- Category: March 2014 - Social Media Marketing
Singapore is one of the fastest growing countries in the world. It’s economy has put up numbers so impressive they are nothing short of surprising over the last few years, including the occasional quarter of 20%+ GDP growth. Singapore is the world’s 40th largest economy, a title it earns from varying efforts related to growing its business potential: strict anti-corruption measures, low inflation rates, ongoing strategies to remain a destination for tourists and business travelers, low debt, plenty of IT, major industrial and manufacturing growth, a strong port, AAA credit ratings from the major credit bodies and a growing, robust labor class with low unemployment.
However, perhaps the most prominent factor contributing to Singapore’s growth is the country’s strong ongoing support for its own businesses. SMEs in Singapore figure prominently into the budget. The country has made a definitive statement to its own businesses that it is there for them to succeed, providing SMEs the opportunity to collect grants, financing, credit and other support in the form of officially sanctioned government programs. And with the release of the new 2014 budget, Singapore has made even more of an effort to support SMEs.
Here are four clear-cut advantages laid out for SMEs in the 2014 budget and how Singapore companies can take advantage of them.
#1: Singapore is opening the door to new Info-Comm Technology investments that will transform businesses.
For all of its technological advancements, Singapore is still a country known for brick and mortar popularity. For that reason, not all SMEs are up to date on the latest technologies. On the other hand, technology is on a clear upward trajectory and is evolving toward a far more advanced state, suggesting that future technologies may be a requirement for Singaporean SMEs— or at least an advantage.
The new Singapore budget takes that issue into account clearly and seriously, outlining a new initiative specific to ICT technologies that should help bring the country’s businesses into the next generation. The Infocomm Development Authority of Singapore (IDA) will now cover up 70% of costs up to $1 million per firm to implement ICT technologies, paying vendors directly so as to help companies avoid the burden of applying for the subsidy. IDA will also subsidize companies willing to pilot emerging ICT (80% up to $1 million per firm).
How to capitalize on the ICT fund in the Singapore budget: Apply. Singapore companies have an inside shot at these technologies and would benefit greatly from being a part of the first adopters who take them on. While the subsidy is not 100%, it is large enough that companies looking to drastically sharpen their technological capabilities should be able to upgrade at a reasonable rate. The pilot program offers the opportunity to stay ahead of the curve, and while those programs have an inherently higher risk in some respects, the higher subsidy percentage and implied dedication of the Singaporean government to make the program work are comforting to the average business owner.
This is a huge opportunity for SMEs to upgrade technology.
#2: Singapore’s new financing initiatives will create credit flexibility for companies launching ideas, products, divisions and other expansionary measures.
Singapore’s new budget provides SMEs with the chance to punch above their weight with respect to spending power. The budget calls for both a co-investment program and a micro-loan initiative. The co-investment dollars can be spent in conjunction with private companies to create a better, stronger coordinated investment opportunity for public and private companies, and provide more patient growth in the form of both equity and mezzanine capital. As for the micro-loan program, it increases the amount of risk the government can take on in a business from 50% to 70%.
How to leverage new budget financing: Companies seeking capital can now consider the government in a more positive light as a potential resource. As for whether the micro-loan or co-investment approach is stronger, the options will likely vary from company to company. Some companies may be able to find effective private sector strategic partners, while others may prefer to take something entirely government-backed, especially if they are in construction, an industry the government has already addressed with other similar initiatives. Using financing and taking tax credits together may be an excellent way for certain companies to reposition themselves much stronger financially.
#3: Current PIC initiatives have been expanded and extended.
PIC is the Product and Innovation Credit, an opportunity for companies looking to expand their capabilities to claim larger tax credits than ever before. The PIC has been in effect in past budgets to great success, and the government is pushing it yet again for its 2014 proposal. PIC sets aside $3.6 billion over the past three years and allows for companies to claim tax deductions of up to $1.2 million. Specifically, SMEs will see an increase in expenditure cap, from $400,000 to $600,000. The government will also allow a tax break of up to 50% for qualified R&D initiatives.
How SMEs can capitalize on PIC: Not everyone has the capital to make a move in the innovation space, but this is exactly the right size break for certain SMEs to get over the hump into the next class of growth. SMEs must constantly innovate to survive the always growing, competitive global market, as well as the competition faced at home in Singapore. Research and Development is already key to free market success. If you can save money implementing it, it’s an opportunity worth taking advantage of.
The new budget throws SMEs a major lifeline on affording it.
#4: The new budget calls for internationalization.
While overseas initiatives are not brand new to Singapore, the change here is substantial. The amount of money available to companies seeking to internationalize will double from $15 million over two years to $30 million over two years. New initiatives will also take on extra support, as pilot and test-bedding projects in international territory will see a raise in support level from 50% to 70%. The budget will also support staffing initiatives in foreign markets, suggesting that global business is a major strength for the city state according to the belief of those with the signature authority on government expenditures.
How to capitalize on international efforts:
The Singapore market is one of the strongest in the world. It has been branded to succeed and is heralded for its success. Making waves in international markets is not only possible, but likely, as long as companies have the right support.And given the outright essential nature of SMEs in the country’s economy, that support is now on the table for any company looking to expand elsewhere. This initiative is a great way to round out the internal infrastructure initiatives of the budget with something useful across the globe.
By Anant Choubey, Regional Head – APAC, Capillary Technologies
About the Author:
Anant Choubey is responsible for sales and marketing in the APAC region at Capillary Technologies and currently manages the firm’s business across South East Asia. His prime focus is to strategize and expand Capillary in burgeoning market in South East Asia. He has donned many hats in Capillary over the years, from operations to client servicing to business development and has been instrumental in setting up Capillary’s India business, before moving to Singapore to establish and manage South East Asia market.