24 March 2016
Budget 2016: ‘A little early’ to scale back PIC Credit Scheme
It is “a little early” to start scaling back the Productivity and Innovation Credit (PIC) Scheme, says Ang Yuit, vice-president of the Association of Small and Medium Enterprises (ASME).
Responding to the announcements made by Finance Minister Heng Swee Keat in his maiden Budget speech yesterday (24 March), Ang said the ASME has seen many businesses turning to the PIC to revamp their operations.
However, with the reduction in the PIC cash payout rate from 60 per cent to 40 per cent, this might send the “wrong message” to businesses, Ang said. The cutback appears to stem from fears of the scheme being abused, he added.
The PIC Scheme was introduced to encourage productivity and innovation activities in Singapore and it provides support to businesses that make investments to improve their productivity.
Ang added that this year’s Budget seemed to have shifted its focus onto “bigger” companies, which is reflective of Heng’s call for businesses here to “scale up”.
Regarding the plans for International Enterprise (IE) Singapore to work with Spring Singapore in helping local businesses with their overseas expansion, Ang said that more details were needed with regard to the specific steps that will be taken to achieve this aim.
Among the measures unveiled yesterday was the new Local Enterprise and Association Development (LEAD) – Plus programme, which aims to help Trade Associations and Chambers (TACs) expand their outreach. A sum of $30 million will also be set aside over the next five years to help TACs develop their operations. In his speech, Heng noted that these groups are “well-placed to reach out to many firms, especially SMEs”.
This announcement was well received by business groups.
Said Lam Joon Khoi, secretary-general of the Singapore Manufacturering Federation (SMF): “We are heartened by the introduction of the LEAD-Plus Programme, which will allow TACs such as SMF to work closely with government agencies to transform the mindsets of Singapore companies to be innovation-driven and thereby bringing forth opportunities for growth.”
Thomas Chua, president of the Singapore Chinese Chamber of Commerce and Industry (SCCCI), said that the SCCCI is glad for the government’s recognition of the role that TACs play in helping SMEs and industries, and that it strongly urges trade associations, “particularly those from the traditional sectors”, to be proactive in tapping into the LEAD-Plus Programme.
The ASME’s Ang said that the budget allocated for TACs was well deserved, and that the newly introduced SME Working Capital Loan – which offers loans of up to $300,000 per SME – would benefit small businesses.
Given that the economy is slowing down, however, he suggested that some businesses may have to “hunker down and prepare for what’s coming” and that firms planning any productivity initiatives should start on them “as soon as they can” before the changes to the PIC cash payout rate kick in.