Finance Minister Lawrence Wong delivered Singapore’s Budget 2024 on 16 February 2024. The budget comes after a difficult 2023 in whichthe international environment was troubled, the global economy was subdued and Singapore’s own economy grew by a modest 1.1%, fortunately avoiding a recession.
In the year ahead, Minister Wong noted some upsides including the receding of global inflationary pressures, the recovery of the global electronics industry, and the position of Asia as a key driver of global growth.
However, geopolitical risks loom large while wars continue to rage in Europe and the Middle East, threatening to potential disruptions in global energy markets and supply chains. The world is becoming more violent, fragmented, and unpredictable.
In the light of these realities, Budget 2024 is about taking concrete steps to build Singaporean’s shared future together. These include short term measures to help firms manage rising costs, and longer term measures to ensure continued growth and jobs.
Measures to help manage rising costs
Minister Wong announced an Enterprise Support Package, which will provide $1.3 billion in support to companies. This will help companies who have seen increases in their wage bills, rental, and utilities, amongst others.
Companies will receive a 50% Corporate Income Tax Rebate, capped at $40,000, in the Year of Assessment 2024. As not all companies are profitable, and some may not benefit from such a rebate, a minimum benefit of $2,000 in cash payouts for companies that employed at least one local employee in 2023 will be provided.
The Enterprise Financing Scheme, which helps Singapore enterprises with their financing needs, will be enhanced. The maximum working capital loan quantum will be permanently raised to $500,000. The enhanced maximum trade loan quantum will be extended to 31 March 2025, as well as the Government’s risk sharing of project loans to support domestic construction projects.
The SkillsFuture Enterprise Credit will be extended by a year to 30 June 2025. The Credit provides additional support for eligible employers to cover their out-of-pocket expenses when they embark on workforce and business transformation. With this extension, employers will have another year to claim any unused credit.
Minister Wong emphasised that the measures in the Enterprise Support Package are tilted towards firms that make the effort to restructure and transform. He also highlighted that they are temporary measures to tackle the period of higher inflation, with the more permanent solution to ensure that Singapore’s firms and workers are more productive, and that real incomes continue to rise sustainably.
Ensuring better growth
Minister Wong asserted that a strong, innovative and vibrant economy is essential to secure good jobs and better lives for all Singaporeans on a sustained basis. This necessitates constant growth, albeit not growth at all costs.
A crucial enabler Singapore’s growth is its ability to attract high-quality and high-value investments, because such projects bring the latest know-how and capabilities, and create good jobs for Singaporeans. To support this, a new Refundable Investment Credit will be introduced.
This is a tax credit with a refundable cash feature. It will support high-value and substantive economic activities, including the setting up or expansion of manufacturing facilities; new innovation and R&D activities; as well as activities in support of the green transition.
To support this and other investment promotion efforts, the National Productivity Fund will be topped up by $2 billion.
Concurring with the move, Chua Hock Leng, Area Vice President, ASEAN and Greater China, Pure Storage comments that “As AI solutions and applications necessitate significant computing power and storage, balancing high-performance data demands and energy requirements will be key to maximising the benefits of AI. It is encouraging to see that the Singapore government is allocating an additional S$2 billion to the National Productivity Fund to better support businesses in bolstering their infrastructure and technology to strengthen their sustainability commitments.”
Supporting better jobs
Besides anchoring new investments, Singapore must build on its existing strengths, and upgrade the sectors where it has competitive advantages.
To this end, the Financial Sector Development Fund will be topped up by $2 billion. This will give MAS more resources to take full advantage of current opportunities, and extend our lead in the financial services sector – not just to do more in the core areas of banking, capital markets, asset management, and insurance, but also to build capabilities in new areas like FinTech, as well as green and transition finance.
More funds for Research and Development will also be allocated to push the frontiers of innovation across the entire economy. The Research, Innovation and Enterprise 2025 (or RIE2025) plan, launched in 2020 with a commitment of $25 billion will now receive an additional $3 billion in RIE2025.
This will sustain Singapore’s investments in research, innovation, and enterprise at about 1% of GDP. The additional resources will go towards research and related investments in national priorities such as advanced manufacturing, sustainability, the digital economy, and healthcare.
There will also be a focus on AI as a critical emerging technology, with a National AI strategy in place. More than $1 billion over the next five years will be invested into AI computing, talent, and industry development. This includes securing access to the advanced chips crucial to AI development and deployment, working with leading companies in Singapore and worldwide to set up AI Centres of Excellence in the country, as well as additional investments in the National Broadband Network which will support these industries.
Jess O’Reilly, Area Vice President for Asia at UiPath, applauds this move, noting that “building a resilient economy that ensures ample employment opportunities will be key to actualising Singapore’s vision for the future. We are encouraged by the Government’s plan to allocate over $1 billion over the next five years to take Singapore further in its National AI Strategy 2.0.
“Coupled with initiatives to plug skill gaps, foster private-public partnerships, and combine education and innovation, Singapore can prime the labour force for growth in the new economy.”
