2013 Budget Measures for SMEs

updated 18 March 2013

Business Transformation for Quality Growth

The restructuring of our economy must result eventually in a dynamic and re-energised SME scene. In this Budget, we will introduce a Quality Growth Programme, which is aimed at helping businesses to upgrade, create better jobs and raise wages.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, Budget 2013

The Quality Growth Programme is aimed at helping businesses upgrade, create better jobs and raise wages. We will continue to tighten our foreign workforce policies through a targeted approach:
Tightening Foreign Worker Policies (a) Foreign Worker Levies Increase Foreign Worker Levies for Work Permits and S Passes will increase for all sectors in 1 July 2014 and 1 July 2015. Increases in levies will be most significant in sectors where its productivity growth is weak and where its growth of foreign workers is substantial. (b) S Pass Qualifying Salary Increase The S Pass qualifying salary criteria will increase from $2,000 to $2,200 from 1 July 2013. (c) Dependency Ratio Ceiling (DRC) Reduction
Sector Work Permit Manufacturing Services 60%
Overall

Current

Changes Unchanged
Reduced

- 45% S Pass (Sub-DRC) 20%

to 40% Reduced to 15% - New applicants will be subject to the new DRCs from 1 July 2013. - For existing permit holders & renewals, the new DRCs will take effect from 1 July 2015. Unchanged Unchanged
Reduced Reduced

Construction Process Marine S Pass Services

1 local : 7 foreigners 1 local : 7 foreigners 1 local : 5 foreigners

to 1 local : 4.5 foreigners (from 1 Jan 2016) to 1 local : 3.5 foreigners (from 1 Jan 2018)

20%

Reduced to 15% - New applicants will be subject to new DRC from 1 July 2013. - For existing permit holders & renewals, the new DRCs will take effect from 1 July 2015. Unchanged

All Other Sectors 20%

(For more details, visit www.mom.gov.sg)

SPRING Singapore

2013 Budget Measures for SMEs

To help businesses cope with this transformation, we will introduce a three-year transition support package:
a. Wage Credit Scheme New
The Government will co-fund 40% of wage increases given to Singaporean employees with a gross monthly salary of up to and including $4,000 over the next three years (2013-2015), to encourage the sharing of productivity gains with workers and alleviate rising manpower costs in a tight labour market.
(For more details, visit www.iras.gov.sg/irasHome/wcs.aspx or contact IRAS at wcs@iras.gov.sg or Tel: 1800-352-4727)

b. Productivity and Innovation New Credit (PIC) Bonus

Businesses (i.e. companies, sole-proprietorships and partnerships) that spend a minimum of $5,000 in PIC qualifying activities in a Year of Assessment (YA) will receive a dollar-fordollar matching bonus up to $15,000 from YA 2013 to YA 2015. This is in addition to existing PIC benefits.
[For more details, contact IRAS at Tel: 1800-356-8622 (companies) or 6351 3534 (self-employed/partnership)]

c. Corporate Income Tax Rebate New

To help companies cope with rising business costs, companies will receive a 30% Corporate Income Tax (CIT) Rebate that is subject to a cap of $30,000 per YA, for 3 years from YA2013 to YA2015.
(For more details, visit www.iras.gov.sg/irasHome/page04.aspx?id=14564)

To build a productive, competitive and vibrant SME sector and to create meaningful jobs for Singaporeans, we will support SMEs through these key measures:

1 Helping SMEs Drive Productivity, Innovation & Capability Upgrading

a. Enhanced Productivity and Innovation Credit (PIC) Scheme Enhanced PIC Scheme: Qualifying activities under Acquisition of Intellectual Property (IP) will be extended to include IP in-licensing. More automation equipment will qualify for PIC benefits, including basic tools of trade that improve productivity.
The above changes will take effect from YA 2013.
[For more details, visit www.iras.gov.sg/irashome/PIcredit.aspx or contact IRAS at Tel: 1800-356-8622 (companies) or 6351 3534 (self-employed/partnership)]

b. Collaborative Industry Projects The Government will work with industry players and partners like Trade Associations and Chambers (TACs) to address sector-specific productivity challenges. Consortia with at least 3 SMEs, comprising solution providers and users, will be formed to develop and propose bottom-up deployable and scalable productivity solutions. SPRING will be looking at the Collaborative Industry Projects (CIP) in six priority sectors: Food Manufacturing, Food Services, Furniture, Printing & Packaging, Retail and Textile & Fashion.
(For more details, contact EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800) Roll-out Period: second half of 2013

c. Technology Adoption New Programme

A*STAR will help to link companies technology needs to solution providers to help companies across sectors increase productivity through adopting technology innovations and solutions. From July 2013, this programme will be piloted in six sectors Construction, Food Manufacturing, Precision Engineering, Marine, Aerospace as well as Retail.
(For more details, visit www.a-star.edu.sg)

