The Budget 2017 Cheatsheet for SMEs

Jasmine Toh

One of the main themes in Budget 2017 is “preparing for the future economy”.

Finance Minister, Heng Swee Kiat mentioned in his speech that businesses need to use digital technology, embrace innovation and scale up.

I have handpicked some of the policies that SMEs should pay attention to, and organized them into three main themes – digitalise, innovate and scale up.

I took the opportunity to interview our CEO Jackie, a seasoned SME owner on his views about Budget 2017 and here are his insights! Enjoy the read.

#1 Digitalise

a. SMEs Go Digital Programme

  • Industry Digital Plans on technologies to use at each stage of growth
  • In-person help at SME Centres for basic ICT advice, and a new SME Technology Hub for specialist advice
  • Advice and funding support for companies piloting emerging ICT solutions
  • More than $80million will be made available for these programmes

We foresee exploding demand for SMEs to go digital.


SMEs will explore different ways to incorporate digital technology, and digital marketing is going to be a hot topic.


A better way to approach marketing is to focus on leads generation, i.e. your eventual return on investment.


clickTRUE’s Better Leads Platform helps you get leads by improving your conversions. Also, in light of the high smartphone penetration rates, all our pages are optimised for mobile viewing. Oh, and did you know that landing pages can incorporate SMS, harvest details, call track, and even accept payments?


Subsequently, clickTRUE assists SMEs in their email strategies to prevent warms leads from turning cold. This is a powerful add-on that can lower costs of marketing and increase effectiveness over time.



clickTRUE’s value comes from the seamless execution of the above mentioned, along with our proprietary integrated dashboard to help clients make data-driven decisions.


#2 Scale Up

a. SME Working Capital Loan

  • Government co-shares 50% of the default risk for loans of up to $300,000 per SME, will be available for the next two years.
  • More than $700 million of loans have been catalysed so far, which means that 2,000 or so SMEs have benefited from this.

As an owner of several startups and SMEs, I’ve always felt that banks are only “good weather friends”.


Despite the government co-sharing 50% of risk, banks still have to worry about bad debt!


This means that they will charge a premium for the risk with exorbitant interest rates ranging from 4%-8%. Often, directors are required to put in personal guarantees as well.


The SME Working Capital Loan will be useful if you have a project to finance in the short term, with high probability of transactions in the coming months.


But if you were to depend on it as working capital for a longer term, you will have to live with interest charges as part of your monthly expenses. As an alternative to this, startups and SMEs will instead try to raise funds by looking for angel investors.

Instructions on how to apply for the loan, the qualifications required and other frequently asked questions should be made clear if it were to successfully reach out to more SME owners.


b. Enhancement to Corporate Income Tax (CIT) Rebate

  • Enhanced for YA2017 with rebate cap raised from $20,000 to $25,000, at 50% of tax payable
  • Extended by another year to YA2018, capped at $10,000, 20% of tax payable

It is always great to get income tax rebates. They can be allocated into training, staff welfare, auditing expenses and A&P activities.



Although profitable SMEs would probably get a larger slice of the pie compared to startups or large conglomerates.



c. International Partnership Fund

  • Up to $600 million in Government capital to co-invest with Singapore-based firms to help them scale-up and internationalise

Implication: Increased capital available for local SMEs to increase their global footprint.

This is perhaps the most interesting and intriguing part of the budget 2017 for me.


“Scale up and internationalise”


It’s a nice slogan, but it is extremely challenging for SMEs to achieve alone without any help.


These are common challenges faced by SMEs – small domestic market, high cost of labour, limited talent pool, lack of capital financing due to lack of credit and trust, lack of a clear vision and plan, lack of relationships and knowledge about the non-homogenous markets and so on.


SME owners are too busy trying to keep their heads out of the water. Scaling up and internationalising might be not high on their priority list.


And to actually succeed in scaling up, SMEs owners need a clear vision and a viable plan. Of course, the plan has to be one that your key stakeholders believe in.


After all that is done, they will need to execute to their plans without any customers and partners in a completely new environment. In other words, they have to start from square one, with an extra baggage – the HQ back in Singapore.


To successfully co-share the risk in investments, there should be clearer ways on how SMEs can piggyback on the experience of MNCs, GLCs or pioneers in that marketplace.


I will be looking forward to the details of this partnership fund with hopes of creating an ASEAN SME rather than just a Singapore SME.



d. Enhanced International Finance Scheme

  • Catalyse private cross-border project financing to smaller Singapore-based infrastructure developers
  • Catalyse financing for projects in emerging markets

e. Global Innovation Alliance

Innovators Academy: help students build connections and capabilities through overseas internships

Implication: It is now easier to find new talents with experience working overseas to help expand your business globally

Innovation Launchpads: greater opportunities for entrepreneurs and business owners to connect with mentors, investors and service providers in overseas market

Implication: SMEs can build partnership to gain access to expertise, capital, and solutions for your business problems

Welcome Centres: link up foreign companies with Singapore partners to co-innovate and expand in the region

Implication: SMEs can share the risk of expanding by partnering with a local company in the foreign country



To quote Sun Tzi’s Art of War, “If you do not seek out allies and helpers, then you will be isolated and weak.” We need strategic alliances and partnership to win the war.



