15 January 2014
SMEs call for more govt support in 2014 Budget
Channel News Asia

SMEs call for more govt support in 2014 Budget

Small and medium enterprises (SMEs) are calling for more government support in the upcoming budget to boost growth and productivity, and for expansion abroad.

SINGAPORE: Small and medium enterprises (SMEs) are calling for more government support in the upcoming budget to boost growth and productivity, and for expansion abroad.

The Singapore Business Federation (SBF) is suggesting more targeted financing assistance to help SMEs manage high business costs and manpower constraints.

Meanwhile, the Association of Small and Medium Enterprises (ASME) has proposed a new financing scheme to help firms expand overseas.

Tighter foreign worker controls have seen 15 per cent of businesses surveyed downsize, and 11 per cent relocate operations, according to the SBF.

Productivity remains a focus for firms in addressing the manpower crunch but 70 per cent of SMEs say high costs hinder the adoption of technology and innovation.

The SBF has therefore called for the Productivity and Innovation Credit (PIC) scheme to be extended beyond 2015, and enhanced.

Ho Meng Kit, CEO of Singapore Business Federation, said: "If you look at the PIC scheme, there are six qualifying activities and there's a cap for S$400,000 in each of them. In IT and automation, many of them are hitting the limits, so they (companies) are asking can they claim more.

"What we (SBF) are also saying is can you (the government) lift the cap, or combine it because some companies don't necessarily want to invest in IP or design."

The ASME also calls for the scheme to be extended for another two to three years, and to cover new product development to encourage innovation.

Meanwhile, more small businesses are hoping to venture abroad as the global recovery picks up pace.

The ASME found in a survey that 71.3 per cent of respondents intend to expand overseas over the next two years but have no strategy for overseas expansion.

Teo Ser Luck, Minister of State for Trade and Industry, and advisor to SME Committee, said: "In order to do that, they have to be productive... A lot of the schemes through the SME work group will be targeted at growth and enhancement... We try to open up paths, but it also depends on their readiness to be able to tap on opportunities."

The SBF says current requirements for SMEs to take a majority stake in foreign firms before they are eligible for incentives should be reduced to at least 30 per cent.

Mr Ho says: "These couple of years of economic restructuring makes it very tough for small companies so that's the reason why we're telling the government to ease off on the pedal.

"We're not saying (they should) take a different direction. Just give our companies a little bit more time so they can focus on growing their companies, brands, focus on the markets around."

The ASME found that 57.9 per cent of SMEs indicate that the shortage of funding was among their top concerns regarding overseas expansion.

The ASME also recommends that the government work with financial institutions to introduce an equity financing scheme to help SMEs make local and overseas acquisitions.

 

The number of respondents for the surveys conducted by the SBF and the ASME were 1,014 and 473 companies respectively.