Singapore Budget 2013: What tech SMBs want

Local small and midsize businesses hope for more support to buffer against rising costs, easier access to foreign talent, and schemes for overseas expansion and brand building.
Written by Ryan Huang, Contributor

Ahead of the release of Singapore's Budget next Monday, some key issues business leaders hope will be addressed are more financial support for small and midsize businesses (SMBs), easier access to foreign talent and schemes for expanding overseas and building brands.

According to Tay Hong Beng, head of tax at KPMG Singapore, the value creation process can help businesses build a sustainable competitive advantage by helping them foster trusted and reliable brands and identifying new niche markets.

"We therefore see the need for new schemes to support the growth of local brands as well as new tax incentives to help these enterprises enjoy tax benefits from the commercialization of their brands," said Tay.

These include the extending of writing down allowance for intellectual property (IP) rights claim to all businesses to encourage more efforts at growing brands in Singapore, said the executive.

Expanding productivity schemes

Tay added the previously introduced Productivity and Innovation Credit (PIC) scheme should also be extended to brand building exercises such as in the recruitment of brand consultants.

Echoing his views, Tan Bin Eng, partner for business incentives advisory at Ernst & Young Solutions, said the expenditure cap for the PIC should be pooled across the current six qualifying activities, allowing companies to claim up to a maximum total of S$2.4 million (US$1.94 million) without restrictions.

The Singapore Budget 2013 will be announced on February 25.

"Companies can then potentially claim a bigger slice of the qualifying expenditure pie while investing in areas most suitable to their needs in raising productivity, he explained. 

Agreeing, Benjamin Yang, CEO of IT firm Balanced Consultancy, said as it stands, local firms can enjoy either a 400 percent tax deduction or 60 percent cash payout for investments in innovation and productivity.

"Speaking to many of our clients, quite a good number of [SMBs] in Singapore are hoping the government could increase the cash payout to 70 percent," Yang added. This would help them greatly in adopting technology to raise productivity, the CEO explained.

Another scheme that might help SMBs would be to tweak or develop a new scheme similar to the current Global Company Partnership scheme, with which Singapore firms receive assistance to go global, he said.

Yang pointed out the entry barrier to qualify for this appeared to be "quite high" with requirements such as a minimum of S$500,000 (US$404,000) annual turnover or a total annual business spending of S$250,000 (US$202,000). A sister scheme with lesser requirements will help grow our local companies in foreign markets, he noted.

Lim Soo Meng, director of business development at eVantage Technology, said his company hoped there would be wider support to reduce rising business costs, such as grants to help lessen the impact of soaring rents and utilities.

He added easing and improving Employment Pass (E-pass) application approvals for foreign employees would help. E-passes are the main type of work visa for foreign professionals and managerial staff and executives--with a monthly salary of above S$3,000 (US$2,425).

The director explained eVantage had to turn away many potential hires due to unsuccessful E-pass applications, which affected the company's ability and speed to hire, especially in ramping up for new deals.

"It was pretty tough going for some time last year as we were unsuccessful in securing desktop and systems IT engineers on E-passes even though we thought they met the criteria,"  said eVantage's Lim.

"It was pretty tough going for some time last year as we were unsuccessful in securing desktop and systems IT engineers on E-passes even though we thought they met the criteria," Lim explained. He said they usually fell short of "one criteria or another" such as the applicant's university not being recognized.
He also called for the increase in the quota of Specialist Pass (S-Pass) holders for the IT service sector, typically for mid-level skilled workers with a monthly salary above S$2,000 (US$1,617). The number is currently capped at 25 percent of the company's total workforce.   

He said this would not only offer a wider talent pool, but would also give the company an advantage in greater staff diversity given its expanding customer base in Singapore and the region.

Attracting foreign talent, businesses

According to Sabrina Sia, director of taxes at Deloitte Singapore, encouraging foreign talents to take a more macro and long-term view in making Singapore their base will have spillover effects for the local economy.

She suggested extending the period of the Not Ordinarily Resident (NOR) concession from 5 to 10 years. This would encourage more companies to set up their regional and global headquarters in Singapore, since the individual tax regime will be attractive enough to encourage top talent to relocate to the country.

The NOR scheme should also be extended to Singapore citizens, especially those taking on global and regional roles which require extensive travel outside the country, as they are not able to benefit from the tax concessions currently.

"This will not only incentivize Singapore citizens but also encourage more to step up and take on the regional and global roles and also facilitate the transfer of knowledge and the build-up of the local talent pool for the management of regional and global companies," Sia said.

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