What is in store for small- and medium-sized enterprises (SMEs) with the latest fortitude budget announcement? Read on to find out.
Business owners have a huge amount on their plate right now. Looking ahead, there is no doubt that there is also more to come from the economic fallout of COVID-19.
The Singapore Government has even thrown in the kitchen sink with how they are trying to support local businesses; continuing to extend support to help with the challenges of today, whilst also equipping businesses with the tools to tackle the future.
With four Budgets delivered already in 2020, there are an array of options for business owners to seize. Navigating what, how, and why to use them can be tough though; in a recent poll of SME leaders during a client webinar, we heard that over 70 per cent required some guidance in understanding how they could use the measures.
With so much to digest, here’s a quick guide on what business owners should know from the latest round of reliefs.
As the road out of circuit breaker remains fraught with uncertainty, many businesses and workers will need to adapt and stay resilient in a rapidly evolving situation. That was the key message from Minister Heng Swee Keat, Deputy Prime Minister of Singapore and Minister of Finance.
This package totalled SG$33 billion; combined with the previous three budgets, 1 fiscal support from the Singapore Government amounts to almost SG$100 billion. 2
SMEs—and even large companies—are now mindful that as long as COVID-19 is here to stay, the cost of doing business is expected to increase, stemming from the need to take additional precaution, for example swab tests for construction workers, or safe distancing which means many establishments like restaurants and retail outlets cannot operate at full capacity. With the top line challenged, there is a pressing need to watch costs—which means increasing productivity, improving efficiencies through digitisation, and tapping on financing support to better manage cashflow and liquidity.
Supporting SMEs in Digital Transformation
A defining feature of the Fortitude Budget is on rebuilding the economy in a different way; digitally and by upskilling.
The current pandemic has accelerated the need for digital transformation. To encourage more SMEs to make the shift, the Budget outlined additional measures:
- Businesses, such as stallholders in hawker centres and wet markets that make the transition to E-payments will receive a bonus of up to SG$300 per month over five months. 3
- Businesses that are ready to take their finance functions, such as payment and invoicing, digital will receive a payout of up to SG$5000 for adopting PayNow Corporate and E-invoicing, as well as business process or E-commerce solutions. Businesses that adopt more advanced digital solutions will receive SG$5000 more. 2
This allocation will help businesses in all sectors diversify their revenue to access new customers and new markets. They will also enjoy significant cost benefits and efficiencies, by conducting payments online, managing accounts, liquidity and forecasting, and accessing finance and documentation easily in real time.
Additionally, supporting PayNow aims to protect employees and consumers from handling cash to minimise the risk of the virus being transferred. At HSBC, we have already seen a jump in PayNow Corporate users; in the first two weeks of April 2020 alone, our application rate by corporate clients increased by 35 per cent.
Upskill and Reskill
Supporting workers to secure opportunities and adapt skills that will power the workforce now and in the future was central to this Budget. The Government aims to protect every local worker as long as they are willing to pick up new skills and adapt to work. 4
The pool of talent should therefore increase and it would be prudent of business owners to bear this in mind as they adapt their own business models. Whilst there were several programmes to support individuals announced, there were also a number of incentives for businesses to support the hiring of local Singaporeans who have upskilled.
The Fortitude Budget is a forward-looking package that also mitigates the challenges businesses are facing and protects them and their workers’ livelihoods in the long term.
Besides the enhanced Jobs Support Scheme and Foreign Worker Levy waivers and rebates, SMEs can take advantage of existing financing measures to help them get back on their feet.
The Government flagged that take up of the TBLP and ESG schemes 5 have been high, catalysing around SG$4.5 billion in loans—three times the amount for the year 2019. 2
There are some useful tools available to help business owners who are uncertain of how to utilise these and whether they qualify for them; check out Enterprise Singapore, SME Portal.SG, or the Government’s summary pages, or discuss with your advisors.
Activating Support Measures
The Budget spends the stimulus in a smart way, by encouraging the core of Singapore inc. to transform digitally whilst also clearly addressing business challenges head-on. It is up to SMEs to take it to the next level, by leveraging on the support measures that the Government has provided, and evaluating their own business requirements for additional short-term financing, so they can maintain liquidity, stay relevant, and survive.
1 Budget 2020. Accessed via https://www.singaporebudget.gov.sg/budget_2020/solidarity-budget / https://www.singaporebudget.gov.sg/budget_2020/resilience-budget / https://www.singaporebudget.gov.sg/budget_2020
2 GOV.SG, 26 May 2020, A Summary of the Fortitude Budget 2020. Accessed via https://www.gov.sg/article/a-summary-of-the-fortitude-budget-2020
3 Fiona L, 26 May 2020, BT, Fortitude Budget: Up to S$5,000 payouts for F&B, retail businesses that go digital. Accessed via https://www.businesstimes.com.sg/government-economy/singapore-budget-2020/fortitude-budget-up-to-s5000-payouts-for-fb-retail
4 The Straits Times, 2020. Accessed via https://www.straitstimes.com/politics/in-full-dpm-heng-swee-keats-33b-fortitude-budget-speech
5 Enterprise Singapore. Accessed via https://www.enterprisesg.gov.sg/financial-assistance/loans-and-insurance/loans-and-insurance/enterprise-financing-scheme/overview
Ng Li Lian is the head of Business Banking, HSBC Singapore. Li Lian joined HSBC Commercial Banking in 1996, and has over two decades of extensive experience across corporate recovery, credit risk, and global capital finance in various business segments such as SMEs, local corporates, and multinationals.
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