- POSTED: 18 Feb 2014 19:56
Small- and medium-sized enterprises (SMEs) are hoping for more help in this year's budget to cope with rising competition and business costs.
SINGAPORE: Small- and medium-sized enterprises (SMEs) are hoping for more help in this year's budget to cope with rising competition and business costs.
Foremost on their wish list is for certain funding schemes to be enhanced.
And for SMEs looking to venture abroad, industry experts say more support is needed.
Local eatery, Food for Thought, employs some 70 workers across its three outlets.
Amid growing labour costs, it has hired external consultants to see how costs can be trimmed.
Food for Thought is also considering automating its processes with the help of government funding.
Like many other SMEs, it's hoping for certain funding initiatives, in particular, the Productivity Innovation Credit (PIC) scheme, to be extended and improved.
Kuik Shiao Yin, director at Food for Thought, said: "I do hope the grants will be extended further, and maybe looked into so it's even easier for us. The way grants work is the government passes on the money later after SMEs put in the initial capital outlay. SMEs don't necessarily have the capital outlay, so if capital resources are already an issue, then taking up that grant becomes difficult."
Ho Meng Kit, CEO of Singapore Business Federation (SBF), said the PIC scheme should be modified.
"Some of our companies are just using mostly the IT and innovation automation claim which has a cap of S$400,000. Can that cap be raised because there are six qualifying activities that have a combined cap of S$2.4 million. They may have used up just one aspect of it."
Some SMEs are also requesting that changes be made to the current mergers and acquisitions (M&A) allowance to support growth.
"When we want them to expand, be it locally or overseas, one of the ways to help them is through acquisitions, said Kurt Wee, president of the Association of Small and Medium Enterprises (ASME).
He added: "I think the M&A segment in the budget could be expanded to encourage SMEs to band together to consolidate. I think that would be very helpful to create more breadth within industry clusters to try to find better economies of scale, and reduce costs marginally."
ASME is also calling for the government to introduce an equity financing scheme to help SMEs make local and overseas acquisitions.
SBF proposes that SMEs be eligible for the M&A allowance, even if they do not control a majority stake of the target company.
As they seek to expand overseas, one potential area of growth is innovation and some SMEs are hoping for tax incentives to encourage such efforts.
Owi Kek Hean, deputy managing partner at KPMG, said: "Innovation helps to create values in terms of creating new products, services, markets and of course brand development. The Singapore brand is very well recognised and respected brand globally or regionally. I hope the government will come up with grants or incentives to work with SMEs to expand footprint outside Singapore leveraging on the Singapore brand and their own brands."
Recent surveys by the ASME and SBF show that 70 per cent of SMEs plan to expand outside Singapore.