One area highlighted in the Budget 2015 this year was aid for local SMEs.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his speech for Budget 2015 yesterday that the support level for SMEs for activities under IE Singapore's grant schemes will be raised from 50% to 70%.
Other initiatives included enhancement for its Double Tax Deduction for Internationalisation scheme, covering salaries incurred for Singaporeans posted overseas, and greater support to companies venturing overseas.
A new tax incentive - the International Growth Scheme - will be also be introduced, where qualifying companies will enjoy a 10% concessionary tax rate on their incremental income from qualifying activities. This is aimed at encouraging more local companies to expand overseas, while still anchoring key business activities in Singapore.
Mergers and acquisitions for companies to acquire scale, attract talent and compete effectively overseas are also encouraged, with the government raising tax allowance for acquisition costs from 5% to 25%. Companies can also claim M&A benefits for acquisitions resulting in at least 20 % shareholding in the target company, down from the current threshold of 50% shareholding. The M&A scheme, introduced in 2010, will also be extended for another five years.
IE Singapore's Internationalisation Finance Scheme (IFS) will also be extended to support M&A that will aid a company's overseas expansion.
A leg up for local agencies
Several local agencies Marketing spoke to today have lauded the Budget, particularly its initiatives for internationalisation.
In recent years, several local shops have complained of hitting a saturation point in the Singapore market for new business, with many looking to the region's upcoming markets for newer revenue streams.
Sonya Madeira, founder of Rice Communications, which recently expanded its business to Myanmar, said that the move was a welcome one. "For Singapore-based agencies that are internationalising, the tax allowances and incentives make growing your business outside of Singapore more viable," said Madeira, adding that she was looking forward to this for support of the new office.
She added that the launch of the Myanmar office had been with help from IE Singapore and that the agency had also benefited from earlier government initiatives such as PIC and Market Readiness Assistance (MRA) programs.
Lars Voedisch, founder of PRecious Communications said that his agency was looking forward to the initiatives supporting internationalisation plans, as it was looking to expand to Indonesia as part of a wider Southeast Asian focus.
"Working with many startup and growth companies, we see that our clients will benefit from these incentives and schemes - and it is our aim to grow together with our clients," said Voedisch.
However, he added that while incentives had been made to grow the local talent pool, more needs to be done to allow communications and creative experts to come to Singapore.
"I believe that more can be done to also allow communications and creative experts to come to Singapore to fuel our international growth, as we are in a global competition for skills and ideas and require talents from all over the world and especially from our target expansion markets," he said.
Joe Barratt, founder of PR firm Mutant Communications said that the highlight on internationalisation was of particular interest to the agency business, as it is looking to launch offices overseas in the next 18 months.
"Enhancing the Double Tax Deduction to cover Singaporean talent working overseas gives us extra confidence in using our current in-house team to help with setting up and managing our market expansion in Asia. Combined with things like the International Growth Scheme, it also provides an added incentive to make sure our Singaporean workforce gets crucial experience and opportunities for professional growth in other markets," said Barratt.
"For many agencies, the biggest challenges for growth are around manpower and the attraction and retention of talent. From a cost point of view, the tax incentives and deductions, as well as things like the extension of the Wage Credit Scheme, are a positive move. The additional support to give Singaporean staff experience in offshore offices is also welcomed, as we know this type of professional development to be a large factor in retaining good people. It will take time to see the effect of these, but in the long-term it can only help develop capabilities."
"Overall, I think the government has recognised a number of hurdles for entrepreneurs, start-ups and small businesses and has made a compelling case for companies to come together to expand," said Barratt.
Mylinh Cheung, founder of Epic PR said: "As an employer looking for the right mix of workforce that is best equipped to understand and service international as well as local clients, we welcome the government’s initiative in ‘spurring more internationalisation of local SMEs’ because this is the only way we can truly compete and remain in business in a cosmopolitan market like Singapore."
Co-founder of The Media Shop Gary Tang said:"The Government’s move to extend the Wage Credit Scheme (WCS) and Corporate Income Tax (CIT) Rebate will continue to help SMEs recruit and retain talented and motivated individuals to help the industry grow," referring to his companies recent expansion in Taipei, Taiwan and Sydney, Australia. "As we continue to explore strategic expansion into key countries in Asia Pacific, the Government’s support for SMEs through enhanced grant and new tax incentive schemes will definitely benefit The Media Shop and those venturing overseas," said Tang.