Singapore Budget 2020 steps up support for SMEs amid challenging economic outlook

Singapore is taking supportive measures after its economy skirted a technical recession in 2019. After just a month into 2020, the novel coronavirus (COVID-19) outbreak has caused a further economic challenge, placing additional pressure on companies that were already dealing with an uncertain business outlook.

Singapore's 2020 budget announced comprehensive measures to alleviate financial pressure on businesses – especially small- and medium-sized enterprises (SMEs) – by providing relief for companies negatively affected by the COVID-19 outbreak.

Singapore Finance Minister Heng Swee Keat introduced specific measures through the Stabilisation and Support Package that will help local businesses. Some of the key highlights include:

• A New Jobs Support Scheme where employers will receive an eight per cent cash grant on the gross monthly wages of each local employee (Singapore Citizens and PR only) for the months between October to December 2019, subject to a monthly wage cap of $3,600 per employee.
• Twenty-five per cent corporate tax income rebate for 2020, capped at S$15,000 per tax-paying company.
• One month's worth of rental waivers to stall holders of NEA-managed hawker centres and markets; half a month's worth of rental waivers to eligible tenants located in other Government-owned / managed facilities.
• A Temporary Bridging Loan Programme for tourism sector enterprises, where eligible enterprises can borrow up to S$1 million with interest rate capped at five per cent per annum. The Government has also increased its risk-share to 80 per cent.
• An enhanced SME Working Capital Loan to extend a maximum loan quantum of $600,000 to SMEs, with the Government's risk-share increased to up to 80 per cent.

UOB is a key supporter of these government loan schemes to help SMEs mitigate the impact of this difficult time, where the additional working capital would be essential for supporting costs from wages, rental and additional disinfection protocols. No collateral is required and the bank will respond on loan application status within 1 business day.

To help alleviate the impact of COVID-19 on SMEs, UOB announced it has set aside S$3 billion in relief assistance. We will offer SME clients greater flexibility in cash flow management to address near-term liquidity issues to help address the business disruption. Companies with good track records will have the opportunity to defer principal payments and service only their loan interest for up to one year, extend their current payment tenor or increase their loan amount for financing liquidity.

Support schemes for digital transformation of enterprises at every stage

Under the longer-term Transformation and Growth plans, Budget 2020 offered comprehensive support for enterprises at every stage of their growth. Here are some of the key highlights:

• At the start-up stage, S$300 million co-investment funds have been set aside for “deep-tech” start-ups to provide them with better access to capital, expertise and industry networks.
• At the growth stage, the SMEs' Go Digital programme has been expanded to all 23 Industry Transformation Map (ITM) sectors, with industry digital plans or equivalents made available in order to help enterprises access pre-approved digital solutions.
• In achieving the next bound of growth, the Enterprise Leadership for Transformation Programme will support business leaders of promising SMEs through training and mentorship.

UOB supports SMEs' digitalisation efforts with value-added solutions

With respect to these enhanced schemes, we have the UOB BizSmart¹ solution, a cloud-based platform for SMEs to automate multiple core processes, including sales, payments and employee management. It is a pre-approved digital solution, which allows SMEs to have 70 per cent of their set-up costs deferred by the government's SMEs Go Digital Programme that was introduced in 2017. BizSmart is specific to business functions, so SMEs across various industries can adopt solutions as per their most pressing requirements and scale up at their own pace.

In terms of training and mentoring SME leaders, UOB has partnered with Google since 2019 to run the SME Leadership Academy to provide training on key topics like digital marketing and workplace productivity. The training series aims to accelerate digital transformation for SMEs and help them to compete more effectively in the digital economy.

Singapore government and UOB remain committed to supporting SMEs

Although 2020 has gotten off to a challenging start, Singapore's budget shows that the government is steadfast in supporting companies through tough times, while improving their longer-term prospects.

SMEs taking the first steps to digitalise, with the help of long-standing partners such as UOB, will be in a better position to participate in and to seize opportunities in the new digital economy. It is predicted that it will add as much as S$13.5 billion to Singapore's gross domestic product by 2021² and to grow in the ASEAN region to S$300 billion by 2025³.

UOB commits to being an enabler of Budget 2020 initiatives, as well as putting our customers in good stead for the long term through our own value-added solutions that drive digital transformation.