Budget 2024 can help businesses stay resilient amid uncertainty

By: Kok Ping Soon, CEO, SBF & Ajay Kumar Sanganeria, Partner, Head of Tax, KPMG in Singapore

An uncertain global economic environment and lingering geopolitical tensions are putting the resilience of Singapore enterprises to the test once more.

All eyes will be on Budget 2024 as businesses look for greater government support in navigating these concerns, while accelerating digitalisation, sustainability and internationalisation to remain competitive.  

KPMG’s research shows that top chief executives globally view geopolitics as the greatest risk to business growth, with more than half of those in Singapore adjusting their strategies to tackle these complex challenges. While Singapore’s economic growth is expected to improve this year, businesses remain cautious.

Three-quarters of businesses surveyed in Singapore Business Federation’s (SBF) latest National Business Survey believe that the economy could worsen over the next 12 months, with tightening credit, cost increases and manpower constraints cited as top challenges. 

While the Government has recently refreshed the Industry Transformation Maps in 23 sectors, plans alone are not enough. Concrete actions taken in the immediate months, both by the Government and industry, to further strengthen businesses of all sizes will be critical. 

Even as most companies embark on some form of digitalisation, it is important for them to progress beyond basic digital transformation to more advanced technology adoption across their value chain. This enables optimal business productivity and efficiency, while catalysing new innovation opportunities. 

With costs often a key consideration, one way to incentivise businesses is through a tiered grant support approach, with higher support for businesses to adopt emerging technologies, such as artificial intelligence (AI) and digital ledger technology. 

The Government could also explore a grant scheme to support costs related to AI upskilling, including employee training, building training datasets, data management and model testing. 

Additionally, existing grants schemes, such as the Enterprise Development Grant, could be expanded to support digital projects where development work is led in Singapore but involves resources from the region, in view of the tight technology talent landscape. 

This can support businesses to leverage offshore talent to develop Singapore digital solutions, while keeping costs low. 

Amid growing climate urgency, ecosystem and sectoral collaborations will be crucial to catalyse green transition at scale, especially in helping businesses optimise the deployment of sustainability-related resources and talents. This will also enable Singapore to strengthen its position as a regional sustainability hub.

Trade associations and chambers, in collaboration with sectoral agencies, can take the lead in curating sectoral green transition roadmaps to drive progress in the development of sector-specific solutions.

For instance, the real estate sector can lead the way in driving a greener business ecosystem. Amid new growth opportunities in the retrofitting space, there is scope for an institutional framework to be established through a public-private partnership to push for more clarity in financing eligibility and adoption of energy efficient solutions.   

To stay competitive amid global uncertainties, businesses will need to tap the burgeoning opportunities in ASEAN and do more to raise the talent bar to meet the needs of emerging areas.

Currently, 76 percent of small and medium enterprises already have an overseas presence, but the SBF’s survey reveals that fewer are making future overseas expansion plans.

Increasing the Market Readiness Assistance (MRA) Grant cap from S$100,000 to S$150,000 and providing greater flexibility in different funding categories will encourage enterprises to explore international opportunities.

With 65 percent of ASEAN’s 680 million population set to be middle class by 2030, this will allow them to reap the demographic dividend and accelerate their growth.

Support should also be given to companies deploying Singaporeans overseas, as this will promote an exchange of ideas, enrich the local talent pool and develop more globally oriented Singaporean executives – an intent of Forward Singapore.

To further drive a complementary pipeline of talent to sustain Singapore’s status as a global hub, the Government could review the Complementarity Assessment Framework to allow for short-term flexibility in the diversity quota. This could facilitate more cross-deployment of foreign workers.

In the same spirit, it may also be timely to review the classification of the services sector for foreign worker quota, in consideration of the diverse range of businesses classified under this broad sector. 

Efforts to step up support for the training and upskilling of the local workforce, particularly mid-career Singaporeans, are critical, given the increased pace of technological progress and the shortening half-life of skills.

As the economy transforms, many job roles will keep changing, and so will in-demand skills. We need to give our local workforce a leg up to be equipped with the skill sets to stay relevant and competitive.

As Covid-19 demonstrated, Singapore has built an excellent ecosystem for supporting enterprise growth and resilience even in the face of external volatility.

Building on Singapore’s robust ecosystem, Budget 2024 is a timely platform for the country to drive initiatives that can strengthen enterprise digitalisation, sustainability and internationalisation as levers for growth.

By exercising flexibility in foreign worker policies and investing in the local workforce, we can ensure that businesses will not only be able to overcome immediate challenges, but are also well-positioned to emerge even stronger when the global economy recovers.