By Chiu Wu Hong and Ho Kah Chuan
SINGAPORE — "Life is like riding a bicycle. To keep your balance, you must keep moving," Albert Einstein said.
Singapore’s ‘Emerging Stronger Together’ Budget 2021 straddles that bicycle of balance, relentlessly pushing forward the country’s transformational agenda, while maintaining a sustainable fiscal position.
Although Singapore tapped on its reserves for the second straight year, Budget 2021 manages to strike a delicate equilibrium between the immediate need to protect businesses and jobs, while laying the groundwork for medium- to long-term restructuring.
This balanced, yet forward-looking approach is congruous with KPMG in Singapore’s 3R Framework that Re-imagines the economy through transformative strategies, Re-plans as new business realities rapidly evolve, and Re-creates the country as a global hub for enterprise, finance, and transformation.
Changes in the business landscape will undoubtedly outlast the pandemic that triggered them, and long-term solutions will be required in the areas of digital transformation and innovation. Budget 2021 unlocks a wide range of capital for businesses at various stages of growth, and this will be a key driver of future transformation.
Large local enterprises (LLEs) have seen funding dry up in recent times as investors turned cautious in a volatile economic climate. The S$1 billion Local Enterprises Funding Platform between Temasek and the government provides a timely fillip to LLEs, propelling them towards their next phase of growth. This programme should allow LLEs to tap into global networks and invest in innovative projects, by leveraging Temasek's vast experience to become regional leaders. LLEs should be encouraged to involve local small- and medium-sized enterprises (SMEs) that are complementary to their businesses as they go global and make significant investments.
The government also extended funding to smaller, promising companies seeking to innovate, transform and scale up by taking on a significant share of risk (up to 70 per cent) under the Enhanced Venture Debt Programme for High-Growth Enterprises, including startups. Access to additional capital from the increased loan cap (S$8 billion from S$5 billion earlier) under this programme will drive further business expansion, especially those that see good opportunities arising from the current pandemic or post-pandemic situation.
To support innovation, three key initiatives—New Corporate Venture Launchpad, Enhanced Open Innovation Platform, and Enhanced Global Innovation Alliance—were outlined that will help nurture creative ideas, cultivate an entrepreneurial spirit and enable businesses to collaborate on a global scale and tap into a larger pool of resources and networks.
Aside from offering new avenues for funding, the second important prong of Budget 2021’s blueprint deals with resetting the jobs and skills landscape. As the new post-pandemic reality continues to unfold, businesses urgently need to upgrade their capabilities and find new ways of working to re-invent themselves, while right skilling, reskilling and upskilling their workers. To help bridge this skills gap, the government increased its SGUnited Jobs and Skills package to S$5.4 billion this year, in addition to the S$3 billion allocated last year. The programme placed nearly 76,000 individuals into jobs, traineeships, attachments, and skills training last year, and will continue to create opportunities for jobs and growth.
As organisations chart their digital transformation journeys, lack of skills is a major impediment. The Emerging Technology Programme, along with initiatives such as the CTO-as-a-Service (CTOaaS) and Digital Leaders Programme, will help address this problem, while driving the adoption of digital solutions and frontier technologies. CTOaaS, in particular, is a pivotal initiative that pools together experienced technology leaders to plug the knowledge gap at many SMEs.
The comprehensive approach outlined in Budget 2021 not only furthers knowledge and expertise at organisations, but also extends the funding support to drive growth, regionally and globally. Through a well-thought-out set of measures to spur transformation, innovation and scaling up, Budget 2021 summons the collective resolve of Singaporeans to emerge stronger together from this unprecedented crisis.
Chiu Wu Hong is Partner, Head of Enterprise, Tax, KPMG in Singapore and Ho Kah Chuan is Director, Corporate Tax Consulting, KPMG in Singapore