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SINGAPORE: The Association of Banks in Singapore (ABS) said Budget 2012 has focused on longer-term strategies rather than short term counter-cyclical measures.
ABS director Ong Ai Boon said the emphasis is on reinforcing the productivity drive and restructuring and strengthening the social safety net to ensure growth is inclusive and sustainable.
She said the continued emphasis on productivity will benefit companies.
She also said tightening foreign worker quotas, in terms of the dependency ratio ceiling and levies, will see businesses bear higher costs.
Mrs Ong said some measures for companies to help shoulder this burden came in the form of the employment credit to hire local older workers.
She said the new scheme paying eight per cent of wages for this group of older workers will go some way in helping to offset the higher costs of Central Provident Fund (CPF) increase.
She added the enhancement of the Productivity and Innovation Credit in terms of giving Small and Medium Enterprises (SMEs) cash upfront has been what some SMEs were calling for.
Mrs Ong said the ABS is encouraged by the adoption of the recommendations made, in particular, the removal of multiple sales requirement in R&D expenditure claim.
Industries, including banks, that are constantly upgrading and investing in back-end systems to improve their productivity and competitiveness, will now benefit from the tax incentive.
Mrs Ong said the ABS also welcomed the removal of withholding tax on interest made to permanent establishments in Singapore.
It said this removes the last vestige of the withholding tax regime on interest in the development of Singapore as an international financial centre.
Mrs Ong said it had been an administrative burden to ensure the collection of the rather minimal tax revenue.
- CNA/wk
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