The Singapore government will be expecting a SG$64.9 billion overall budget deficit in 2021, which is the nation's largest deficit since independence. According to the Budget 2021 speech delivered by deputy prime minister and finance minister Heng Swee Keat, this comes on the heels of lower revenue, as well as increased expenditure in combating the negative effects brought upon by COVID-19.
Although the nation's GDP has shrank by 5.4% in 2020, the government is taking a bullish approach by investing heavily into innovation and tech.
While it looks to further support sectors that are badly hit by the pandemic such as aviation, aerospace, and tourism in 2021, the Singapore government is also looking to help businesses in Singapore digitalise and innovate, to build Singapore's reputation as a "global-Asia node".
The Singapore government will be injecting SG$1 billion in various schemes to help mature enterprises adopt emerging technologies such as 5G, artificial intelligence (AI), and trust tech. DPM Heng said in his Budget 2021 speech that the government will be launching a new Emerging Technology Programme, which will co-fund costs of trials and adoptions of such technologies, in order to encourage businesses in Singapore to sharpen their competitiveness, innovate, and facilitate the diffusion of technology.
To further aid companies in adopting emerging technologies, Heng said the government will also be launching a "CTO-as-a-service" initiative, which will provide businesses with access to IT consultancies, to help firms identify and adopt digital solutions more efficiently. Additionally, a Digital Leaders Programme will also be launched to help businesses hire core teams to further develop their digital transformation roadmap. To top off the new initiatives launched, the Singapore government will also be extending existing enterprise schemes to end March 2022. This includes the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance, and Enterprise Development Grant.
Here are four more areas marketers should keep an eye on for the Budget 2021:
1. Funding large local businesses to scale globally
The Singapore government is looking to help large local enterprises scale globally by providing a growth capital of SG$500 million. The funding platform will be co-invested by Temasek Holdings, which Heng said will match the government's funds on a one-for-one basis, amounting to a sum of SG$1 billion available for investing in large businesses.
This new funding platform comes as changes in the global economic landscape have made it harder for large local enterprises to attract private equity players, Heng said. The government was previously focusing on aiding small-and-medium sized enterprises (SMEs), which have annual revenues of up to SG$100 million.
2. New launchpad for innovation
To further encourage companies to drive innovative ideas, the Singapore government will be investing in a corporate venture launchpad, which Heng said will provide co-funding for corporates to build new ventures through pre-qualified venture studios. This launchpad will be especially useful for larger businesses that want to stir up “a startup mindset” within their organisations, he added.
Heng also added that a new cloud-based digital bench will be implemented for its existing Open Innovation Platform to further help businesses to gain access to digital solutions as well as fundings for prototype and deployment for their innovation ideas.
With businesses innovating, Heng also foresees the rise of intellectual property (IP) and intangible assets (IA) that businesses will need to protect and commercialise. In response, the government will be unveiling the Singapore Intellectual Property Strategy 2030. This will will aim to not only support businesses in commercialising such properties, but also to train skilled professionals in these respective fields. Heng added that more information will be announced in April.
3. Hiring talents in for deep tech
Besides grooming talent to help businesses value their IP and IA, Heng also said it will be growing deep tech talent through approximately 500 fellowships in the next five years. These talents are said to be meet the needs in areas such as cybersecurity, AI, and health tech. It will be launched under a new Innovation and Enterprise Fellowship Programme by the National Research Foundation.
Additionally, the government will be pumping in an additional SG$5.4 billion in hiring locals, on top of the SG$3 billion it invested last year. According to Heng, the aim for this second investment is to hire 200,000 locals and provide up to 35,000 traineeship and training opportunities.
4. Extension of GST to imported low-value goods
While Heng said goods and service tax (GST) will not increase from 7% to 9% in 2021 due to the current economic situation, he added that GST will be extended to low-value goods (items valued up to SG$400) imported via air or post. This will take effect from 1 January 2023 onwards, and will affect international purchases from avenues such as eCommerce platforms. GST will also impact imported "non-digital services" for consumers such as fitness training, counselling and tele-medicine by overseas parties. Currently, low-value goods which are imported via air or post, as well as B2C imported non-digital services are not subjected to GST.
According to Heng, the extension comes as the government looks to ensure a level-playing field for local suppliers and overseas suppliers, and to make sure both are subjected to the same treatment when it comes to taxes.
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