2 SPRING Singapore

2013 Budget Measures for SMEs

d. Land Productivity Grant New Programme that supports companies which intensify their use of land in Singapore, or choose to relocate some operations offshore, including to the immediate region while retaining core functions in Singapore.
[For more details, contact: EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800 (local enterprises) or EDBs Client Services Centre at 6832 6832 (non-local enterprises)]

e. SME Talent Programme New Jointly administered by SPRING and the TACs, the SME Talent Programme will help SMEs attract and recruit local talent from ITEs and Polytechnics over the next three years, through a study award for students, followed by a job opportunity upon graduation.
(For more details, contact EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800) Roll-out Period: second quarter of 2013

f. Workforce and Training Support

WorkPro WDAs Enterprise Training Support (ETS) Scheme Holistic HR and training support package Funding support for job-redesign, on-the-job training, recruitment and retention efforts to help for companies with five grants to tap on: i) Training Grant, ii) Capability Grant, iii) HR companies support their aging and multi generational workforce and to tap on back-to- Development Grant, iv) Compensation and Benefits System Review Grant, and v) Curriculum work locals. Contextualisation and Alignment Grant. Work-Life Grant Made up of: Enhanced Training Support for SMEs - A Developmental Grant to help employers defray costs of implementing Flexible Working SMEs training costs will be further lowered to Arrangements (FWAs) and other work-life encourage greater training participation. Funding of up to 90% for over 8,000 courses will be programmes; and - An FWA Incentive to motivate employers to available. support more employees on FWAs. Place-and-Train (PnT) Support for back-to-work locals with fully-funded Increased funding for PnT programmes job preparation workshops. Those earning less a scheme where workers are first hired by than $4,500 will receive a Retention Bonus, and employers before undergoing skills training those from low income households will also required for the job. During the training period, workers salaries and training costs will be co receive additional a one-time Transport Allowance. funded by WDA.
(For more details, visit www.mom.gov.sg or www.wda.gov.sg)

2 Helping SMEs Tap Opportunities for Growth

a. Market Readiness New Assistance (MRA) Grant SMEs accessing markets can tap the grant to get advice from pre-approved consultants on areas like market assessment, market entry and business restructuring through internationalisation.
(For more details, visit www.iesingapore.com) Roll-out Date: 1 April 2013

b. Support for In-market Business Development SMEs will receive greater support for inmarket business development. IE Singapore will work with TACs to hire in-market business development intermediaries to help SMEs identify and secure business opportunities overseas.
(For more details, visit www.iesingapore.com)

SPRING Singapore

2013 Budget Measures for SMEs

c. Enhanced Partnerships for Capability Transformation (PACT)

Roll-out Date: 1 April 2013

SMEs can access more business opportunities and partnerships by tapping on the enhanced PACT scheme, which: Has been expanded beyond the manufacturing sector to other sectors; and Will foster SME collaborations with large enterprises in areas that involve co-innovation, technology test-bedding, knowledge transfer and sharing of best practices.
[For more details, contact: EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800 (local enterprises) or EDBs Client Services Centre at 6832 6832 (non-local enterprises)]

d. Support to Enhance Companies Access to Financing

In collaboration with the Asian Development Bank, IE Singapore will expand the capacity of the Trade Finance Programme to provide credit guarantees that will facilitate greater trade flows between Singapore and emerging markets. IE Singapore will release details later in the year.

3 Helping to Create a Conducive Business Environment for SMEs

a. SME Centres New
Roll-out Date: 1 April 2013

b. Streamlining of Schemes

Roll-out Date: 1 April 2013

The Enterprise Development Centres (EDCs) will be expanded to become integrated one-stop SME Centres, where SMEs can access information and seek advice on assistance programmes from government and private organisations. SME Centres will also extend outreach to more businesses, providing more concerted government help and easier access to the schemes.
(For more details, contact EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800)

For better access to government assistance, SPRING has streamlined its various schemes into one main Capability Development Grant (CDG) to support SMEs in their productivity improvement and capability development efforts. It has simplified and standardised its application forms to two pages. A new online grant portal will also be introduced to reduce paperwork. In essence, SMEs can look forward to five broad categories of assistance: i) toolkit, ii) voucher, iii) tax incentive, iv) grant, and v) loan.
(For more details, contact EnterpriseOne at enterpriseone@spring.gov.sg or Tel: 6898 1800)

Others
a. Increase in CPF Contribution Rates for Low-Wage Workers
Employer and employee CPF contribution rates for older employees aged 36 and above, earning less than $1,500 a month, will be restored. Medisave contribution rates for self-employed persons earning net trade income of between $6,000 and $12,000 will be increased.

b. Taxation of Housing, Hotel and Furniture and Fittings Benefits

From YA 2015, housing and hotel accommodation provided to employees will be taxed based on the Annual Value of the premises, less rent paid by the employee, and the actual cost of the hotel accommodation incurred by employers respectively.

