Budget 2021: Local companies can access co-funding schemes to transform, digitalise

A total of $1 billion has been set aside for new digital transformation schemes for mature companies. ST PHOTO: LIM YAOHUI

SINGAPORE - The Government will provide local companies with a range of avenues to access capital they may need to innovate, transform and scale up their businesses.

"To catalyse the flow of capital and bridge market gaps, the Government will step up risk-sharing arrangements with providers of capital, and provide grants to support businesses at various stages of growth," Deputy Prime Minister Heng Swee Keat said on Tuesday (Feb 16).

To ensure that high-growth companies, including start-ups, have access to financial capital, the Venture Debt programme will be extended and enhanced - with an increase in the cap on loan quantum support from $5 million to $8 million.

"With this, we expect about $45 million of venture debt to be catalysed over the next year," Mr Heng said.

Under the debt programme, the Government also shares up to 70 per cent of the risk on eligible loans with participating financial institutions.

From 2016 to 2019, early-stage funds raised for promising enterprises have grown at an annualised rate of 44 per cent, helping build an ecosystem of budding entrepreneurs and venture funds.

For more mature companies, including small and medium-sized enterprises (SMEs), the Government will co-fund their plans to adopt digital solutions and new technologies.

A total of $1 billion has been set aside for new digital transformation schemes - such as the Emerging Technology Programme, Chief-Technology-Officer-as-a-Service (CTOaaS) initiative and Digital Leaders Programme - for mature companies.

The Emerging Technology Programme will co-fund the costs of trials and adoption of frontier technologies like 5G, artificial intelligence and trust technologies.

"This will support commercialisation of innovations and diffusion of technology downstream," Mr Heng said.

To help firms identify and adopt digital solutions, the new CTOaaS initiative will provide SMEs with access to professional information technology consultancies.

The Digital Leaders Programme will support companies in hiring a core digital team and developing and implementing a digital transformation road map.

The Government will also extend its enhanced support of up to 80 per cent for existing enterprise schemes to end-March 2022. These include the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance Grant and Enterprise Development Grant.

Mr Heng said that technological advances will enable many tasks that are physically demanding or repetitive to be better done by machines.

Hence, a critical part of business transformation in the coming years will be to redesign jobs in accordance with technological advances.

"With an ageing workforce, we must leverage technology to develop senior-friendly workplaces," he said.

He gave the example of local restaurant chain Tim Ho Wan, which worked with the National Trades Union Congress' e2i (Employment and Employability Institute) to modernise the previously tedious tasks of manual ordering, tabulation and reporting, saving 20 per cent to 30 per cent in man-hours.

To ensure productivity gains are shared with employees, e2i also negotiated with the company to increase the salary of the impacted older staff, he said.

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On Tuesday, Feb 16, Deputy Prime Minister Heng Swee Keat delivered his Budget statement. Our panel of experts breaks down what Budget 2021 means to Singaporeans.
This show is jointly hosted by The Straits Times and Money FM 89.3.

To support businesses in redesigning jobs, the Government will enhance the Productivity Solutions Grant for job redesign by raising the government co-funding ratio from 70 per cent to 80 per cent till end-March 2022.

For large local enterprises (LLEs) that are ready to transform or expand overseas on a larger scale, the Government will complement existing grants and loans, and support them through equity investments, tapping market players to ensure commercial discipline.

A sum of $500 million will be set aside to be co-invested with Singapore investment company Temasek in a Local Enterprises Funding Platform, which will be managed commercially.

Temasek will match the Government's funds on a one-for-one basis, so the platform will have $1 billion to invest in non-control equity and mezzanine debt of selected LLEs, which will work with the fund manager to pursue their next phase of growth.

The Ministry of Trade and Industry will provide more details on the fund later, Mr Heng said.

Read next: Highlights of Budget 2021 - From household vouchers to GST on imported low-value goods bought online

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