The shadows of Brexit, the US presidential election result, and an increasingly inward-looking world loomed large over the Singapore government’s 2017 budget announcement today. So did the recommendations of the Committee on the Future Economy report, as Singapore seeks to adapt to new challenges.
In presenting the 2017 budget to Parliament, finance minister Heng Swee Keat echoed the report’s recommendations of enabling digitization for small and medium-sized enterprises (SMEs), attracting more funding, and maintaining connections to international markets and innovation hubs.
Here’s how the future economy looks for the technology and #startup space in Singapore:
Helping Singaporean firms cross borders
The government will set aside US$420 million for an International Partnership Fund. It will work with local enterprises to co-invest in their expansion overseas. The International Enterprise Singapore scheme helped more than 37,000 companies in 2016, 9 percent more than in 2015.
Singaporean companies must immerse themselves in new markets and understand their customers more deeply if they are to take advantage of the growing consumer class of many Asian cities, the minister said.
Measures proposed by the Monetary Authority of Singapore (MAS) will relax the restrictions on setting up new venture capital funds in Singapore and provide more sources of funding for startups and SMEs.
The National Research Fund and the National Productivity Fund, both older schemes to enhance research and development, will be topped up by US$352 million and US$705 million respectively. This brings the total budget to implement the strategies of the CFE report to US$1.7 billion over the next four years.
Turning SMEs digital
Enhancing SMEs’ technological capabilities has been a big target for the government and one of the key recommendations of the CFE. The minister announced the SME Go Digital program, which will help small companies modernize their services with the help of technology, especially in sectors like food & beverage, retail, hospitality, logistics, and others.
This will involve SME centers where business owners can receive step-by-step tech support and get advice on which off-the-shelf solutions have been approved for funding support.
Businesses that are ready to pilot emerging tech services will receive both financial support and advice. The program will be led by Singapore’s Infocomm and Media Development Authority, along with enterprise development agency SPRING and other government bodies.
Zeroing in on cyber security
An increased focus on cyber security will be essential if more businesses are to embrace technology. The minister said that Singapore’s Cyber Security Agency will work with professional bodies to train cyber security experts. He highlighted companies like telco SingTel for its efforts to train employees in this field and set up a Cyber Security Institute for education and research on electronic threats.
Tax and employee support for SMEs
SMEs will continue to benefit from a corporate income tax rebate at 50 percent of tax payable, capped at US$18,000, up from US$14,000 last year. The rebate will also be extended into 2018, with a reduced rebate of 20 percent of tax payable, capped at US$7,000.
Previously announced schemes will continue into 2017. One of them is the Wage Credit Scheme, through which the government co-funds 40 percent of wage increases for employees that are Singapore citizens and earn up to approximately US$2,800 per month. This will “help firms cope with rising wages,” the minister said.
The SME Working Capital Loan scheme, meanwhile, will share half the default risk for loans of up to US$210,000 per SME until 2019.
Commercializing research and innovation
Through the country’s Agency for Science, Technology, and Research (A-STAR), Singapore will give local companies access to more research and development resources, the minister outlined. A-STAR’s Headstart program will help SMEs co-develop intellectual property and enjoy royalty-free and exclusive licenses for up to 36 months.
Finally, a Tech Access initiative by A-STAR will give small companies the opportunity to use advanced equipment and get training and advice.
Regulatory sandboxes and industry transformation
Following the industry transformation recommendations from the CFE report, the minister announced that industry transformation maps have been developed for 23 sectors that cover 80 percent of Singapore’s economy. Six of those initiatives were launched last year and the remaining 17 will be launched in 2017. As per the report, the minister stressed it’s important to be able to adapt these maps when new potential industries emerge, to take full advantage of them.
He also stressed how the government must balance risk and the need for innovation, praising the effectiveness of regulatory sandboxes for allowing companies to experiment and test out ideas in a safe environment. Examples include the Monetary Authority of Singapore’s fintech sandbox and the Land Transport Authority’s test area for driverless vehicles in Singapore’s One North district.
Training Singaporeans for future jobs
As companies turn digital, workers should also adapt and learn new skills. New, shorter courses that can be split into multiple parts and e-learning will be applied to keep Singapore’s workforce current. The SkillsFuture credit scheme will continue, with subsidies for union members.
The CFE recommendations are guidelines to build up Singapore’s adaptability and resilience.
A Global Innovation Alliance will include initiatives for education, including the Innovators’ Academy, with which university students can build connections and find training overseas. So far available to NUS students, it will be extended to other universities in Singapore as well. Innovation launchpads in cities like Beijing, San Francisco, and cities in Southeast Asia will enable local entrepreneurs to build international networks.
For leadership roles, Singapore will send professionals abroad through the SkillsFuture Leadership Initiative to gain international experience and specialized skills. 800 potential leaders will be selected for this over the next three years.
The minister said that the Committee on the Future Economy recommendations are not prescriptive blueprints but guidelines to build up Singapore’s adaptability and resilience, to keep the city-state relevant.
“As we stay open and connected, we have to understand our global partners and customers much better and more deeply. We must make the most of our strengths as a nimble, well-educated and tech-savvy society. We need to build a strong innovation and enterprise engine to complement our traditional strengths in efficiency and speed,” he said.
Converted from Singapore dollars. US$1 = S$1.42