The annual budget announcement in Singapore is always eagerly awaited by the business community, which seeks assistance to develop resilience and improve competitiveness. The unveiled Budget 2024 by the Minister for Finance Lawrence Wong is no exception.
The budget seeks to assist in dealing with rising costs; however, the main thrust this year is enabling businesses and enterprises to integrate sustainability for long-term success.
Managing Rising Costs Sustainably
Business costs have been rising in Singapore and have become a constant headache for businesses. Costs of labour are the main concern of such worries. Based on the latest surveys, the rise in labour costs is the main barrier to business growth in the country. Various factors further exacerbate this issue, including:
- Cost pass-through from upstream suppliers
- Soaring utility bills
- Difficulties in managing foreign manpower
The effect of these rising costs on businesses is not to be underestimated. With expenses soaring high, companies are now faced with thinning profit margins and more financial pressure. This, in turn, can limit their capacity to invest in growth opportunities, innovate, and stay competitive.
The challenge also goes beyond the financial impact directly. It can also affect a company’s capacity to attract and keep talented employees as the need to provide attractive salaries and benefits increases.
However, in spite of these challenges, Singapore businesses are actively seeking ways to deal with the increasing costs. Technology is being considered a possible answer by many, who are spending on automation and digital tools to increase efficiency and make the process more streamlined. The companies are also reviewing their strategies for overseas development. They seek to diversify their markets and find out new opportunities overseas to counterbalance the threats of these growing costs.
Key Measures and its Components: The Enterprise Support Package
In response to these challenges, the government has implemented a package of support and relief measures. Enterprise Support Package is one of the initiatives announced in Budget 2024 and it is an extensive program aimed at assisting enterprises in the current complex economic environment.
The CIT Rebate
It is composed of a number of elements, each focusing on a particular aspect that businesses should consider. CIT rebate is one of the most important components of this package. With this scheme, companies will be granted a 50% tax rebate for the Year of Assessment 2024, with an upper limit of 40,000 SGD. This step is designed to give businesses an immediate cash flow benefit so that they can keep more of their profits and reinvest in their operations.
Extending The SFEC Program
Extending the SkillsFuture Enterprise Credit (SFEC) program is another crucial part of the Enterprise Support Package. The SFEC, which was originally due to expire on 30 June 2024, has been extended by one year, with businesses now having until 30 June 2025 to utilise the credit. This extension acknowledges the ongoing demand for workforce upskilling and reskilling, especially given the dynamic nature of the business environment.
Enhancing Other Financing Schemes
The Enterprise Support Package also includes improvements to the different financing schemes, thus, making it easier for the businesses to get the finance to continue and expand their operations. For instance, the Enterprise Financing Scheme (EFS) – SME Working Capital Loan has had its maximum loan quantum permanently increased from 300,000 SGD to 500,000. This is to allow SMEs more financial freedom to efficiently address their working capital requirements.
Extending The EFS – Trade Loan
It is also extended until 31 March 2025, with an increased maximum loan quantum of 10 million SGD to help enterprises with their trade financing needs. This measure is important for companies involved in international business as it helps to reduce the risks of cross-border transactions and ensures continuous working capital.
Extending The EFS – Project Loan
The EFS – Project Loan aimed at the domestic construction sector has been extended until 31 March 2025. The maximum loan amount for construction projects is 15 million SGD. The government understands the difficulties that the construction industry is facing and therefore, it gives the required financial aid to help firms survive challenging market conditions.
Transitioning To Sustainable Practices
The Singapore government has been actively promoting sustainability in many sectors. It has acknowledged the significance of the green economy and, therefore, launched a number of initiatives and schemes to assist businesses in moving towards more environmentally friendly practices.
EFS-Green
The improved Enterprise Financing Scheme – Green (EFS-Green) is a sustainability-aimed scheme. It was initially introduced in 2023 and was further expanded in Budget 2024 to help more Singapore businesses adopt green solutions.
The EFS-Green offers financial assistance to firms that are investing in or adopting green technologies and practices, including renewable energy, energy efficiency, and waste reduction.
Energy Efficiency Grant For More Sectors
Another significant project is EEG – Energy Efficiency Grant. It has been expanded to cover other industries, including manufacturing, construction, maritime, and data centres. This grant is aimed at helping enterprises to invest in energy-saving equipment and technologies. The final objective is to assist them in decreasing their energy consumption and carbon footprint at lower operating costs.
Not About Sustainability Alone
The advantages of shifting to sustainable practices are not only to minimise environmental effects but also for the businesses to be competitive in the long run. With consumers becoming more eco-conscious, companies that focus on sustainability are likely to be more positively perceived. The outcome is higher brand loyalty and market share.
