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SINGAPORE : The payoffs from this year's Budget will not be seen quickly, according to Finance Minister Tharman Shanmugaratnam.
He also said the gains will not be spread out equally as well, with dynamic companies set to reap more benefits.
Mr Tharman was addressing business concerns raised during the debate on Budget 2010 in Parliament this week. And he took the opportunity to explain the three key principles behind the productivity measures in the Budget.
Singapore has seen productivity levels more than double since 1980, but according to the Finance Minister, there is still significant headroom for improvement.
And one key principle of this year's Budget is to focus benefits on growth-seeking business.
Mr Tharman said: "The measures this year aim to get businesses to invest in innovation, and to upgrade their operations and develop the skills and potential of their workers. Every company that is willing to do so will benefit from the schemes we have introduced."
The Finance Minister also said it is inappropriate for the government to further extend the Jobs Credit scheme to the end of the year, or to continue the Special Risk Sharing Initiatives beyond 2011, as this would compromise efforts to restructure the economy.
Mr Tharman also noted that the Budget seeks to provide "the most bang for the buck" for small- and medium-sized enterprises (SMEs).
He said that is why a lower cap has been set for the Productivity and Innovation Credit (PIC) scheme at S$300,000 per year, with a tax deduction of 250 per cent of expenses.
The claims process for the scheme will be tweaked initially to allow businesses to benefit from it without rushing to implement their innovation plans.
Mr Tharman said: "We will refine the PIC claims process to enable companies to combine the S$300,000 ceilings per year for the first two years into a new ceiling of
S$600,000 over two years.
"Businesses will therefore be able to claim a 250 per cent deduction for the first S$600,000 of expenditure on each activity that they incur for YA2011 and YA2012 combined. Thereafter, we will revert to the yearly cap of S$300,000 per activity so as to focus the scheme on our SMEs."
Elaborating on the PIC scheme, Mr Tharman said the Finance Ministry will work with the Ministry of Manpower and other agencies such as SPRING, to make it cover a wider range of in-house training programmes.
And finally, Mr Tharman said the Budget aims to strike a balance between broad-based incentives and more targeted grants, to provide maximum support for enterprise upgrading. - CNA/ms
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