Budget 2015 - Budget incentives don't help firms manage daily woes

Thurs, 5 Mar 2015

THE STRAITS TIMES
SINGAPORE

Budget incentives don't help firms manage daily woes. 

SMEs badly hit by rising business costs and labour shortage, MPs warn.

Published on Mar 5, 2015 1:36 AM

By Chia Yan Min

THIS year's Budget contained plenty of incentives for companies to grow and restructure, but not enough to help them cope with daily woes, MPs said during the second day of the Budget debate in Parliament yesterday.

These woes include rising business costs and an ongoing manpower shortage, which are hitting small and medium-sized enterprises (SMEs) especially hard.

Mr Inderjit Singh (Ang Mo Kio GRC) was among the speakers who sounded warnings about the "plight of SMEs", saying many of them are too preoccupied with managing day-to-day costs to think about raising productivity or venturing overseas.

"The general feeling is that things have become worse for SMEs in the last few years and business owners wonder if the Government is listening enough to their problems," said Mr Singh, who is himself an entrepreneur.

"Are we doing enough to help them? Or are we prepared to allow a substantial proportion of them to exit, shut down or die a natural death?"

The "exodus" of companies relocating out of Singapore to lower-cost countries has already started, "and it is going to accelerate further unless we do something about rising costs", he said, adding that firms are unlikely to come back once they move away.

Mr Singh also joined a chorus of MP voices calling on the Government to fine-tune its foreign manpower policies.

Instead of a blanket foreign worker levy, companies employing fewer foreign workers than the average for their sector should be given a rebate, he said.

Ms Lee Bee Wah (Nee Soon GRC) said that while companies welcomed the foreign worker levy deferment announced in the Budget, they were "disappointed" that there were no other measures to address their manpower woes.

Foreign workers are a necessary part of the economy, particularly for jobs which locals do not want to do or lack the skills to take up, added Ms Lee.

A "one-size-fits-all solution" will not work and some sectors might need more "hand-holding", she said.

Mr Ong Teng Koon (Sembawang GRC) agreed that manpower policies need to be more sector-specific, and warned against going too far in tightening the tap on foreign workers.

MPs also said SMEs should be given more opportunities to take on public-sector projects, so they can build up a track record for overseas ventures.

In encouraging companies to go abroad, "we should not put them on a boat with some rations and then expect them to sail the high seas", said Ms Lee, who added that local companies should first aim to gain experience at home.

The Government "should lead by example" in awarding major projects to local SMEs, she added.

"I am not asking for a protectionist policy, but we should promote buying Singapore products and services first."

Start-ups should also be able to test-bed their ideas locally before selling them worldwide, suggested Non-Constituency MP Yee Jenn Jong.

To help SMEs survive and thrive, Ms Denise Phua (Moulmein-Kallang GRC) proposed appointing a minister dedicated to business issues, and having the Government conduct a comprehensive review of SMEs' needs.

She added that large firms should get incentives for mentoring smaller ones, and should also be encouraged to set up training institutes to develop workers in the industry.

Ms Phua also spoke up for micro-enterprises that employ fewer than 10 workers.

They face the same problems as their larger peers but may not have the capability to overcome them and grow, she said.

The Government should help these businesses grow and scale up if appropriate, she added, praising the outfits for their spirit of entrepreneurship, tenacity and energy.

chiaym@sph.com.sg

BACKGROUND STORY

"REMOVE GST ON ESSENTIALS

GST is a regressive tax and the Government should identify essential goods and remove the GST on these essential goods.

To help cushion the impact on lower-income earners, we should exempt GST on certain necessities such as milk powder, diapers, medicine, health supplements, mobility aids and exercise equipment for the elderly. Apparently, the usage of diapers was rationed in some nursing homes to reduce costs.

This is very unhygienic for the wearer.

I would also like to point out that between (economies) like Sweden, which spends about 30 per cent of gross domestic product on social spending, and... Hong Kong, which spends about 3 per cent, there is a middle path. Finding the middle path is what Singapore has to get right.

- Non-Constituency MP Lina Chiam, on exempting essential goods from goods and services tax

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COMPETENCY AND REALITY CHECK

While we may not be very rational beings, in the long run, we all have to face reality, whether in relationships, in the career we choose or the politicians we vote for. And a competency check is also a good reality check.

Singaporeans have had 56 years of experience with (the) People's Action Party's competency, starting in 1959 when Singapore achieved self-government.

Admittedly, competency is always a work in progress and we can always improve, even if we make mis-steps along the way, such as delay in improving our infrastructure and capacity of our public services, as our Prime Minister mentioned recently.

But by any international standards and in the large scheme of things, our PAP Government has always been competent.

- MP Sitoh Yi Pin, on picking a competent government