Seizing the opportunity for economic growth
The business landscape is becoming more complex and uncertain globally. However, these difficulties act as drivers for strategic transformation and innovation.
The government also plays a vital role in strengthening the resilience and capabilities of Singaporean businesses, enabling them to excel in their relevant sectors. We anticipate the following recommendations to be valuable in this context.
To tackle issues arising from delayed payments and a lack of transparency in funds, Singapore might consider optimising and digitising payment verification processes. This may include implementing e-signatures and digital interfaces to accelerate payments by minimising the time-consuming verification procedures.
Moreover, establishing transparent certification criteria could streamline payment processes, delivering significant advantages to smaller enterprises.
Strengthening key business capabilities involves sustained teamwork over a period of time, with assigned employees dedicated to executing strategies. Enhancing the capability building programmes by incorporating incentives could encourage the retention of key staff crucial for successful strategy implementation.
Enhancing inclusivity and fairness among smaller enterprises in Singapore’s government projects could involve a revision of tender packaging strategies, improvement of evaluation criteria, tiered allocation of tender packages based on size, and the implementation of subcontracting requirements, ensuring larger companies allot a portion to smaller players. This will help smaller enterprises to compete equitably, develop capabilities and thrive.
Many small businesses encounter challenging and intricate registration procedures involving extensive paperwork and prolonged processes. Singapore might contemplate reassessing and streamlining the documentation and prerequisites linked to procurement tenders. It could also explore integrating measures to address unforeseen events, implementing standardised templates and procedures for typical procurement categories, and simplifying the evaluation criteria for clarity and transparency.
Singapore might explore modifying the sustainability scoring criteria in government tender mandates to accommodate smaller enterprises and their ability to meet sustainability objectives. This would ensure that businesses of all sizes actively contribute to sustainability. For example, introducing specific evaluation criteria focused on innovation could encourage the development of new ideas or inventive problem-solving approaches.
Bolstering the talent pool for success
In Singapore, firms continue to address the voids left by departing foreign talent amidst the pandemic, while also navigating the changing work dynamics. The demographic factors of the country also add complexity to the talent landscape.
Despite these challenges, seizing opportunities in emerging growth sectors is crucial for enhancing the local talent pool and establishing Singapore as an international talent hub. These recommendations can aid in attaining the stated objectives.
Starting September 2023, prospective Employment Pass (EP) applicants must successfully navigate the points-based Complementarity Assessment Framework (COMPASS) alongside fulfilling the required salary threshold. However, challenges may arise for certain entities, especially regarding aspects such as the recruitment of local staff.
Therefore, we recommend that the government reassesses COMPASS, considering a potential temporary easing of the diversity quota criteria. Additionally, expanding the range of qualifying skill sets would help maintain their relevance to various businesses.
Currently, under the Manpower for Strategic Economic Priorities (M-SEP) Scheme, qualifying companies can engage S Pass and Work Permit holders for a two-year duration, with potential expansion. When an eligible company attains a heightened quota, this allocation remains fixed for two years without alterations.
Hence, we propose that the government contemplates a provision enabling companies to gradually incorporate foreign workers up to the 5% threshold, should they surpass local hiring or training objectives. Such a measure would afford companies the flexibility to adapt their workforce to evolving circumstances.
In a competitive job market, service industry businesses aim to attract and keep skilled workers while also considering foreign manpower for operational support. These businesses are diverse and face cumbersome paperwork related to migrant worker details such as their source country or employment duration.
Therefore, we propose that the government reevaluates the existing foreign worker quota, suggesting it be tried to specific job roles rather than the current classification.
The Inland Revenue Authority of Singapore (IRAS) appears to employ inconsistent methods when determining the ‘fully loaded cost base’ for transfer pricing. It is advisable to amend the income tax legislation to explicitly consider the actual costs borne by companies. While share option plans and award schemes are crucial for attracting top talent, numerous startups and tech enterprises encounter challenges related to the above actual cost issue.
Employees based in Singapore, mandated to travel abroad for business, currently do not get tax breaks. It is advisable for the government to contemplate implementing a special scheme for this category, fostering the establishment of regional roles in Singapore, fortifying its standing as the ASEAN hub, and facilitating business travel and expansion.
A skilled and well-educated workforce enables businesses to access a consistent pool of talent and depend on local expertise to meet their manpower requirements, contributing to Singapore’s economic goals. Recognising potential challenges due to inflation, we recommend increasing the annual Course Fees Relief cap from S$5,500 to S$10,000 to better assist individuals committed to lifelong learning.
Download our full Budget 2023 Proposal for more insights and recommendations