#3 Scale Up with the Right Talent

a. Enhancements to “Adapt and Grow” initiative

  • Provide wage and training support under the Career support programme
  • Increase professional conversion and work trial programme

b. “Attach and Train” Initiative

  • Industry partners can send participants for training and work attachments, rather than full-time positions, to prepare themselves for jobs of the future.


I think the idea of “train and place” allows us to kill two birds with one stone. On one hand, we can increase the possibility of employment. On the other hand, we increase our return on training investment on the employee.



A CFO might ask, “What if we train the guy and he leaves?”


But the CEO will reply, “What if we don’t, and he stays?”


c. Wage Credit Scheme

  • Over $600 million to be paid out in March 2017 to help firms cope with rising wages

The wage credit scheme has directly allowed firms to promote and increase the pay of their junior employees. This scheme has allowed for the increase to be buffered over the years of transformation.


Firms will be more willing to bestow more responsibility in view of the higher wages, giving employees a chance to rise to the occasion and accomplish more for the firm.



This increases the income of Singaporeans, helping them to cope with the rising costs of living.


It also promotes the idea of hiring Singaporeans first.


The objective of this scheme is to incentivise businesses to share productivity gains with their employees.jackielee


However, we might still fail to have productivity gains despite the pay increase. In such a case, the firm would just be left with a more expensive employee. 


d. Special Employment Credit

  • Over $300 million to be paid out in F/Y2017 to benefit 370,000 workers.

e. Extension of Additional Special Employment Credit

  • Extended till 31 December 2019 to provide wage offsets of up to 3%, to help older workers stay employed

Such policies will increasingly become a norm as the population ages.


Re-employment age has risen to 67 from 65. But the rise of automation threaten certain jobs, where humans might eventually be replaced with robots.


Thus, the government is trying to advocate the idea of lifelong learning through the introduction of SkillFuture. The “less young” are also encouraged to take on jobs that leverage on their wisdom and experience.



I agree that as long as the employee is able and does a good job, age & gender doesn’t matter and their remuneration should not differ too widely.


f. Increased Accessibility of Training

  • Introduction of short, modular courses and e-learning
  • Funding support available through SkillsFuture
  • Union members can enjoy subsidies for certain courses through NTUC-Education and Training Fund. $150million will be set aside to match donations to the Fund.

Implication: Employees can now access training easily without being restricted by their regular job commitments or money concerns.

No comments on this as I feel that training for training’s sake will yield little outcome economically, unless there is a specific purpose.



But, I do acknowledge the longer-term benefits of lifelong learning, especially for future generations.



g. SkillsFuture Leadership Development Initiative

  • Support companies in expanding their leadership development programmes with the aim of developing 800 potential leaders over three years
  • Includes sending promising individuals on specialised courses and postings

h. Better Job Matching

  • Enhancements made to National Jobs Bank to work with private placement firms to deliver better job matching services to professionals

Implication: Helps you to find the right talent by ensuring that skilled workers are matched to the correct jobs.

#4 Innovate

The government is serious about innovation, they will be topping up S$500 million to the National Research Fund (NRF) and S$1 billion to the National Productivity Fund (NPF).

a. Regulatory Sandboxes

  • Promote innovation by creating space where rules can be suspended to allow greater experimentation

b. Operation and Technology Roadmapping

  • A*STAR helps firms identify technology to better innovate and compete
  • Efforts will be expanded to support 400 companies over the next four years

c. Tech Access Initiative

  • Support companies by providing access and training to use A*STAR’s advanced machine tools for prototyping and testing. (Available from September 2017)

d. Access to Intellectual Property (IP)

  • Intellectual Property Intermediary, a SPRING affiliate, helps to match companies with IP that meet their needs
  • Headstart Programme offers SMEs that co-develop IP with A*STAR, royalty-free and exclusive licences for 36 months (up from 18 months)

SMEs and Intellectual Property can be said to go hand in hand.


Perhaps that is about be made even closer with these A*STAR programmes.


I have spoken to A*STAR Exploit Technologies before with regards to co-developing an IP, and I realised that there will be clash of perspectives and priorities between SMEs and the researchers.


SMEs see themselves as “technology shoppers”. They pick what they need, deploy them and make money.


Researchers on the other hand, may not be that ready to be served on a silver platter.


Perhaps we can all learn from this example.


Pittsburgh was once known as the “Smoky City”, highly polluted due to steel manufacturing. Today, is is the “Most Livable City in America”.


This was only achievable because various stakeholders came together to solve the problem. University professors worked closely with business people, investors facilitated and accelerated the movement of research and technology out of the university and into the marketplace.


For these policies to work, I feel that jackielee
both SM
Es and researchers need to identify their differences and work together.




So you have heard about what we think of Budget 2017. What are some of your thoughts? We would love to hear about them in the comment section.