Singapore Budget 2024 Proposal

Ascending as a digitalisation leader

Achieving leadership status requires a focus on innovation to meet productivity goals. As a regional leader, Singapore should expand by embracing cutting-edge technologies such as machine learning, artificial intelligence and data analytics. However, analysing the risks related to security, privacy and ethics is also crucial.

Here are some recommendations on how Singapore can empower local enterprises for global growth.

Introducing a tiered support strategy can motivate businesses to initiate a digital transformation journey. Commencing with fundamental digitisation, enterprises can benefit from a gradual increase in grant support — 20% for back-office and operational digitisation and scaling up to 60% for incorporating digital ledger or AI technology.

Singapore’s current government grants and subsidies pose challenges for smaller enterprises, as significant upfront payments are mandatory. To aid these businesses, the government should reassess programmes such as Productivity Solutions Grant and Enterprise Innovation Scheme, ensuring a more manageable initial financial commitment for embarking on their technological initiatives.

Presently, Singapore’s digital resources fall short of meeting demand. However, there exists an opportunity to harness local talent for the swift growth and development of indigenous digital solutions. The government might explore broadening the grant schemes to back projects led from Singapore but incorporating resources beyond the region, ensuring the progress of local enterprises is not impeded.

With investments in appropriate AI and ML tools, businesses must allocate considerable time and funds to achieve reliable real-world outcomes in connection with these technologies. However, many face challenges in delivering dependable results.

We suggest the government to implement a grant scheme to assist with expenses associated with  employee upskilling and the adoption of AI and ML. Additionally, the government might explore establishing a centralised platform to facilitate access to these services for smaller enterprises.

Amidst the rising cybersecurity challenges and a complex digital landscape, we advise the government to bolster current initiatives, providing stronger support for smaller enterprises in implementing recommended measures through enhanced training programmes. Furthermore, companies might require government assistance in upskilling and reskilling their workforce in response to evolving techniques.

Singapore Budget 2024 Proposal

Navigating the path towards net-zero

Singapore, driven by its ambitious commitment to environmental responsibility, is positioning itself to empower local businesses in their journey towards net-zero. However, there are multiple challenges that may be a roadblock. For instance, cost implications of technologies may impact the financing of green projects.

Given these challenges, it is clear that businesses need substantial support. The pursuit of a more sustainable future is a collaboration that demands unified efforts from all sectors. Here are our recommendations in addressing these concerns.

Singapore is grappling with a talent shortage for the net-zero transition. We advise the government to bolster Singapore’s status as a regional ESG workforce hub, enrich the curriculum at Institutes of Higher Learning (IHLs), and broaden support for establishing global or regional sustainable finance or ESG hubs in the country via grant initiatives.

Collaborating with aggregators such as Trade Associations and Chambers (TACs) and sectoral agencies, the government should strategise a decarbonisation plan for a more sustainable transition. Providing significant grant support in the range of 50–70% for early adopters is a viable approach. Moreover, introduction of a tax scheme that offers extra deductions for investments in sustainability can be explored. To encourage the adoption of innovative, low-carbon and energy-efficient solutions, the creation of a platform for project matching, technology, and capacity development is recommended.

Supporting ecosystem players in Singapore is essential for facilitating the transformation and transition efforts of the companies. To address the demand for green skills in Singapore and the region, the government could consider supporting the implementation of a sustainability-as-a-service model to optimise expertise for sustainability transformation. Additionally, we propose empowering the Green Skills Committee to create a national recognition pathway for hiring appropriate talent. 

The EFS-Green programme currently excludes enterprises solely adopting green solutions or technologies. Given the significant interest among smaller enterprises in embracing sustainability-linked finance, we propose expanding the initiative to encompass such adopters. This extension would enhance support for smaller enterprises by facilitating a 70% risk-sharing approach, fostering their sustainability initiatives. 

To bolster businesses in reducing carbon emissions, we suggest making energy transition projects eligible for targeted tax incentives, enhanced allowances or deductions. This involves promoting the adoption of energy-conserving production methods and investing in appropriate equipment. This can be achieved by expanding the Energy Efficient Fund and introducing government incentives.

