9 January 2014
ASME urges Govt to extend productivity scheme
SINGAPORE — The Association of Small and Medium Enterprises (ASME) is calling on the Government to enhance and extend the Productivity and Innovation Credit (PIC) package, due to expire next year, to help local businesses navigate their way through the process of economic restructuring and manage future challenges.
This is a crucial year to do so as companies, particularly small and medium enterprises (SMEs), are still feeling the heat of escalating costs as a result of restructuring, while 2015 may present a new set of challenges such as neighbouring markets becoming more competitive and higher financing costs from rising interest rates.
“2014 is an extremely important year for (businesses) to make a productivity breakthrough and grow in a way that is sustainable going forward. If PIC could be extended for another two or three years, it would be extremely helpful,” ASME President Kurt Wee told TODAY at the sidelines of a pre-Budget roundtable discussion organised by the Institute of Singapore Chartered Accountants (ISCA).
“SMEs have found PIC very helpful in helping defray costs or make acquisitions that have increased their productivity, so we think there’s more scope to do that,” he added.
PIC was introduced in 2010 and has been enhanced in subsequent years to better support businesses who invest in innovation and productivity.
Last year, the scheme was enhanced with a cash bonus on top of existing tax deductions and cash payouts. These benefits are currently available until next year.
Minister for Finance Tharman Shanmugaratnam will deliver the Budget 2014 statement on Feb 21, and the ministry is now collecting views and suggestions from the public.
Besides the PIC, Mr Wee also wishes to see an equity financing scheme to help companies make acquisitions locally or overseas.
“The current available means for SMEs to do this is to sell out a portion of their company to raise private equity and they suffer some dilution that way, so we can take a little bit more risk with our SMEs and start piloting more aggressive equity financing, I think it will help SMEs grow faster,” he said.
While agreeing that alternative sources of financing would help companies expand, Chief Executive of Singapore Business Federation (SBF) Ho Meng Kit also said that more companies should utilise innovation to grow their businesses and called for tweaks to the application process of Government schemes that support that.
“The Innovation and Capability Voucher of S$5,000 is not enough if companies want to do serious innovation and they have to apply for the Capability Development Grant,” he said. “The problem is they have to start the application process all over again, so the feedback is ‘Can there be a through-train process between the two?’”
Sharing his view of the importance of innovation is Chairman of the Government Parliamentary Committee for Finance and Trade and Industry Jessica Tan.
“While I believe that cost is an important factor that affects our businesses, I also think we need to go beyond cost and look at how we can drive higher value,” she said.
CR: TODAY Online