(For more details, visit www.cpf.gov.sg)

c. Road Tax Rebate

To relieve business costs, a 30% road tax rebate will be granted for goods vehicles (including goodscum-passenger vehicles), buses and taxis for one year. The rebate will take effect on 1 July 2013 and provide savings of about $46 million for businesses.

d. Further Five-year COE Renewal for Commercial Vehicles

Owners who choose to renew their COEs for five years in the first instance will be allowed to extend their COEs further for another five years.

4 SPRING Singapore

2013 Budget Measures for SMEs

SPRINGs Assistance Schemes for SMEs

In essence, SMEs can now look forward to assistance in five easy-to-remember broad Assistance Description categories Scheme of toolkit, voucher, tax incentive, grant and loan. Self-help guides in the areas of: - Customer Service; - Human Resource Capability; - Financial Management; and - Marketing $5,000 Innovation & Capability Voucher (ICV) to defray costs of engaging approved consultants & service providers to assist in: - Productivity improvements; - Human resources development; - Financial management; and - Innovation

Toolkits

Voucher

Tax Incentive

Productivity & Innovation Credit (PIC) is administered by IRAS 400% tax deduction of up to $400,000 and/or 60% cash payout of up to $100,000 expenses in productivity improvements and innovation. Covers six areas: - Acquisition or leasing of PIC IT and automation equipment; - Training; - Acquisition and in-licensing of Intellectual Property Rights (IPRs); - Registration of selected IPRs; - Research & Development; and - Approved design projects Capability Development Grant (CDG) supports up to 70% of the cost of productivity improvements and capability development that will result in greater enterprise competitiveness and business growth. The 10 supportable areas are: - Business Innovation & Design - Business Strategy Development - Brand Development - Enhancing Quality & Standards - Financial Management - Human Capital Development - Intellectual Property & Franchising - Productivity Improvement - Service Excellence - Technology Innovation Government-backed loans for working capital, trade financing and equipment financing, offered through Participating Financial Institutions. They are: - Local Enterprise Finance Scheme (LEFS) - Loan Insurance Scheme (LIS) - Micro Loan Programme (MLP)

Grant

Loans

SPRING Singapore

Information Resource
Hotline: (65) 6898 1800 Email: enterpriseone@spring.gov.sg Website: www.enterpriseone.gov.sg

Important Contacts
A*STAR Tel: (65) 6826 6111 Email: contact@a-star.edu.sg Website: www.a-star.edu.sg Central Provident Fund (CPF) Tel: 1800-227 1188 Inland Revenue Authority of Singapore (IRAS) Tel: 1800-356-8622 (companies) Tel: (65) 6351 3534 (self-employed/ partnership) Website: www.iras.gov.sg International Enterprise Singapore (IE) Hotline: 1800 437 7673 Website: www.iesingapore.com Land Transport Authority (LTA) Tel: (65) 6396 1947 Email: media@lta.gov.sg Ministry of Manpower (MOM) Tel: (65) 6438 5122 Website: www.mom.gov.sg Singapore Economic Development Board (EDB) Tel: (65) 6832 6832 Email: clientservices@edb.gov.sg Website: www.edb.gov.sg Singapore Workforce Development Agency (WDA) Tel: (65) 6883 5885 Email: wda_enquiry@wda.gov.sg Website: www.wda.gov.sg SPRING Singapore (SPRING) Hotline: (65) 6898 1800 Tel: (65) 6278 6666 Email: enterpriseone@spring.gov.sg Website: www.spring.gov.sg Enterprise Development Centres (EDCs) The EDCs will be expanded to become SME Centres.

EDC@ASME Association of Small and Medium Enterprises (ASME) 167 Jalan Bukit Merah Tower 4, #03-13 Singapore 150167 Tel: (65) 6513 0388 Email: enquiries@edc-asme.sg Website: www.edc-asme.sg

EDC@SICCI Singapore Indian Chamber of Commerce and Industry (SICCI) SICCI Building 31 Stanley Street Singapore 068740 Tel: (65) 6508 0147 Email: edc@edc-sicci.sg Website: www.edc-sicci.sg

EDC@NorthEast (Managed by EDC@ASME) Tampines Ave 5, #06-01 NTUC Income Tampines Junction Singapore 529653 Tel: (65) 6424 4000 Email: northeast@edc-asme.sg

EDC@SMCCI Singapore Malay Chamber of Commerce and Industry (SMCCI) 15 Jalan Pinang Singapore 199147 Tel: (65) 6293 3822 Fax: (65) 6293 3905 Email: gadvisory@edc-smcci.sg Website: www.edc-smcci.sg

EDC@SCCCI Singapore Chinese Chamber of Commerce and Industry (SCCCI) 47 Hill Street, #09-00 Singapore 179365 Tel: (65) 6337 8381 Fax: (65) 6339 0605 Email: edc@edc-sccci.sg Website: www.edc-sccci.sg

EDC@SMF Singapore Manufacturing Federation (SMF) 2985 Jalan Bukit Merah Singapore 159457 Tel: (65) 6826 3020 Fax: (65) 6826 3021 Email: edc@edc-smf.sg Website: www.edc-smf.sg

6 SPRING Singapore