The Singapore government has renewed its focus on small and midsize businesses (SMBs), offering more financial to help drive initiatives in innovation and research development, as well as skills upgrading among employees.
The country's 2015 budget features various grants dedicated to SMBs looking to tap the use of technology to stand out and expand globally.
In his parliamentary speech outlining the budget, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said the government recognized the need to expand existing support for smaller companies and make grants more accessible to support their initiatives in developing new services.
"We will give stronger support to SMBs that innovate and go beyond the norm. Every form of innovation counts, and must be supported--whether it is a new process or brand, developing online marketing or leveraging big data.
"We recognize that bringing about innovation involves a range of activities from technology research to product development, process improvements, or creation of new brands and marketing efforts. For most SMBs, innovation will often not come in the form of major technological breakthroughs, but in other forms of innovations that are nonetheless significant," Tharman said.
To make it easier for SMBs to innovate, the Singapore government has simplified the application process for projects below S$30,000 under its Capability Development Grants (CDG), managed by Spring Singapore. Funding for up to 70 percent of costs also has been further extended by three years up to March 31, 2018, according to the minister.
He aded that the CDG supports various innovation activities including developing intellectual properties and new brands, and currently funds 1,200 projects a year. The government is aiming to increase this number and is projecting to spend some S$600 million over the next three years to support the new enhancements, he said.
To further boost R&D (research and development) efforts across the country, S$1 billion will be added to the National Research Fund to support such activities. The government's public sector investments in R&D have supported some 400 startups and yielded 800 licenses since 2011.
Tharman further noted the need to reduce early-stage funding hurdles for startups and revealed plans to increase the co-investment cap for Spring's Startup Enterprise Development Scheme and Business Angel Scheme, as well as engage more angel investors to participate and help nurture local startups.
There are also plans to pilot a "venture debt risk-sharing" initiative with selected financial institutions in Singapore, designed to offer high-growth businesses an alternative to equity financing and traditional bank loans.
"Venture debt typically requires minimal collateral as lenders instead receive equity options to share in the company's future growth. This new method of financing, in between equity financing and traditional bank financing, is worth trying," the minister explained.
He said Spring will provide 50 percent risk-sharing with these financial institutions over an initial period of two years, during which the government is looking to support some 100 venture debt loans for an estimated S$500 million.
In addition, there will be a new tax incentive--coined International Growth Scheme--to support larger local companies in their globalization efforts. Enterprises that qualify will receive 10 percent concessionary tax rate on their incremental income from qualifying activities.
Further tax incentives will be introduced to fuel merger and acquisition (M&A) activities that support local companies' expansion overseas, helping them to achieve scale, attract talent, and compete effectively in global markets.
These initiatives are estimated to cost the government S$100 million over five years.
The 2015 budget also focuses heavily on skills upgrading under what Tharman described as, "SkillsFuture", which seeks to support development across a citizen's learning cycle including schools, internships, and re-skilling.
Every Singaporean will receive SkillsFuture Credits that can be used to fund courses and will be topped up by the government "at regular intervals", with citizens above the age of 25 receiving an initial S$500 from next year.
The credits can go toward multiple modes of learning including weekend workshops and online learning such as Massive Online Open Courses (MOOCs) as well as specialist development programmes.
Some S$1 billion per annum until 2020 will be set aside for SkillsFuture, up from S$600 million annually over the last five years. SkillsFuture credits have no expiry date and can be accumulated, but can only be used to fund education and training programmes.
In addition, Singaporeans above the age of 40 will receive education and training subsidies of at least 90 percent of training costs for courses funded by the Ministry of Education and Work Development Authority. These rebates will be available later this year.