

The original two rounds attracted about $1.3 billion of additional funding for SMEs. Mr Heng expects the new fund will bring in another $200 million for these firms.

The Government will also increase the accessibility of loan financing for firms, said Mr Heng, acknowledging that banks such as DBS and OCBC have also been doing the same for SMEs.

 
 
 

In addition, the eight financing programmes offered by ESG will also be streamlined into a single Enterprise Financing Scheme to be launched in October, covering trade, working capital, fixed assets, venture debt, mergers and acquisitions and project financing.

The Government will take on up to 70 per cent of the risk for bank loans, up from 50 per cent in existing schemes, made by firms that have been incorporated for less than five years, said Mr Heng.

The existing SME Working Capital Loan scheme, which will be under the Enterprise Financing Scheme when it is launched, will be extended for two more years, until March 2021. This scheme has enabled loans of around $2.5 billion since it started in 2016.

Government assistance will also be available in a tiered manner to help firms build deep enterprise capabilities.

The Economic Development Board, ESG and other agencies will provide customised support for large firms or those with strong growth potential. SMEs will be supported through "scalable solutions" while medium-sized firms seeking to grow will be given targeted support in their different industry clusters. More details will be released in the budget debate.

Trade associations and chambers will also develop five-year plans to map out how they can help their industries transform. These business groups have a key role to play in helping businesses build partnerships and grow abroad, said Mr Heng.

The Government is also working with partners to facilitate the secure exchange of electronic trade documents to lift productivity.

These measures come amid an expected moderation of global economic growth this year, said Mr Heng.

Singapore's economy grew by 3.2 per cent in 2018 compared with 3.9 per cent in 2017.

"Our efforts to transform our economy are bearing fruit," said Mr Heng, who cited the 23 industry transformation road maps that were launched in the 2016 Budget.

He noted that productivity has grown by 3.6 per cent a year since 2016, up from 1.6 per cent a year recorded in the preceding three years.

Part of these productivity boosts arise from the Government's financial and advisory support of SMEs, many of whom would otherwise be hard-pressed for resources to beat industrial disruption, said business owners.

Mr Anurag Avula, chief executive of e-commerce platform Shopmatic, told The Straits Times that measures to support SMEs are very encouraging, adding: "Young companies face a constant challenge of being resource- or capital-constrained, which potentially limits growth and the speed to scale."

 
 
 

Local food manufacturer Golden Bridge tapped programmes like the Lean Enterprise Development Scheme to automate production and raise efficiency over the years.

It has also partnered a local institute to developed smart manufacturing methods and has digitised its processes from resource planning to maintenance scheduling.

These have enabled Golden Bridge to be competitive against other food manufacturers in Europe, where it is now seeking to expand into, said operations director Ong Chew Yong.

While the manufacturing industry has performed strongly, Mr Heng said the construction and some services sectors continue to show weaker productivity growth.

"But this is a continuing journey," said Mr Heng. "There is much more we can do, especially in sectors like domestic services. We must press on."

Read Mr Heng's full speech.