Global events -- such as the tensions between the United States and China -- will cause greater contestation and fragmentation in the global economy, says deputy prime minister Lawrence Wong in his Budget 2023 speech.
To seize new opportunities in this challenging situation, Singapore will top up the National Productivity Fund with $4 billion. The fund will be used to anchor more quality investments in the country. This includes supporting local companies to build new capabilities, add greater value to the domestic ecosystems, and upskill workers.
Supporting innovation capabilities
While innovation will be a key driver of growth, Wong notes that innovation is not without risks, which businesses might find difficult to undertake amidst slower growth and higher cost. Singapore will therefore introduce the Enterprise Innovation Scheme to support businesses’ innovation activities.
The scheme includes annual tax deductions and allowances of 400%, capped at $400,000 of qualifying expenditure with one activity capped at $50,000. Qualifying activities include local research and development activities, registration of intellectual property (IP), acquisition and licensing of IP rights, innovation projects carried out with polytechnics and ITE, and training via courses approved by SkillsFuture Singapore and aligned to the Skills Framework.
Companies will also have the option to convert 20% of their total qualifying expenditure per year of assessment into a cash payout of up to $20,000. This will help smaller firms defray the cost of their innovation activities, even if they pay little or no taxes, says Wong.
See also: Budget 2023 offers near-term help but maintains fiscal discipline and active wealth distribution
Helping local companies scale up
To help local companies scale and be globally competitive, Singapore will add $1 billion to the Singapore Global Enterprises initiative to provide companies with dedicated and customised support.
Additionally, Singapore will set aside an additional $150 million via the SME Co-Investment Fund to invest in promising small- and medium-sized enterprises (SMEs). It will also aim to catalyse an additional $300 million of private investments to support local SMEs.
See also: A budget to secure Singapore's future
Translating training into good employment outcomes
To further close the skills gap across industries, Singapore will appoint Jobs-Skills Integrators to optimise training and job placement.
Wong shares that the Jobs-Skills Integrators will bring together key players in selected sectors to develop industry-relevant training and facilitate job matching.
As such, they will engage enterprises to understand the manpower and skills gaps in the sector; and work with training providers to update existing training programmes, or develop new ones. They will also work with employment facilitation agencies, industry partners and unions to ensure that training translates into better employment and earnings prospects.
The precision engineering, retail, and wholesale trade sectors will the first to pilot the Jobs-Skills Integrators programme as those industries have higher concentrations of mature workers and SMEs.
The Minister for Education will share more about the programme at the Committee of Supply debate.
