2013 - January
Welcome Address by Dr Ernest Kan, President of the Institute of Certified Public Accountants of Singapore (ICPAS) at the ICPAS Pre-Budget Roundtable 2013 on 9 January, 8.30 am to 1.00 pm at the Hotel Intercontinental Singapore, Ballroom 1.
09 Jan 2013 Category: Speeches
Ms Jessica Tan, Chairman of the Government Parliamentary Committee for Finance and Trade & Industry
Members of the Media,
Ladies & gentlemen,
Welcome to the ICPAS Pre-Budget Roundtable 2013! I am heartened that for the fourth year running, this roundtable continues to be a relevant platform to hear from various industry leaders on their thoughts regarding the Budget for the new year.
This year’s theme is “Recalibration for Growth”, but before I start on the roundtable proper, I would like to take the opportunity to mention that ICPAS will be celebrating its 50th Anniversary this year. We have a series of events lined up, with the Singapore Accountancy Convention and the Gala Dinner tentatively scheduled on 2nd July as the signature events. We look forward to your support at these events. All these will all be taking place as the Institute continues its transformation to stay relevant to our members, profession and Singapore.
Now let me get back to the roundtable. On the economic outlook, the forecasts anticipate dark clouds for the year ahead. However, they also raise some bright spots. Hence, I remain cautiously optimistic about the opportunities for 2013.
The year began on an exciting note with the US averting, if not postponing, the fiscal cliff. Going forward, the International Monetary Fund or the IMF forecasted a weakening of the global economic recovery, with the slowdown being caused by continued problems within developed countries. The IMF expects the global economy to grow by an estimated 3.6% this year. On a more positive note, the World Bank has forecasted that Asia will grow by 7.5% in the last year, and by 7.9% this year. Despite the improvement, the World Bank also cautions that open economies may be impacted by global fluctuation such as persistent economic weaknesses in the US and Europe and a slowdown in China.
Singapore is one of the open economies which may be impacted and latest figures from the Trade and Industry Ministry reflect this sentiment. As announced by Prime Minister Lee Hsien Loong in his New Year message, growth last year was 1.2%, which is lower than the original forecast of 1.5%  and the ministry’s growth forecast for 2013 is 1 to 3%. Both figures represent a far cry from the blistering 14.7% growth achieved in 2010. In addition, inflation is estimated to range from between 3.5 to 4.5% this year, which is significantly above our historical average of about 2%.
Nonetheless, amid a sea of global economic uncertainty, South East Asia is expected to stay buoyant. Opportunities are abound in other ASEAN markets such as Indonesia, Malaysia, Thailand and the Philippines, with their economies propelled largely by robust domestic consumption. There are also opportunities in Myanmar which has recently opened up.
This means that there is a silver lining for businesses despite a period of slower growth, elevated inflation and other challenges like a tight labour market, as the government seeks to restructure our economy based on productivity-led growth.
Given the subdued global outlook, it becomes even more important that we do not miss out on such opportunities provided by the region as Singapore re-structures its economy. To help ensure this, it will be useful to now pause, take stock, and recalibrate as we move forward. The annual Budget provides a valuable opportunity to do so.
Brief Recap of 2012’s Budget
Before we start the discussion, allow me to briefly recap some key areas from Budget 2012. The focus last year was to “…build an inclusive society and a strong Singapore” and it was be achieved through two pillars, namely:
- restructuring to sustain growth and
- building a fair and inclusive society.
Under the first pillar of “Restructuring to Sustain Growth”, one key measure was to push for productivity-led growth by reducing Singapore’s dependence on foreign labour. To encourage our companies, especially the SMEs, to embark on the productivity drive by automating processes and upgrading the skills of their workforce, the Productivity and Innovation scheme (or “PIC”) was enhanced. For example, cash payout rate were doubled from 30% to 60% for up to $100,000 of qualifying expenditure from YA2013 to YA2015. Companies were also allowed to claim for in-house training costs of up to $10,000 each year and claim cash payouts on a quarterly basis instead of annually.
Furthermore, to address manpower issues, companies were encouraged to hire older Singaporeans through the Special Employment Credit scheme (or “SEC”). Under this scheme, for which S$2.4 billion has been set aside from 2012 over the next 5 years, employers would be reimbursed a percentage of wages for hiring local staff above 50 years of age.
The next pillar of “Building a Fair & Inclusive Society” aims to create more opportunities for lower income families, seniors and Singaporeans with disabilities. Examples include the topping up of the Edusave Endowment Fund by $200 million and the raising of the CPF employer contribution rates to between 0.5 to 2%. Lastly, to help workers with disabilities find employment, the benefits under the SEC scheme were extended to companies who hire them as well.
So have last year’s initiatives been helpful? What can be done differently or fine-tuned this year?
To help provide a sense of this, ICPAS conducted a pre-budget survey in November last year in anticipation of Budget 2013. The survey findings highlighted the top three business concerns for 2013. These are rising business costs, uncertain global demand and increasing regulation. More of these findings will be shared by the ICPAS Research team in its presentation later.
Some of these findings can provide a useful backdrop for our discussion on whether there is a need, and if so, where the various policies could be re-calibrated or measures fine-tuned, especially in view of the need to leverage on the opportunities provided by the region as Singapore re-structures its economy.
Recalibration for Growth
Hence, this year’s Roundtable theme “Recalibration for Growth” is timely. While we remain clear on the long-term strategy, a review and recalibration along the way, if the need arises, will be valuable, if not appropriate.
With this theme as the backdrop, our roundtable discussion will cover the five key areas, namely
- economic outlook;
- business costs;
- productivity and manpower;
- sustainable growth; and
- social concerns.
Providing insights at today’s discussion are prominent leaders from diverse industry and social sectors. Although the Institute has already submitted an initial set of views to the Ministry of Finance or MOF as our feedback to the 2013 Budget process, the views at today’s panel discussion will continue to be collated as feedback to MOF.
Before we start, I would like to express my sincere thanks to all panelists who took time out of their busy schedules to be at this roundtable. I would also like to thank our observers from Inland Revenue Authority of Singapore (IRAS), International Enterprise Singapore (IE Singapore), Ministry of Finance (MOF), Ministry of Trade and Industry (MTI), Monetary Authority of Singapore (MAS), Singapore Accountancy Commission (to be enacted via legislation), SPRING Singapore and Workforce Development Agency (WDA).
Last but not least, I am pleased to introduce my co-chair, Ms Jessica Tan. Despite her hectic schedule, having been promoted as the new General Manager, Enterprise & Partner Group (APAC), Microsoft Operations Pte Ltd, she has kindly taken time to be with us today, in her capacity as Chairman of the Government Parliamentary Committee for Finance and Trade & Industry, to gather feedback and channel back to the Government for Budget 2013.
Let me now invite Jessica to say a few words. Thank you.
 BBC 9 Oct 2012, Global economic recovery weakening, says IMF
 BT 20 Dec 2012, Growth window slams shut on open economies
 ST 20 Dec 2012, Asia 'will still outperform the West amid gloom'
 ST 1 Jan 2013, Economy grew a slower 1.2%
 BT 20 Dec 2012, Q4 economic performance likely to mirror Q3's-Hng Kiang
 BBC 3 Jan 2011, Singapore economy sees record expansion in 2010
 BT 25 Dec, November inflation at 2-year low of 3.6 percent
 BT 20 Dec 2012, Growth window slams shut on open economies
 Budget Singapore 2012 (http://www.mof.gov.sg/budget_2012/download/FY2012_Budget_in_Brief.pdf)
 ST 21 Nov, Managing foreign workforce rise 'an inexact business'