The Singapore Business Federation (SBF) SME Committee (SMEC) submitted its recommendations for the Singapore Budget 2020 to the Singapore Government in December 2019.
For the 2020 Budget, the SBF SMEC is proposing seven key recommendations that will provide our SMEs with increased liquidity through new schemes and initiatives, greater access to digital solutions, more financial and R&D support, as well as incentives to hire mature workers. These measures will better position Singaporean companies for the next upswing in the global economy.
1. One-Stop Digital Trade Platform to enable trade amongst organisations
As growing revenue has remained the top priority for our SMEs, SBF recommended the Singapore Government help B2B companies grow their businesses more by enabling and optimizing trade through a one-stop digital trade platform. With greater sales opportunities, companies are also more likely to adopt digital solutions such as e-invoicing.
2. Increase support to SME financing
The 2018 SBF ‘Singapore’s SME Debt Financing Landscape’ study identified a 15 per cent (or $19 billion) credit demand gap of the total approved loan facilities extended to SMEs, mainly attributed to the lack of collateral and their risky borrower profile. The Loan Insurance Scheme (LIS) supports short-term financing lines such as invoice financing. Enhancement of the LIS can provide greater financing support and also encourage SMEs’ shift to e-invoicing.
3. Support and adopt a payment code of conduct
The SBF NBS 2019/2020 found that almost 50 per cent of the late payments experienced by companies were above 30 days past due, on top of the two months credit term offered. This caused seven in 10 businesses to face moderate to severe cash flow issues.
The SBF SMEC recommend the Singapore Government to support SBF in the development of a Payment Code of Conduct for Singapore. Government Procurement Entities should endorse and adopt this code, which will encourage larger companies to follow suit. Taking reference from Australia’s Supplier Payment Code, more than two-thirds of the Survey respondents felt that a similar code would help reduce late payments in Singapore.
4. Promote collaborations towards R&D activities and channel more research funds directly to private enterprises
More collaboration between Research Institutions (RIs) like A*STAR and our SMEs will ensure that our SMEs, which are often constrained by a lack of resources, are able to develop new capabilities through R&D.
It is also critical for local enterprises to develop intellectual property and intangible assets so as to move up the value chain. Public sector R&D should focus more on supporting SMEs. More can be done to expand the allocation of funds to private enterprises directly.
5. Offer financial incentives for productivity-driven innovation
An option for a cash or cash-back system for companies that are not paying tax can be introduced to drive R&D activities amongst SMEs which are not yet profitable. This is currently practiced by the Australian government, where companies with a turnover of less than A$20 million receive a refundable tax offset for eligible R&D expenditure, which can be a cash refund if they are in a tax loss position. All other eligible companies receive a non-refundable tax offset to reduce the tax they pay.
6. Greater assistance for adoption of cybersecurity solutions
Apart from the cost of technology adoption, the prevalence of cybersecurity risks was also listed as one of the top three barriers to adopting technologies in the SBF NBS 2019/2020.
The cybersecurity needs of SMEs are increasingly complex as enterprise IT systems sit across in-house and outsourced systems, on both desktop and mobile platforms, while catering to the varied needs of customers, suppliers and employees.
As such, to complement currently available government assistance schemes, the SBF SMEC recommends an Enterprise Cybersecurity Advisers program where selected advisers are deployed to SMEs to facilitate the adoption of comprehensive cybersecurity solutions and customized training for the needs of individual SMEs.
7. Increase support for companies to employ older workers
As the retirement and re-employment age and CPF contribution rates for older workers will be increased progressively over 10 years, the SBF SMEC recognizes the importance of the Special Employment Credit (SEC) and the Temporary Employment Credit (TEC) in supporting companies in the face of an aging population.
The SEC provides subsidies of up to 11% of older employees’ monthly wages, while the TEC, introduced by our Government back in 2015, helped to cushion employers’ cost for increased CPF contributions.
The SBF SMEC also noted that the Portable Medical Benefits Scheme (PMBS) has not been fully leveraged, as only 5 per cent of companies offer it currently. This Scheme helps to defray employers’ high costs of medical benefits, especially for older workers. The SBF SMEC will work with other TACs and the Singapore National Employers Federation to increase awareness among companies on the PMBS.
Mr Ho Meng Kit, CEO of SBF, said, “Our businesses are increasingly aware of the importance of innovation and transformation, as reflected in the latest SBF National Business Survey. We hope the government can build on that momentum with robust measures that encourage, support and strengthen the digitalization and R&D efforts of our companies. This will position them well for the future economy.”
He added, “at the same time, we should not ignore bread and butter issues like facilitating adequate cash flow for our SMEs, especially during this prolonged period of economic uncertainty. The SBF SMEC will prioritize our engagement with the Government and business community to ensure our companies stay resilient and prepared to capture future opportunities.”
Mr Kurt Wee, Chairman of the SBF SMEC, said, “The global slowdown in growth is likely to persist for the foreseeable future. Companies should seize this window of opportunity to upgrade their human capital, strengthen their digital capabilities and expand overseas for diversification of markets.”
“Whilst more tangible support for SMEs is necessary this year, we would also like to encourage SMEs themselves to be more proactive in seeking out and leveraging available resources, be it provided by the Government, SBF or other TACs,” he concluded.
