To gather the views of the CA (Singapore) community on enhancing productivity and sustaining growth in 2013, ISCA Research conducted the Pre-Budget 2013 Survey, augmented by several quick polls, in November 2012. Overall, the surveys attracted more than 500 responses from the accounting and business community, comprising professional accountants (PAIBs), CFOs, public accountants (PAs) and small and medium-sized enterprises (SMEs).
The ISCA Pre-Budget Roundtable 2013, held on 9 January 2013 for the fourth year running, continued to be a valuable platform for industry leaders to share their thoughts on key issues that could be considered for Singapore Budget 2013. The roundtable, also attended by senior officials from various government agencies, was co-chaired by Ms Jessica Tan, Chairman of the Government Parliamentary Committee for Finance and Trade & Industry and Dr Ernest Kan, President of Institute of Singapore Chartered Accountants.
The roundtable highlighted that, despite the subdued global economic outlook, there continued to be growth opportunities in the region. Against the brighter outlook in Asia, especially beyond the medium term, businesses were encouraged to look beyond Singapore’s shores and plan for the longer term. In particular, Singapore companies should source for new business opportunities, re-orientate their market focus from the developed economies in the West to the emerging ones in the East, and innovate and focus on building a high-margin rather than a low-cost business model.
While there is a clear need to innovate and enhance productivity against the constraints of limited labour and rising business costs, embarking on efforts to improve productivity is a process which takes time and whose impact will not be immediately realised. Hence, there may be a need for more help to cushion the impact felt by businesses in this transition. Against this backdrop, several panelists called for a more gradual and sector-specific approach to tightening the supply of foreign labour. A few others, on the other hand, raised the point that the subdued market outlook provided an opportune time for businesses to restructure and upgrade.
With the increasing role of the services sector in the Singapore’s economy, as reflected by its increased contribution of 70% to Gross Domestic Product (GDP) in 20111, there is a need to re-look at, if not adopt a mindset change in, how we frame government assistance and tax incentive schemes to promote the services sector. In line with this, there were calls by several panelists for the Government to consider making government assistance and tax incentives more relevant as companies move up the value-chain, especially in the services sector. In particular, existing schemes for the services sector, which are largely based on those for the manufacturing sector, may not be entirely appropriate since qualifying criteria and performance metrics for the latter sector are focused primarily on the tangible. In contrast, the nature of the services sector focuses on the intangible.
For example, to support knowledge creation activities, greater incentives could be introduced to encourage greater build-up and exploitation of intellectual property (IP) in Singapore. Another area which we could further promote is branding, of both our services and manufactured products. Branding can help differentiate Singapore-based companies from their competitors, and help Singapore sustain its attractiveness as a worldclass business hub and better sustain its growth.
As businesses increasingly venture overseas to overcome local constraints and to seize growth opportunities abroad, the panelists raised the possible need to look beyond the existing measures so as to better facilitate such efforts and yet continue to entrench the key elements of these businesses in Singapore. Existing government measures presently focus on helping Singapore companies at the pre-investment stage, such as defraying participation in trade and investment missions, and cost of initial market studies. Possible measures to help companies during the implementation of their investment projects overseas, especially in the initial period, would be useful to help tide over expected losses in this period, and encourage more companies to venture overseas and yet remain rooted in Singapore. In the same light, a few panelists also call for the Government to consider allowing companies to repatriate profits back to Singapore without being taxed, on a temporary or even permanent basis.
With regard to social issues such as healthcare, housing and the non-profit sector, key aspects of related policies could be improved to better promote an inclusive society. For example, the Government could consider allowing first-time home owners to pay a lower stamp duty as a way of defraying the costs of housing, especially for young couples. Measures could also be considered to raise the remuneration of professionals in the non-profit sector so as to attract and retain the requisite talent to manage the nonprofit organizations and deliver the increasingly sophisticated services expected of them.
The Singapore Budget 2013, announced on 25th February 2013, revealed the Government’s two key pillars for a better Singapore. They are restructuring for quality growth and building a more inclusive society. The Government has remained steadfast in the pursuit of productivity and, at the same time, will enhance assistance to businesses. For a more inclusive society, the Government will enhance social mobility, adopt more progressive taxation and enhance help to the needy.
ISCA Research has produced a Budget bulletin giving you a snapshot of the key initiatives and our insights.