In the midst of rapid technological change and global uncertainty, in particular, the rising anti-globalisation sentiments as demonstrated in the votes for Brexit and Donald Trump, Finance Minister Heng Swee Keat delivered the Singapore Budget Statement on 20 February 2017.
There have been comments that the budget does not deal with short-term measures nor stop-gap solutions (Institute of Singapore Chartered Accountants (ISCA) Journal March 2017: Focus budget 2017). The Singapore Business Federation was disappointed with the inadequate short-term support to relieve rising business and compliance costs. This issue has been conveyed by the business community repeatedly through various platforms.
Singapore Chinese Chamber of Commerce and Industry (SCCCI) President Thomas Chua felt it was a long-term budget and commented that “businesses, especially SMEs who are facing challenges are disappointed that there are not enough near-term measures to help them. Businesses are concerned with the immediate impact on their business costs, especially with the immediate increase in diesel tax and, soon, water prices”1.
The 2017 Budget indeed was not a budget dealing with short-term measures but rather a long-term restructuring budget. The last major economic restructuring of Singapore started in 2010, following the recommendations of the Economic Strategies Committee (ESC). However, the world today is very different from the start of the decade. Innovation cycles have shortened. Data analytics and digitalisation are the new buzzwords. The Committee on the Future Economy (CFE) chaired by Mr Heng Swee Keat was convened in January 2016 to develop economic strategies for the next decade. Budget 2017 adopted many of the CFE recommendations.
ARE OUR SMES READY FOR THE FUTURE ECONOMY?
Many small entrepreneurs have been facing challenges with rising costs. The Budget, instead of providing short-term measures to ride them through, has offered them an opportunity to adapt for the future economy. Fully aware that most of the entrepreneurs might not be tech-savvy to deal with these rapid technological changes, the government is implementing the SMEs Go Digital Programme. This will be a collaboration between Info-communications Media Development Authority of Singapore (IMDA), SPRING and sector lead agencies and will provide step-by-step advice on technologies to use through sectoral industry Digital Plans. Minister for Communications and Information, Associate Professor Yaacob Ibrahim, said during a Budget debate that “it will help raise SMEs’ overall level of digital-readiness by giving them step-by-step advice on the technologies to use at each stage of their digital journey”. IMDA will be the government agency leading this and providing customised help to SMEs from funding and consultancy to participating in joint pilots. There will be help at SME Centres and a new SME technology Hub.
The SMEs Go Digital Programme is an example of the government partnering with the business community to help prepare them for the future economy. It is laudable but the real test is in the implementation. It is hoped that all SMEs would be able to tap onto this and not just the bigger enterprises. Organisations such as the Singapore Malay Chamber of Commerce and Industry (SMCCI) needs to take the lead to help the Malay/Muslim business community to do so.
OVERSEAS OPPORTUNITIES FOR OUR SMES
The first strategy recommended by the CFE is to “deepen and diversify our international connections”. The immediate initiatives by Budget 2017 are the international partnership funds and the internationalisation finance scheme to help enterprises scale up globally. Innovation launch pads in selected overseas markets would provide opportunities for Singapore enterprises to connect with overseas counterparts. The Malay/Muslim business community should capitalise on this to venture overseas. In the region, countries like India, Indonesia, Myanmar, and Thailand provide ample opportunities. Indonesia in particular is an interesting market for the future economy as it has the ingredients to ‘leap frog’. SMCCI has strong connections in, and knowledge of the Indonesian market; this can be leveraged upon for Malay/Muslim entrepreneurs to partner other Singaporean enterprises to venture into the Indonesian market. Malay/Muslim entrepreneurs have the competitive edge in bringing Singapore businesses to the Nusantara.
PREPARING FOR THE FUTURE ECONOMY THROUGH SCHOOLS
The longer term strategy in the Budget for building capabilities to operate overseas is implemented through the educational institutes. The Innovators Academy will enable tertiary students to build connections and capabilities by connecting students to start-up overseas. It is expected that higher educational institutions would introduce more modules on entrepreneurship, FinTech and other future economy required skills, and that there would be more short modular courses under Skills Future funding.
The future economy provides an opportunity for the Malay/Muslim community to leap frog. The preparation for the future economy should start at an early stage. We need to get our children to be tech-savvy. Malay/Muslim organisations can offer training in technology for primary and secondary children to raise their interest to pursue technology-related training. Even at the preschool level, efforts could be made to introduce the use of technology to students to raise interest. We need to mould the next generation to be tech-savvy, with an entrepreneurial mindset and a passion for lifelong learning. A tall order indeed.
HELP FOR SINGAPOREANS IN THE FUTURE ECONOMY
It is also worth mentioning that housing grants and water prices are increasing. The increase in Housing Grant coupled with the Proximity Grant for buying resale flats near parents, and the Additional Housing Grant (AHG) can amount to $100,0002. Eligible Singaporeans should consider buying resale HDB flats and applying for the grants especially as the HDB resale market is expected to benefit from these grants. Overall the property market will most likely see an upward trend towards the end of the year.
Increases in diesel tax and water prices unfortunately are expected to have an inflationary effect. Business costs will increase and more importantly, these two items tend to have a physiological effect of expected inflation. We could see an increase in prices of basic commodities, including our teh tarik!
The 30-percent increase in the price of water is a large jump even though it is spread over two phases. However, from a political cost perspective, it is understandable to do a one-time increase coupled with the current campaign to convince Singaporeans of the need for the increase. The message of saving water is not new; it has been going on for over the last 50 years.
The water price increase and the rising costs of living are serious concerns for the lower-income group. The government’s social spending has been modest compared to other developed countries. There is a need to address these concerns and provide a social welfare system to take care of those left behind. Health costs, education, utilities, and of course water, are basic human needs that need to be provided. Budget 2017 was a strategic plan for the future economy but, worryingly, it has no strategy spelled out for those who are at risk of being left behind. ⬛
1 www.straitstimes.com/singapore/singapore-budget-2017-reactions-from-business-community
2 DollarsandSenses.SG. Singapore Budget 2017: Early Analysis on the 7 Things That Matter to You. 21 Feb 2017
Dr Ameen Talib is Head of Applied Projects at the School of Business at the Singapore University of Social Sciences. The views expressed in this article are his own.
