SBF SME Committee’s recommendations for Budget 2021

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The Singapore Business Federation (SBF) SME Committee (SMEC) submitted its recommendations for the Singapore Budget 2021 to our Government on 30 November 2020.

Budget 2021 Recommendations

For Budget 2021, the SBF SMEC has put forth six key recommendations to help companies gain access to necessary resources, build resilience to better overcome future crises and create more value for their businesses. These recommendations will also better position our companies for recovery and emerge stronger from the impact of the COVID-19 pandemic.

Provide Businesses with Resources to Support Recovery and Growth

The Temporary Bridging Loan Programme (TBLP), which provides access to working capital for business needs, has been instrumental in helping businesses with their immediate cashflow needs. The SMEC acknowledges that the TBLP remains a vital scheme for companies that have assessed their business viability and are well-positioned to take on additional risks to emerge stronger from the pandemic and expand their operations.

As recovery is expected to remain uncertain and uneven across sectors, the SMEC remains cognizant of the need to assure businesses that resources will be made readily available for their recovery and growth.

The SBF SMEC Recommends:
Government to extend the Temporary Bridging Loan Programme until March 2022.

Timely Payments to Improve Cashflow for Businesses

The SBF National Business Survey 2019/2020 revealed that almost 50 percent of late payments experienced by companies were above 30 days past due, on top of the credit terms offered. While prompt payments accounted for 38.39 per cent of total transactions in the third quarter of 2020, this is a drop from 40.09 per cent in the previous quarter, and the lowest since the second quarter of 2012.

Delayed payments may create ripple effects affecting the entire value chain of businesses. Timely payments, on the other hand, can help ensure the vibrancy and sustainability of our businesses. This is especially critical during an economic downturn, where managing costs and falling demand across sectors may pose challenges on multiple fronts for businesses.

The SBF SMEC Recommends:
Government to take the lead in paying suppliers more promptly to set example for the private sector. Payment terms between the Government and its suppliers to be reduced from 30 to 14 days to set a new benchmark for the private sector. For smaller contracts below S$100,000, payment to the suppliers to be made within five working days, provided that the delivery of the services or products is in satisfactory conditions.

Foreign Worker Levy Rebates to Help Businesses Better Manage Manpower Costs

On 1 August 2020, the Ministry of Manpower announced that the Government has set aside S$320 million to extend foreign worker levy (FWL) rebates until December 2021 for firms in the construction, marine shipyard, and process sectors.

However, businesses from other sectors such as food and beverage, hospitality, and logistics remain impacted by the phased reopening of economic activities and lacklustre local demand in Singapore. A similar monthly FWL rebate for these sectors will help alleviate some of the manpower and cashflow challenges that SMEs in these sectors are facing.

The SBF SMEC Recommends:
To extend the monthly FWL rebate to other sectors, and that this can be till 31 December 2021 like for construction, marine shipyard, and process sectors. These other sectors can include food and beverage, hospitality and logistics services.

Advisors to Assist SMEs in Safeguarding Against Cybersecurity Risks

Cybersecurity will be increasingly important to strengthen our digital infrastructure and protect our economy. As cyber threats and attacks grow in scale and become more sophisticated, SMEs need to expand efforts to better secure and safeguard their systems and networks from malicious intrusions.

SMEs across all sectors can be guided by cybersecurity advisors to tap on relevant initiatives such as the SMEs Go Digital programme, GoSecure programme, and the Productivity Solutions Grant offered by Enterprise Singapore. These advisors can provide the necessary expertise to conduct a thorough diagnosis to identify vulnerabilities and develop customised cybersecurity solutions to protect the systems and day-to-day operations of these SMEs.

The SBF SMEC Recommends:
To improve SMEs’ cybersecurity posture amidst digitalisation of businesses, the Cyber Security Agency of Singapore (CSA) can work with relevant industry partners to appoint a list of pre-approved cybersecurity advisors for SMEs to harness their expertise for the prevention and remediation of malicious cyber activities.

Upskilling the Local Workforce to Address Tech Talent Crunch

Singapore will need more tech talent to forge a vibrant technology ecosystem and meet the increasing industry demand for tech talents. In addressing this gap, the Economic Development Board announced the Tech.Pass scheme in November 2020 to attract up to 500 proven founders, leaders, and experts from established or fast-growing tech companies to Singapore.

To recruit and develop the next generation of Singapore’s tech talent, Tech.Pass pass holders can commit time to mentor and/or train local workforce to facilitate the transfer of niche or critical skills to ensure business continuity and develop local talent. in areas such as artificial intelligence, data analytics, digital marketing and cybersecurity.

The SBF SMEC Recommends:
Tech.Pass, an extension of Tech@SG, can be enhanced to include the training and upskilling of the local workforce as a key requirement, including accelerating career conversions of PMETs from non-tech roles to tech roles. This may help to close the demand gap for local tech talent.

Bespoke Support for Businesses with Breakthrough Innovations

For the seventh consecutive year, Singapore has been ranked Asia-Pacific’s most innovative nation in the Global Innovation Index. The SMEC acknowledges that the Government has provided much required support for businesses to adopt innovative solutions to transform and remain globally competitive. However, more customised solutions to help our businesses through the entire value chain, from conceptualisation to commercialisation, may be required.

Taking reference from the Scale-up SG programme, support for SMEs with innovative solutions can be based on the assessment of their readiness to scale. Such SMEs can be guided on areas of managing and monetising their IPs, scaling regionally and globally, building an efficient, effective and motivated workforce, and positioning themselves to capitalise on potential investments to fund their growth and expansion plans.

The SBF SMEC Recommends:
To provide companies, which have innovative solutions, with customised support based on their readiness to scale. The support can include guiding them in areas of IP management, internationalisation, company culture development and positioning themselves for investments.

Mr Ho Meng Kit, CEO of SBF, said, “As economic recovery remains uncertain and uneven, it is crucial that adequate support measures continue to be in place to help businesses address current issues and, at the same time, to position them for future growth. Our businesses are grateful for the support from the Government amidst the challenging operating conditions due to COVID-19. SBF will continue to engage the Government to push forth transformative efforts particularly in innovation support, internationalisation and human resources upgrading to help our members capture new opportunities in the longer term.”

Mr Kurt Wee, Chairman of the SBF SMEC, said, “The pandemic is expected to be protracted. Companies need to take immediate actions to review their business models and right-size their manpower needs with the relevant skillsets to remain resilient and competitive. We also urge companies to proactively seek out new resources and tap on available grants to transform their businesses in order to take advantage of the eventual recovery.”