In addition, with global regulations and standards changing to favour sustainability, companies that have already incorporated green practices into their operations will be more likely to comply with these requirements.
Supporting Innovation And Technology Adoption
The government also stressed the importance of helping businesses in their efforts to innovate, conduct research and development (R&D), and uptake technology. Through different programs and budget allocations, the government seeks to develop an environment that promotes creativity, stimulates trials, and allows firms to leverage the latest technology.
A Key Area Of Focus: RIE 2025 Plan
One of the areas of focus in the Singapore Budget 2024 is the Research, Innovation, and Enterprise (RIE2025) plan. This visionary project, started in 2020 with a first financing of 25 billion SGD, has got 3 billion SGD more in the last budget. The rise in the allocation highlights the government’s focus on pushing research and innovation activities in key areas like advanced manufacturing, sustainability, and artificial intelligence (AI).
Investment In AI Tech
The focus on AI development is interesting, as it can completely change the majority of the industries and open new opportunities for companies. In this regard, the government is allocating more than 1 billion SGD to be used in AI investment, talent development, and industry growth in the next five years. This funding will help to guarantee the city-state’s access to cutting-edge microchips and promote cooperation between the best local and global enterprises by creating AI centres of excellence.
RIC Scheme
The Refundable Investment Credit (RIC) scheme is another major initiative brought about in Budget 2024. It will be managed by the Singapore Economic Development Board (EDB) and Enterprise Singapore (EnterpriseSG) and it is designed to assist companies involved in high-value and meaningful economic activities.
These activities include:
- Investing in new productive capacity
- Conducting R&D and innovation
- Implementing decarbonisation solutions
Companies that qualify for the RIC scheme can receive grants of up to 10 years based on their qualifying expenditure for an approved project. The level of support will vary with the nature of the expenditure (e.g., capital outlays, labour costs, training expenses, and fees for work outsourced in Singapore). This strategy will ensure that businesses get the required assistance to carry out innovative projects and embrace modern technologies.
What’s more
In addition, to strengthen the initiatives, the government has also revealed a 2 billion SGD top-up to the National Productivity Fund (NPF) and another 2 billion SGD to the Financial Sector Development Fund (FSDF).
The NPF helps businesses in increasing productivity and in continuing education and training of employees, while the FSDF, governed by the Monetary Authority of Singapore (MAS), offers grants to firms and individuals in the financial services industry. The extra funds will fuel productivity gains and further enhance SG’s position as a leading financial hub.
Developing Strong Capabilities For The Future
Businesses face many challenges that require innovative approaches and adaptability. Two of the main concerns in the near future are the effects of an ageing population and climate change. All sectors will feel the impact of these demographic and environmental changes on business.
SG Recognises These Challenges
This is why the Singapore government has committed substantial resources in Budget 2024 to help businesses develop the required skills and capabilities to prosper in the midst of these changes. It focused on critical sectors, including skill upgrading, internationalisation, and sustainability practices, to arm companies with what they need to seize future opportunities and sustain their competitive advantage.
1. Skills Upgrading And Development
With the changing nature of work, driven by technological changes and the market, it is important for businesses to ensure that their employees have the necessary skills to adapt and succeed. Hence, the government implemented a number of measures, such as the SFEC extension and the 4,000 SGD SkillsFuture credit top-up for Singaporeans aged 40 and above.
2. Internationalisation
Businesses should think outside domestic markets to reach new possibilities and diversify their growth strategies. In this respect, the government has strengthened the Partnerships for Capability Transformation (PACT) scheme that now includes internationalisation and corporate venturing. This expansion will enable you to tap into worldwide supply chains, penetrate foreign markets and become leaders in your respective industries.
3. Sustainability Practices
The emphasis on sustainability practices in Budget 2024 clearly indicates the government’s support for businesses in their move toward a low-carbon and resource-efficient future. As the effects of climate change become more visible, organisations must embed sustainability into their core strategies and operations.
In order to facilitate this change, EFS-Green and the extension of EEG were implemented. They offer the required financial assistance and incentives for companies and businesses to embrace green technology, minimise their carbon emissions, and enhance overall environmental performance.
Conclusion
The Singapore Budget 2024 is a comprehensive set of measures that will help businesses like yours move towards a more sustainable and resilient future. But you need to have a strong base in your financial management and reporting practices in order to take full advantage of these measures and prosper.
This is where employing a professional accounting firm in Singapore, such as Corporate Services Singapore, can really help. Do not allow the complexities of finance management to slow down your business. Sometimes, the usual first step is to begin small. Start by engaging the expertise of Corporate Services Singapore today.
