In this video episode of Singapore Budget 2025 Insights by KPMG in Singapore, Matthew Kwok, Director, Corporate Tax Consulting sat down with Chiu Wu Hong, Partner and Head of Private Enterprise and Chris Roberts, Partner, IGH and Manufacturing, Tax to discuss how Singapore can continue to maintain its competitive edge and grow in an increasingly complex environment.
Read video transcript below.
Which of Singapore's industries do you think are best positioned for the next phase of global growth and what steps can the Government take to assist them in attaining success?
Chiu Wu Hong: The first would be the green energy and sustainability sector, as there is a global push for decarbonisation, renewable energy and sustainable urban planning.
The second would be the healthcare and biochemical sciences sector. Like many countries, Singapore has an ageing population. There is a huge demand for advanced healthcare solutions, and Singapore is positioning itself to be a leading clinical hub to offer products and services in precision medicine, biopharma and MedTech.
The third is the professional services sector. As global companies seek high-value expertise, Singapore is well-placed to be a regional talent hub.
To support these industries, the Singapore government can do a few things:
First, increase subsidies and enhance tax incentives for businesses to adopt clean technologies and invest in research & development (R&D) for alternative energy sources.
Second, provide tax incentives for biotech companies and enhance partnerships with global health organisations for cutting-edge research.
Third, to encourage the professional and business sectors, the Government can enhance workforce training programmes through initiatives like SkillsFuture, focusing on emerging skills such as artificial intelligence (AI), data analytics, and cybersecurity to address any talent shortages.
What do you view as the three most significant challenges for businesses looking to expand further into the region and beyond and what are the strategies they will need to overcome them?
Chris Roberts: The first challenge is the route to market. With route to market and also the market – where is it you are going to grow your business internationally? Do not try to boil the oceans - focus on what has been successful in your business in Singapore and how you can look to replicate that overseas.
The second challenge for businesses is legal regulatory tax compliance. The world is not getting any simple; it is getting more complex. How do you ensure that businesses can face and deal with these challenges?
Finally, it is how you deal with disruptions in the global environment as they are happening at the moment? How will that impact the plans for your business and how do you ensure your business remain robust against those challenges?
Regarding the first piece around route-to-market, and how you pick and choose that route to market, speak to peers and other businesses that have done the same thing. KPMG can introduce you to our networks to speak to businesses that have gone to that particular market or that are aligned with top priorities in your area.
Next, legal, regulatory and tax rules. I am a professional advisor, we all are. Come and speak to a friend.
Finally, you must be willing to accept risk in what you do. There are great opportunities available for you and the business but in a global environment that is constantly changing and shifting, being willing to accept that level of risk is the key to success.
This year's Singapore Budget proposal recommended the establishment of a dedicated transfer pricing advisory programme for small enterprises. What form should this take and how important will it be in helping smaller firms to look abroad for growth?
Chiu Wu Hong: The transfer pricing advisory programme can take the form of a structured education framework that simplifies complex rules for small businesses. This can be achieved through conducting more workshops, having online resources and simplified compliance guides.
Second, the programme can take the form of tailored advisory services delivered through a network of experts. This can be through working with various trade associations or government-backed programmes to help small enterprises navigate the unique transfer pricing issues or scenarios in their respective industries.
Third, it can also take the form of cost-sharing incentives with the Government’s support to encourage businesses to prepare robust transfer pricing documentation. This support is crucial for small enterprises venturing overseas to ensure that they can mitigate their risks by avoiding disputes with foreign tax authorities and also to enhance their credibility with international partners in showcasing their compliance with global standards.
Additionally, to achieve tax efficiency by having robust and carefully thought through Transfer Pricing (TP) policies to support inter-company transactions.
All of these initiatives can help to level the playing field for small businesses and give them the confidence to venture overseas.
On the topic of overseas expansion, local companies will encounter challenges such as regulatory compliance, taxation, and sustainability. How can technologies like AI help them to stay compliant and sustainable?
Chris Roberts: Companies will face multiple challenges, particularly in the current environment - where rules are changing all the time and things are getting much more complex. How can AI help businesses maintain compliance and be sustainable? I think businesses need to understand how AI can help their business, where it fits within their business and what the risks are of AI to their business.
If we focus on how it can help them be sustainable and meet compliance, then I think businesses need a cohesive strategy which looks at how does AI fit within their business, how does it help them grow the market, how does it help them retain and recruit new staff within the business and how does it help them to do things more efficiently and be more productive.
By focusing on what AI can do for the business, it will also help them maintain compliance and gain a better understanding of how rules and changes may have an impact on them.
AI is a great tool. It is a great opportunity for businesses to be more efficient to go and explore more markets, but businesses will need to have a focused strategy on how to implement that in the business.
KPMG’s SG Budget 2025 Insights
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