SINGAPORE - The need to maintain economic competitiveness and support for businesses amid rising costs was among the key topics addressed by Deputy Prime Minister Lawrence Wong during the Lianhe Zaobao Singapore Budget 2023 Business Forum, sponsored by UOB and held at Capitol Theatre. Here are five highlights from the discussion:

1. Over 95 per cent of Singapore households have claimed CDC vouchers

More than 95 per cent, or about 1.18 million, of Singaporean households have claimed the latest and third tranche of Community Development Council (CDC) vouchers, said Minister of State for Trade and Industry Low Yen Ling, who was one of the panellists.

Under the scheme, meant to help Singaporeans cover expenses for daily essentials, every Singaporean household – about 1.3 million of them – received $300 worth of vouchers in January 2023.

The vouchers can be used at participating heartland merchants, hawkers and supermarkets. There are now 21,250 merchants on board, said Ms Low.

She added that in 2½ months, over $211 million worth of vouchers have been spent – about $95 million at heartland shops and $117 million at supermarkets.

2. Government to do what it can to support businesses amid rising costs

Responding to a question by Mr Kurt Wee, president of the Association of Small & Medium Enterprises, on help for businesses amid rising costs, Mr Wong said the Government will do what it can to help reduce costs.

For example, the recently introduced eGuarantee@Gov service is meant to help businesses save on couriers or storage of paper guarantees.

But Mr Wong said he hoped businesses would understand that costs in Singapore will be higher than others in three areas – land, energy and manpower – as land is scarce, energy is imported and the labour market is limited as population growth slows.

Businesses must put in effort to make relevant changes, such as continuing to transform their businesses, automate and reduce reliance on manpower, and internationalise, and the Government will help them to do so, he added.

3. Businesses should partner each other to expand reach

The Government wants to encourage businesses to work together to expand overseas, rather than go at it alone, said Mr Wong.

He noted that in Japan or South Korea, many businesses work together when exploring overseas markets.

“Previously, people would say that Singapore businesses don’t like to work together. Of course, the Government cannot force businesses to work together; this is a business decision. But now, we see changes as more are working together,” he said.

He added that the authorities will look into seeing how they can better help business associations to encourage them to find new markets.

4. SVB fallout not likely to affect Singapore

The recent collapse of the Silicon Valley Bank (SVB) in the United States has not really affected the local banks, said Mr Wong.

He was responding to a question from forum moderator and Lianhe Zaobao editor Goh Sin Teck on the impact of the SVB failure here.

SVB’s early-March collapse was followed by the closure of New York-based Signature Bank. Another bank, California-based Silvergate Bank, has also announced plans to wind down and voluntarily liquidate its operations.

Mr Wong said SVB’s situation cannot be compared to the 2008 global financial crisis that saw the collapse of investment bank Lehman Brothers, and when every bank was affected.

For SVB, the issue is about confidence in the bank’s ability to return its clients’ money, added Mr Wong.

However, even if this does not affect Singapore, there may be other challenges, such as financial risks, a more severe virus, climate change, rising sea levels or even war, he said.

UOB’s head of research Suan Teck Kin said that with the US government’s move, things have been relatively resolved, though people will continue to worry about the potential collapse of the next bank.

5. Singapore must maintain economic competitiveness

Singapore cannot be complacent, but should continue to work towards attracting investments from multinational companies (MNCs), said Mr Wong.

He was responding to Mr Suan on how Singapore can retain its competitiveness post-pandemic, as well as with potential corporate tax rate changes after the rollout of BEPS 2.0, a global scheme to discourage large MNCs from evading tax due to their home countries

Mr Wong said MNCs here know that Singapore does not have the lowest operating costs, but “Singapore can create value”.

He noted that BEPS 2.0 is meant to stop countries from using tax rates as an advantage to attract investments, but “this does not mean that investment competition will stop; it will instead turn to other areas”.

Many MNCs are now thinking about diverting operations back to their home countries, or to neighbouring countries with lower costs, he added.

Mr Wong added that Singapore needs to continue to innovate and create new solutions to provide more value for Singapore and the world.