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5 key areas for business leaders to take note from Budget 2022

5 key areas for business leaders to take note from Budget 2022

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The Singapore government is doubling down on its support for SMEs in Budget 2022. Minister of Finance Lawrence Wong said during his Budget 2022 speech that over the past two years, the government has funnelled close to SG$100 billion towards COVID-19 relief measures, including support for businesses and the local workforce. According to him, unemployment has gone back to around pre-pandemic levels (3.2%). At the same time, the median income of the local workforce has increased by 1%, compared to a 0.4% dip seen in 2020.

This year's budget includes a focus on specific job sectors that were not only affected by the pandemic, but also by the COVID-19 restrictions that came after. Furthermore, the aviation sector will receive targeted assistance to ensure public health and safety at the airport, as well as to preserve core capabilities, to "preserve and enhance" Singapore's status as an international aviation hub. 

Wong also spoke about how investments in tech and innovation will help boost jobs in Singapore. Here are five key takeaways that businesses should focus on for Budget 2022:

1. Support for local businesses

The Singapore government will set aside SG$500 million for a jobs and business support package to help workers and businesses that are struggling from the aftermath of the pandemic. As part of the package, a small business recovery grant will be provided to SMEs most affected by the COVID-19 restrictions over the past two years, such as those in F&B, tourism, retail and hospitality sectors. The grant will provide SMEs with a SG$1,000 per local employee in the establishment, capped at SG$10,000. At the same time, local sole proprietors and partnerships in eligible sectors such as hawkers and market stallholders who do not hire local employees will also receive a SG$1,000 grant. 

Additionally, The jobs growth incentive, a salary support scheme that provides employers with 15% to 50% salary support for new local employees hired, will be extended until September 2022. The COVID-19 recovery grant, which provides temporary financial support to workers in lower to middle-income households who experienced a loss in income or employment, will be extended to end 2022. 

2. Investment in innovation

In addition to attracting more investments, Singapore is also looking to secure more high-quality, cutting-edge and innovative projects. Singapore has grown to be a more vibrant startup and innovation ecosystem. Last year alone saw 11 Singapore businesses achieve unicorn status. Along with other tech firms, these will create many highly-skilled jobs and opportunities for Singaporeans.

However, Singapore's total business expenditure on R&D falls behind compared to other economies. Even then most of the R&D are driven by MNCs - local enterprises, which account for about 80% of all firms, make up for only about a quarter of total business R&D expenditure. 

To help local firms undertake R&D, the capacity of centres that provide research and innovation support to SMEs will be increased such that they will be able to undertake close to 2,000 innovation projects across five pilot sectors over the next five years. These include agri-tech, construction, food manufacturing, precision engineering and retail. Singapore currently has over 80 such centres across polytechnics and ITEs, which work closely with SMEs to undertake industry projects, often leading to innovations, Wong said. The expansion will see an eight-fold increase in the number of innovation projects undertaken in these sectors.

3. Jobs because of hub structure

Singapore will continue to be "a strategic launchpad for businesses around the world" looking to expand to new markets in the region. Wong cited how BioNTech has established Singapore as its Southeast Asia regional headquarters, as well as its plans to build a fully integrated MRNA manufacturing facility in Singapore, which will be operational by the end 2023. Such investments and plans to build business headquarters and operations in Singapore will create many good jobs for Singaporeans, Wong said. 

4. US-China conflict

The US-China conflict has intensified, which may come with global impacts. "We have entered a new era of greater contestation for influence between countries and blocks, which may erode the rules-based multilateral system," Wong said. As the system had been crucial to Singapore's success, it has to learn to contend with external challenges and adapt quickly to the new environment.

5. Tech talent up skill

The pandemic saw businesses "turbo charge towards the digital future", disrupting and reshaping businesses across all sectors. This allows local businesses, especially digitally-savvy ones, to take advantage of the rich opportunities on offer and transcend geo-locations and gain a larger consumer base. 

To strengthen its digital capabilities, about SG$200 million will be set aside over the next few years to enhance schemes that build such capabilities among firms and workers. The SG$200 million sum will be partly used to enhance initiatives such as the advanced digital solutions scheme, which helps firms adopt cutting-edge digital solutions such as in robotics. It will also be used to expand the grow digital scheme, which helps businesses access overseas markets digitally.

This will come on top of infrastructure investments in broadband infrastructure and future technologies such as 6G.

Just this week, the Ministry of Trade and Industry (MTI) said Singapore's economy expanded by 7.6% in 2021. For 2022, MTI has maintained the GDP growth forecast at 3.0% to 5.0%. The Singapore economy grew by 6.1% on a year-on-year basis in the fourth quarter of 2021, moderating from the 7.5% expansion in the preceding quarter. On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 2.3%, faster than the 1.5% growth recorded in the previous quarter.

Photo courtesy: 123RF

 

 

 

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