In this video episode of KPMG’s SG Budget 2024 Insights, Toh Jia Le, Senior Manager, Corporate Tax Consulting, KPMG in Singapore, sat down with Ajay Kumar Sanganeria, Partner, Head of Tax at KPMG in Singapore to get his perspectives on the reasons behind the recommendations in the KPMG and the Singapore Business Federation (SBF)’s joint Budget 2024 proposal.
Read video transcript below.
When it comes to challenges that Singapore is facing, can you give us an idea of what we can expect for the year ahead?
Ajay Kumar Sanganeria: Globally, there are economic uncertainties at the back of rising geopolitical tensions, high interest rates and high inflation. Coupled with manpower constraints that we continue to see in Singapore, we are experiencing or noticing a weakened business outlook.
Apart from these economic conditions, businesses will also need to pay attention to other developments to remain competitive.
For example, changes in the global minimum tax regulations as well as the growing emphasis on technology and ESG.
Given the various issues at play, I understand KPMG has come out with a host of recommendations this year to help Singapore businesses from all fronts. Can you give us a quick overview of the help and areas that businesses will need support in?
Ajay Kumar Sanganeria: Our Budget proposal for this year is based on a 3E framework that the Singapore Government can consider. Let me elaborate more on each one of them.
The first E is Elevating Singapore's leadership as a competitive regional hub. The second E is Empowering local enterprises for global growth and competitiveness. The third E is Enhancing enterprise resilience and capabilities.
You have mentioned elevating Singapore's leadership as a competitive regional hub. Currently, Singapore has already strategically established itself as a prime regional destination for businesses and wealth management. Are there any specific areas or sectors that Singapore can focus on to cement its role?
Ajay Kumar Sanganeria: In our Budget proposals, we have provided recommendations for a number of areas. But for today's discussion, let me highlight three key areas that Singapore can consider to solidify its leadership role in the region.
First, given the developments to the global tax regulations, Singapore should proactively review its tax incentive offerings to be aligned with global requirements yet remain attractive to investors.
Second, on the innovation and digitalisation front, Singapore should champion regional efforts, such as establishing itself as a data innovation hub or shared service centres and encourage public-private partnerships.
Lastly, Singapore should also be at the forefront of tackling climate change. This can be done through climate financing and ESG initiatives. In addition, with its innovative prowess, Singapore can become an exporter of green solutions in energy and infrastructure.
To align with Singapore's vision as a regional hub, it is also important for businesses to be able to compete on the global or regional stage. How can they do that?
Ajay Kumar Sanganeria: Digitalisation and sustainability are two key areas where Singapore enterprises can gain a competitive advantage.
With digitalisation, companies can reshape operational landscapes, increase productivity, and deliver superior customer experience.
On this front, we have recommended various ways Singapore can administer grants to encourage implementation and ease cash flow concerns for businesses. The transition towards net-zero presents another significant opportunity where we have proposed a wide array of recommendations.
For example, Singapore can create decarbonisation industry roadmaps to empower smaller enterprises in their sustainability journey.
Singapore can also take an institutional-led approach to encourage the permeation of green buildings around us.
In the near term, some of these enterprises, especially the smaller ones, are worried about cost. Some may also be concerned about whether they have the necessary expertise to scale. Do you agree?
Ajay Kumar Sanganeria: Yes, it is definitely essential for Singapore to equip its enterprises with capabilities to tackle immediate challenges while maintaining robust fiscal policies.
One immediate challenge for businesses is to preserve cash. One way to do is to digitise payment verification processes so that enterprises can receive cash faster.
Countries like the UK and Australia have also introduced codes of conduct to encourage prompt payments, which is something Singapore can look into.
Another challenge for businesses is to develop their capabilities. To this end, Singapore can create opportunities for smaller enterprises to participate in government tenders. For example, tenders can be broken down into smaller projects or larger tenders can include subcontracting requirements.
Lastly, helping enterprises to attract and retain talents is also important. Singapore can consider relaxing certain regulations like the COMPASS framework to provide more flexibility for businesses to hire during these manpower constraints that we are facing.
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