SINGAPORE: Against the backdrop of a slowing economy, many companies are feeling the pinch, with less than half polled in a recent Singapore Business Federation survey expecting to make a profit this year.
This is why Finance Minister Heng Swee Keat’s assurance that this year’s Budget will have a “strong focus on the economy” is music to the ears of the 10 business owners that Channel NewsAsia spoke to about their wishes for the Budget.
The companies were heartened by this emphasis, with the majority looking for some sort of help to defray rising costs amid pressure on revenue.
“The biggest problem for businesses is the high cost of operation, due largely to high rentals, labour costs, as well as levies. All these add to a substantial amount for businesses to bear,” said TungLok Group's executive chairman Andrew Tjioe.
“If the government is able to address these areas and provide some form of relief to help business owners tide over challenging times, I believe it will be a very welcome move.”
Nordic Group, which provides support services to the offshore marine and oil and gas industries, said it would like to see tax rebates or subsidies to help mitigate “rising operating costs such as staff costs, utilities, land rental or property taxes”.
“Recent initiatives aimed at increasing productivity through innovation and automation, and the training of employees remain pertinent, especially in view of rising business costs amid a sustained poor economic environment,” said its chairman Chang Yeh Hong.
LABOUR A KEY ISSUE FOR MANUFACTURING COMPANIES
Firms – particularly those involved in manufacturing – are calling for a lowering of levy rates for foreign workers.
“As operational cost is a big issue in tough times like these, the Budget could consider a recalibration of worker levy rates and an increment of the cap of the Productivity and Innovation (PIC) scheme,” said Elvin Tan, CEO of marine power and engine solutions provider XMH.
XMH Holdings CEO Elvin Tan hopes the Finance Minister will consider a recalibrating foreign worker levy rates. (Photo: XMH)
Precision engineering firm JEP felt that lowering the levy rates would help reduce business costs, without contradicting the government’s foreign worker policy since the quota system in place already restricts the number of them in the workforce.
“The precision engineering industry is struggling not only with rising costs but in attracting sufficient local talent. The sector needs time to attract and develop the second generation of skilled workers to support our industry,” said JEP Executive Director Soh Chee Siong.
But not all firms are looking for help to defray labour costs. For instance, Micro-Mechanics just wants country-specific quotas for foreign manpower to be relaxed.
Based on current rules for the manufacturing sector, the foreign worker quota is set at half of the total workforce, and under this quota, workers from China can only form up to 25 per cent of the workforce.
The firm – which makes precision tools, parts and assemblies for high technology industries – needs production workers from China, as it has been unable to hire locals and other workers from Asia for these positions.
“It is more practical if the quota can be applied without any restriction to country base,” explained Micro-Mechanics executive director and chief financial officer Chow Kam Wing, emphasising that the firm is not asking for a higher foreign worker quota.
“We need to hire employees from China for these jobs because China has a large workforce of well-trained production workers… Including levy and housing and airfare, they are not cheap – S$1,900 per month. This means they are not lowering the salary base of Singapore. (The) levy is okay for us, as long as we have workers,” he said.
TECH FIRMS, START-UPS WANT SUPPORT FOR R&D, TRAINING
Firms in the technology space however, have a different set of needs they would like the Budget to address.
Moveon Technologies – which makes optical parts for likes of Philips, Intel, and Microsoft – said it would like to see funding or tax incentives to help companies make sustained R&D investments.
“Notwithstanding the uncertainty in the market, it is important for companies in the technology business to remain focused on R&D activities and be ready to make a splash when the market bounces back,” said its CEO Chee Teck Lee.
Mr Chee noted that while there exists R&D funding support, the application and approval processes for these funds is “usually very long and tedious”, and likely to be too onerous for young firms with limited cash flow.
As for companies that are profitable, he feels that generous tax incentives should be accorded so that these firms can “divert the savings to growth-generating activities like R&D and training”.
Joel Sng, CEO and co-founder of online grocery concierge service honestbee, would like to see support for local brands venturing overseas. (Photo: honestbee)
Online grocery concierge service honestbee said it would to like to see support for local brands venturing overseas, as well training support.
“From a SkillsFuture perspective, it would be great to have its scope expanded to include budget for companies to recruit and re-train employees for them to stay employable,” said its CEO and co-founder Joel Sng.
Meanwhile, social carpooling platform SwiftBack felt that more can be done in terms of raising awareness for “the amount of help, grants and initiatives that are available to emerging, upcoming businesses and startups”.
“Across the general landscape of local SMEs, most are still practicing at a relatively independent scale and aren't too reliant on the grants that are provided to them,” said SwiftBack CEO and co-founder Hyu Lim.
Overall, business owners say that while they will be looking out for grants and support measures, they expect the Government to take a targeted, long-term view with its spending.
“It’s not about giving money so that people can use it for whatever purposes that they want. I think it should be (about) giving money in a certain direction, like to help a company future-proof itself,” said Moveon’s Mr Chee.
“The Budget should not just solve the current issues but prepare companies for what’s coming.”