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Singapore Budget 2023: Building growth with SMEs
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You are now reading:
Singapore Budget 2023: Building growth with SMEs
In correlation with the move to Dorscon Green, Singapore's Budget 2023 initiatives demonstrate enhanced support to small and medium-sized enterprises (SMEs), as they build towards growth.
Continued global challenges such as the Ukraine conflict and rising commodity prices resulting in increased costs and inflation, remain at the top of mind for business owners.
Under the theme "Moving Forward In A New Era", Budget 2023 can be summarised under three key thrusts:
Find out more about UOB's perspective on Singapore Budget 2023 here:
Singapore 2023 Budget: Comprehensive Measures Into A New Era
Singapore Budget 2023’s pro-business initiatives will focus on growing Singapore’s economy, equipping workers through upskilling and reskilling, and providing a broader range of opportunities for individuals who need support to advance in life – including seniors, ex-offenders and people with disabilities (PWDs).
To implement these focus areas, the Budget Statement has implemented a series of subsidies, tax breaks, and strategic top-ups. Some highlights as below:
Innovation for growth is key to remaining competitive, and UOB has actively placed SMEs on the pathway of digital transformation, including payment and efficiency solutions. Key initiatives include UOB BizSmart, which is an integrated suite of business efficiency tools that spans over 50 industry partners and serves over 28,000 SMEs across ASEAN.
Understanding the need for SMEs to fund and accelerate research and development (R&D) as part of building business resilience, Singapore Budget 2023 announced the Enterprise Innovation Scheme (EIS), which supports R&D, innovation, and capability development activities among SMEs.
The EIS is a series of enhanced tax measures to support innovation in five key activities:
The Government will raise tax deductions for these activities, from up to 250% of qualifying expenditure before YA 2024, to up to 400% of qualifying expenditure between the 2024 and 2028 Years of Assessment (YA), generally capped at $400,000 for each activity. Eligible businesses may also convert up to 20% of total qualifying expenditure for each YA into cash, capped at S$20,000. This will allow smaller businesses that need help to receive support with innovation costs, even if they pay little to no taxes.
To adopt these innovation activities, SMEs have to fork out the initial outlay (e.g. for research & development) prior to enjoying the tax deductions and this would affect their cash flow. To help businesses bridge this and augment their working capital, SMEs can tap on UOB Business Loan of up to S$800,000.
For more information, please refer here: IRAS - Enterprise Innovation Scheme (EIS) and Annex D-1: Enterprise Innovation Scheme.
To help businesses weather the headwinds and increased energy prices, the Government will extend current enhancements to the Enterprise Financing Scheme (EFS) for a year until 31 March 2024, facilitating SMEs’ continual access to credit. SMEs can continue to tap on SME Working Capital Loan, offering up to S$500,000, and also the EFS Trade Loan with a maximum of S$10 million limit. SMEs can also tap on UOB trade financing solutions with simple and fuss free application of up to S$500,000.
The Energy Efficiency Grant (EEG) will also be extended for a year to help businesses invest in energy efficiency, especially those in the food services, food manufacturing, and retail sectors.
The EEG provides up to 70% support for qualifying SMEs to adopt pre-approved energy-efficient equipment, with grant support capped at S$30,000 per company per year.
In order to pursue internationalization goals and to remain competitive and relevant, SMEs may tap on the Singapore Global Enterprises initiative, which had received a S$1 billion booster in Singapore Budget 2023. SMEs will have access to customized programmes to help them build specialized capabilities and innovation, accelerate globalization ambitions as well as foster partnership with other companies.
Another S$150 million will be added to the SME Co-Investment Programme (CIP) to invest in promising SMEs. This adds to the Government’s S$1 billion in SME investments through Heliconia Capital Management, which has catalysed an additional S$2 billion in private investments. The new infusion is hoped to catalyse an additional S$300 million of private investments to support SMEs.
To help employers enhance workers’ training and placement, the Government will deploy “Jobs-Skills Integrators” who can engage both enterprises and training providers: the former to understand their respective sector’s manpower and skills gaps; the latter to update existing training programmes or develop new ones.
They will also work with employment facilitation agencies, industry partners, and unions to help ensure that training leads to better employment and earnings prospects for workers.
These Jobs-Skills Integrators will first get to work in sectors with higher concentrations of mature workers and SMEs: specifically, in precision engineering, retail, and wholesale trade.
Singapore Budget 2023 extends support for employers who hire senior workers, lower-wage workers, people with disabilities, and ex-offenders.
The measures announced in Singapore Budget 2023 will give SMEs a stable foundation in an increasingly volatile economy, and some assurance in the face of global challenges.
The launch of tax measures like the EIS supports SMEs to pursue innovation. The EFS and EEG extensions extend a financial safety net to SMEs that are most affected by soaring inflation rates. The new Jobs Skills Integrators will help close skills gaps for SMEs, while allowing workers to upskill their way up the value chain.
In supporting the growth of SMEs, UOB works closely with government agencies and business leaders to build resilience for the long term, both through financial and non-financial solutions.
Speak with us today to find out how we can connect you to new business opportunities and transformation initiatives.
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