Amid the COVID-19 outbreak and a projected slowing economy, Deputy Prime Minister and Finance Minister Heng Swee Keat delivered the Budget 2020 statement on Tuesday (Feb 18).
P.S. Read till the end for tips on how SME owners can make the most of these uncertain times!
1. GST Hike Postponed
In 2018, it was previously announced that there will be an increase of the GST rate from 7% to 9% between 2021 to 2025. However, after reviewing and considering the state of the current economy, it was decided that GST rates will remain at 7% in 2021.
2. Support for 5 sectors most heavily affected
The Adapt and Grow Initiative was launched to support the businesses that are directly hit by the coronavirus outbreak.
Various forms of support will be given to the five sectors most heavily affected from property tax rebate and rental waivers/rebates:
4. Food services
5. Point-to-point transport services
It includes aiding operating costs and cash flow, retain and upgrading the skills of the workers. The duration of the support was also extended from the current three months to a maximum of six months.
3. Aid in firms costs
Job Support Scheme
To ensure Singaporeans stay employed, a new Job Support Scheme will be introduced to subsidise a percentage of every employed worker’s wages of Singaporeans or Permanent Resident (PRs). Employers can expect to receive 8% cash grant of each employee’s monthly salary for a period of 3 months and capped at $3,600 a month per worker by 31 July 2020.
Wage Credit Scheme
To further support the salary of local workers, Singaporeans and PRs earning a gross monthly income of up to $5,000 will be applicable for Wage Credit Scheme. The Scheme will co-fund 20% of wage increases in 2019, and 15% wage increases in 2020.
4. SkillsFuture Credit top-up
Other than working to retain local workers, there will be SkillFuture Credit top-up for workers to re-skill and remain competitive in the workforce. Launching on 1st October 2020, the government will provide a one-off SkillsFuture Credit top-up of S$500 to encourage all Singaporeans aged 25 and above to up-skill and upgrade one’s skills.
However, unlike the previous $500 SkillsFuture Credit which had no expiry, this top-up will expire by the end 2025 to urge local workers to make good use of this period to acquire new skills.
“Together with the Jobs Support Scheme, we will support employers in these sectors to retain and train more than 330,000 local workers,” said Mr Heng. “These workers can make full use of the downtime for training and upskilling to prepare for the recovery.”
Singaporeans can pick up courses that will hone their skills and better prepare them for the future economy. View here for a list of government courses that can be subsidized using SkillsFuture Credit.
5. Budget allocated for deep-tech startups in SG
The government had set aside additional $300 million under the Startup SG Equity to improve the support for deep-tech startups in emerging technology areas – advanced medtech, advanced manufacturing and agri-foodtech.
6. Aid SMEs to expand to new markets and innovate
For enterprises growing and expanding, the Government’s new Enterprise Grow Package will assist companies to innovate and adopt digital solutions, and support their plans to enter new markets.
GoBusiness was also introduced as a new platform for enterprises to access streamlined license applications and transact more seamlessly with the Government.
Furthermore, to better equip firms to build up their digital capabilities, SMEs Go Digital Scheme that was extended to 13 more sectors that will aid firms with step-by-step guide to build up their digital capabilities.
For enterprises looking to expand to new markets, SMEs can top on Market Readiness assistance (MRA) grant that was increased from $20,000 to $100,000 annually per marketing per company between the financial years 2020 and 2022.
7. Reducing foreign worker quota
To encourage firms to hire more Singaporean skilled workers and technicians, the Government will be tightening the number of skilled workers by reducing the quota for the next 3 years.
The dependency ratio ceiling (DRC) affecting S-Pass holders will be reduced from 20% to 18% by 1 Jan 2021 and to 15% on 1 Jan 2023. It will affect the following industries – construction, marine shipyard and process industries.
In conclusion, while Singapore is expecting “modest growth” in 2020, business can be reassured as strong relief and support measures were promised by the Government as broadcasted in Budget 2020.
With the aforementioned, stay updated and vigilant during this period. Just like what Richard Branson says, “Tough times are inevitable in life and in business. But how you compose yourself during those times defines your spirit and will define your future.”
A key takeaway that business owners should heed is to use any spare capacity to prepare to ride the looming economic recovery wave. What does this mean?
In short- future proof your company:
While managing cash flow
How can Aspire better support your company?
We would like to play our part by providing SMEs with easy and hassle-free up to $300k business line of credit to aid with your cash flows.
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