Singapore can assist businesses in reducing their vulnerability to environmental fines by offering essential support and establishing relevant facilitation and frameworks, such as assisting enterprises in complying with export/import-related green regulations.

To aid Singaporean businesses in complying with evolving climate reporting mandates and international sustainability benchmarks, we suggest introducing an extensive upskilling initiative for affected enterprises. This would involve instructing employees on reporting necessities and the broader business implications.

Singapore has the potential to create data sharing platforms enabling the exchange of ESG data, including greenhouse gas (GHG) emissions linked to specific activities. This would enable companies to validate internal data and make estimations in cases where this information in unavailable.

Establishing a collaborative institutional framework with public-private partnerships is crucial for the government to lead while engaging with financial bodies. This approach aims to develop a cohesive taxonomy for financing eligibility, accompanied by a team of environmental advisors with specialised expertise. Such mechanism would be instrumental in fostering the growth of a thriving retrofitting and energy-efficient industry, positioning it for potential regional exports.

In addition to Singapore providing incentives for property developers to incorporate EV charging infrastructure, the government could promote the utilisation of sustainable energy for charging stations, such as solar power. This could involve permitting property developers to integrate solar panels into charging, thereby minimising the carbon footprint and decreasing dependence on the grid.

Singapore can implement explicit temperature control standards for commercial buildings, aiming to keep indoor temperatures 1.5 degrees Celsius above the current average, aligning with energy-saving policies. Additionally, the uptake of sustainable building practices and technologies could be promoted. Buildings following such guidelines can be eligible for property tax incentives or waivers.

Encouraging greater environmental responsibility in Singapore involves revising tax policies to transfer the financial responsibility from corporations to end users and consumers. This strategy would not only influence green behaviours but also align with global sustainability objectives.

Singapore’s property tax currently applies to all immovable properties, regardless of their environmental impact. To enhance sustainability, there should be modifications wherein ‘green’ commercial and industrial buildings face reduced property tax rates while ‘non-green’ counterparts incur higher tax rates.

Singapore Budget 2024 Proposal

Expanding internationally and cultivating a conducive business environment

The potential risks to Singapore’s global competitiveness are heightened in the current inflationary business landscape, marked by resource limitations and geopolitical tensions. Nevertheless, despite these challenges, the country remains a sought-after destination for businesses.

To harness these opportunities, it is crucial for Singapore to take the lead in inspiring local enterprises to extend their international reach. We have outlined suggestions to guide Singaporean businesses in showcasing their excellence on the global platform.

Establishing an Export-Import (Exim) Bank in Singapore would position the country as a global hub for trade finance, drawing in international businesses and investors. This commitment would signal strong governmental support for smaller enterprises.

The Exim Bank could address the financial challenges faced by smaller businesses by bridging credit gaps attributed to perceived risks. Additionally, it could offer mitigation tools to safeguard businesses from potential losses, fostering innovation and diversifying the export markets for smaller enterprises.

We propose the establishment of an Alliance for Action to foster collaboration with businesses, focusing on cost-related issues. This initiative aims to promote dialogue between the public and private sectors, analyse the business costs in Singapore, and provide policy recommendations for improving competitiveness and fairness in the business environment.

To ease cost pressures on businesses, the government can explore diverse policy tools. E.g. despite global macroeconomic influences on the Singapore Overnight Rate Average (SORA), practical steps like enhancing funding accessibility for smaller enterprises could be taken to mitigate the effects of SORA fluctuations on business costs. 

We recommend easing internationalisation costs for businesses and nurturing local talent. Our suggestion involves a comprehensive review of the MRA Grant, proposing an increase in the cap to S$150,000 and introducing flexibility to the current activity sub-cap. Additionally, it is crucial for Singapore to champion local talents excelling in their industries, facilitating their transition to global roles in multinational corporations.

This recommended support may encompass providing 50% base annual salary support in the first year, up to S$50,000 or leaders/managers with a minimum of three years of full-time employment with the applying smaller enterprises.

Download our full Budget 2023 Proposal for more insights and recommendations

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