The Singapore economy has entered a new phase of growth. Despite ongoing COVID-19 limitations and supply chain disruptions, Singapore’s GDP expanded by 7.6 per cent in 2021, a strong rebound from the 4.1 percent contraction in 2020.
A similar trend of growth and recovery is seen with local SMEs with OCBC’s Q4 2021 SME Index showing continued expansion for four consecutive quarters last year. The results demonstrate resilience amongst Singapore’s small businesses, who leveraged digitalisation and e-commerce to deliver healthy year-on-year growth.
However, new headwinds in 2022 – such as the resurgence of Omnicon infections, growing geopolitical tensions and their potential disruption to supply chains, and inflation – could still mean considerable business uncertainty in the times ahead.
Fortunately the Singapore Government announced a new wave of support in its 2022 Budget, packed with policy changes, schemes and grants to help businesses maintain their growth trajectories and build momentum for the year ahead.
Get immediate relief from the Jobs and Business Support Package
Under the new $500 million Jobs and Business Support Package, SMEs in badly hit sectors, including food and beverage (F&B), retail, tourism and hospitality, can obtain a payout of $1,000 per local employee, capped at $10,000 per firm, from the new Small Business Recovery Grant. Separately, Budget 2022 extends several initiatives to ease SME cashflow concerns, such as the Temporary Bridging Loan Programme and Enterprise Financing Schemes (Trade and Project Loans).
This cash influx can help affected businesses overcome immediate challenges, like rising costs caused by supply chain issues. While SMEs should take advantage of this new capital, businesses must remember that these measures are one-off grants that only offer short-term relief and cannot help SMEs maintain growth in the year ahead. To thrive long-term, SMEs must invest in improving productivity and innovation through digital transformation.
Invest wisely in productivity and digital solutions to catalyse long-term growth
Digital solutions can help SMEs seize emerging opportunities. SMEs can use this year’s enhanced Productivity Solutions Grant (PSG) to invest in IT solutions that amplify productivity, like automated business intelligence systems and enterprise resource planning suites.
At the height of the pandemic, Singapore-based Japanese gourmet grocer, Zairyo, implemented cloud-based accounting solutions by Xero to drive accuracy, efficiency, and transparency across their finance practices. Integrating additional digital tools like InvoiceNow, e-commerce, logistics and payment tools, Zairyo grew their sales volume by 400 percent and successfully fulfilled those orders during Circuit Breaker.
While an enhanced PSG will help SMEs keep lean and efficient, the expanded Advanced Digital Solutions (ADS) scheme will empower companies with advanced technologies to improve innovation and competitiveness, like artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT).
By adopting innovations like AI-powered personalised customer engagement solutions or IoT-enhanced energy management platforms, SMEs can create offerings that reach customers and stand out in today’s upended business landscape. While the benefits of these advanced solutions can be immense, SMEs must take a practical approach and carefully assess the feasibility of adoption and integration with existing systems and business goals.
Double down on training and Research and Development (R&D) collaboration
SMEs must ensure that their workforce is skilled enough to use advanced digital technologies or risk wasting time and money maintaining a solution that brings little business value. To upskill employees and hire more skilled individuals, SMEs can take advantage of Budget 2022’s ramped-up support for training initiatives, such as the SkillsFuture Career Transition Programme, SGUnited MidCareer Pathways Programme, TechSkills Accelerator and the expansion of SkillsFuture Enterprise Credit.
While upskilling the workforce ensures success with harnessing advanced digital technologies, SMEs can leverage R&D collaboration opportunities with Singapore’s academic institutions to maximise technology benefits. Budget 2022 will soon increase the capacity of technology, innovation and enterprise centres in polytechnics and Institutes of Technical Education (ITEs) for SME collaboration. Over the next five years, these centres will have the capability to run 2,000 innovation projects with SMEs across five pilot sectors: agri-tech, construction, food manufacturing, precision engineering and retail.
These R&D collaborations are the perfect opportunity for SMEs to sharpen their competitive edge. A recent partnership between Nanyang Polytechnic and automotive SME Sanwa-Intec resulted in new robotics solutions that boosted production volume by 1.5 times, increased energy efficiency and improved safety. Moreover, this partnership spawned numerous internship opportunities for students, with some converting to full-time employment at Sanwa-Intec.
Maximise Budget 2022’s measures now to secure success in the future
Budget 2022 presents SMEs with the perfect opportunity to maintain their growth momentum in the face of significant headwinds. While the Singapore government has laid out multiple support measures, companies need to carefully weave in this help with their business strategies. With prudent use of these resources and a steadfast commitment to digital innovation, training, and industry collaboration, SMEs can build the agility and resilience needed to succeed in the face of unforeseen disruption and economic uncertainty.