SMEs are the central focus for transforming the Singaporean economy. With the rising opportunities, consistent economic development, and continued emphasis on productivity and innovation, the government is playing an active role in promoting SMEs.
Rapid urbanization and the rise of the Asian middle class, has led to higher disposable incomes and sophisticated demand in sectors like retail, lifestyle, F&B, education, and healthcare.
The Singaporean Government has further strengthened its support to promote the growth of SMEs
Let’s take an in-depth view into various sectors how government is facilitating the same:
Financing – Banking & Loans
Singapore is well-known for its business-friendly stance. Its pro-active business approach underlines numerous grants and incentives offered to companies operating in the city-state.
The new and expanded grants are more targeted towards specific needs of Singapore businesses. The government-backed SME loans serve as resources for working capital, factory, and trade financing.
1. Productivity Solutions Grant (PSG): The PSG makes funding and support readily available to the Singaporean SMEs. Where it supports to offer detailed and specific levels; primarily encourages the adoption of digital productivity solutions and funds up to 70% of the costs.
2. Enterprise Development Grant (EDG): Unlike PSG, EDG helps businesses that are looking to expand within and beyond Singapore’s shores. Its incentives allow SMEs to work on their core capabilities, explore new areas of work by innovation and productivity. Last but not the least help in market assessment in case SMEs plan to venture overseas market.
3. PACT Grant: Collaborations between SMEs and startups – Up to 70% of funding is available for such alliances. It would focus more on local business growth by co-innovation, knowledge transfer and sharing resources.
4. Venture Debt Program (VDP): SMEs with high-growth potential are granted access loans up to $ 5 million, with at least 30% ownership and less than 200 employees. A perfect boon for Singaporean economy, where capital sourcing has been a challenge.
Government Financed Schemes
Singapore is a very lucrative market, and due to ease of business, it attracts a lot of Foreign Direct Investments (FDI). But, the game-changer strategy that drives the economic growth in the country are:
Manpower & Talent Pool
Manpower is not only the lifeblood of the enterprise; they are its heart and kidneys, without which the enterprise cannot function.
The Singapore Government has decided to toughen the norms for Dependency Ratio Ceiling (DRC), which means the percentage of foreign workers will be restricted to 35% by 2021. This is the best time for Singaporean employees to strengthen and sharpen their skills, and also for the employers – to redesign the jobs and work processes with digital technology so they could facilitate their employees.
Further, a lot of enterprises face this perennial problem of finding the right talent who are in alignment with the enterprise’s vision and consequently, become one with its values. Some of the methods to increase employee retention ratio, could be:
- Consistent review and interaction with the manager, instead of annual reviews
- Reward their contribution to the growth and success of the enterprise
- Take feedback and suggestion from them, they have the best ideas.
Rethink their business strategies, such as incorporating new technology to automate and streamline their workflow” and “redesign service roles that address locals’ mind-sets to retain more local talents in the long run.
– highlighted by Ms. Linda Teo, the Country Manager of Manpower Group Singapore
To facilitate this, the government has introduced WorkPro scheme. The companies can access upto S$480,000 grant to create a healthy and conducive work environment. It is to initiate support in the following areas:
- Age Management practices
- Redesign workplace to create smarter, safer and easier jobs for older people.
- Introduction of Flexi working hours
Internationalization & Market-Readiness
Only 14% of Singaporean SMEs intend to internationalise while nearly half remarked that they prefer to keep their business within Singapore in the future
– as per QBE study
Internationalization has always been a far-fetched and expensive proposition for an SME. To have a global presence, the companies need to market themselves, attend trade shows, partner with local organizations. It involves a significant amount of time and effort for SMEs due to limited resources.
The government has special programs for this, which include:
Double Tax Deduction for Internationalisation (DTDi): The government introduced Double Tax Deduction program, to promote internationalization. It allows SMEs to claim 200% tax deduction (capped at $150,000) for approved overseas business activities like – Business Development trips, attending trade shows, Market study. A reduction in tax burden allows the businesses to engage is aggressive market expansion activities.
Market Readiness Assistance (MRA) Grant: MRA grant covers 70% of the costs (capped at $20,000 per annum) for Singaporean businesses that are exploring overseas markets. It helps in market set-up (Company registration/ tax structure/ licenses/ legal documentation), partnering with local companies, participation in trade shows or PR and promotional activity.
International Partnership Fund: With the consistent impetus of the Singaporean government on SMEs, it has further decided to support them through the International Partnership Fund. The fund consists of $600 million for a co-investment scheme, that allows local SMEs to create and increase their presence on the international front.
To understand the penetration into the digital world, the film production companies used to sell cassettes and CDs; now they sell ads on their YouTube channels. In the voice industry, there is a unique arm called Alexa skills. Freelancers are creating full-time real businesses from making connections on LinkedIn.
To penetrate or not penetrate the digital space is not the question for SMEs, the real problem is how and how soon they are going to do it.
In the larger enterprise, due to digital transformation, there is 17 percent revenue gain and 20 percent cost saving. Whereas the growth rates for SMEs are projected to be 26 percent and 22 percent respectively.
The digital transformation will add an estimated US$10 billion to Singapore’s GDP, and increase the growth rate by 0.6 percent annually, by 2021.
– according to the Unlocking the Economic Impact of Digital Transformation in Asia Pacific study conducted by Microsoft and IDC Asia/Pacific.
Microsoft Singapore has initiated to collaborate with Association of Small & Medium Enterprises (ASME), with the following objectives:
- Bring about accelerated digital transformation.
- Facilitate support from government agencies as well as the market.
This has led Microsoft achieve huge milestones, such as:
- Reaching 100,000 SME customers and 1,000 business partners
- Partnering and working with Infocomm Media Development Authority (IMDA) under their Strategic Partners Programme (SP), to improve digital capabilities of Singapore based tech-companies
- Facilitated adoption among SMEs, of preapproved solutions for IMDA’s SMEs Go Digital Programme
- Partnering with AI Singapore to educate locals with AI knowledge and skillsets, that will invariably take over across all industries, in the upcoming years.
With these humungous efforts from the government and facilitation from the tech giant like Microsoft, SMEs will finally be able to penetrate and establish their brand value in the digital space.
To conclude, this is the ripest time for SMEs to avail of a multitude of benefits offered by the government and take it to heights that these statistics haven’t even predicted.
It’s a powerful metric, especially because SMEs are going to be the highest contributors to Singapore’s GDP in the years that follow. With the endless support and resources from the government as well as international markets, the best time to avail of these opportunities was yesterday; the second-best time is NOW!!!
Picture Source: Google