Summary Report

2020RECOMMENDAT IONS

BUDGET

Singapore Business FederationThe apex platform promoting the growth and vibrancy of the

Singapore business community

ABOUT THE SBF SME COMMITTEE(SMEC) ANNUAL BUDGETRECOMMENDATIONSThe SBF SME Committee (SMEC) has been providing recommendations to the annual Singapore Budget sincethe committee's inception in 2011. The recommendations are rigorously put together through collective inputsfrom business leaders and representatives from the various Trade Associations and Chambers (TACs). TheSMEC also obtains feedback from various government agencies in coming up with the recommendations. SBFis grateful to have this platform that has effectively brought together businesses, TACs and our Government,to engage in regular meetings with one another. This document is a summary of the SBF SMEC's full Budget2020 Recommendations.

BUDGET 2020 RECOMMENDATIONSONE-STOP DIGITAL TRADE PLATFORM TO ENABLETRADE AMONGST ORGANISATIONSOur Government has been driving the digitaltransformation of our economy and its varioussectors. Through initiatives like the IndustryTransformation Maps, Industry Digital Plans andSMEs Go Digital programme, our Government hasbeen helping companies to digitalise theirprocesses to improve productivity. Growing revenue has remained the number onepriority of our local businesses for threeconsecutive years . Our Government can help B2Bcompanies grow their businesses more byencouraging, enabling and optimising tradeamongst them. Companies are also more likely to adopt digitalsolutions such as e-invoicing and e-paymentswith greater sales opportunities generated from aone-stop digital trade platform. With a firmfocus on revenue growth, businesses can aligntheir key processes to a digital strategy, riding ona good digital trade platform.

Recommendation: Our Government to develop a one-stopdigital trade platform, or encourage theusage of available procurementplatforms, by leveraging GeBiz andgovernment spending on local SMEs'products and services, so as to enablebuying and selling activities amongstcompanies online.

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1 SBF National Business Survey 2017/2018, 2018/2019 and 2019/2020

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INCREASE SUPPORT TO SME FINANCING

The 2018 SBF ‘Singapore’s SME Debt FinancingLandscape’ study identified a 15% (or S$19billion) credit demand gap of the total approvedloan facilities extended to SMEs. The studyidentified that an increase in lending via invoicefinancing could have a significant impact onclosing the credit demand gap. The Loan Insurance Scheme (LIS) supports shortterm financing lines such as invoice financing. Byenhancing the LIS to encourage invoice financing,it would help meet the financing needs of SMEswithout collaterals and those with a higher riskprofile. The enhanced support from LIS could alsohelp SMEs shift to e-invoicing as they tap oninvoice financing through the LIS.

Recommendation: Our Government to increase the sharingof the cost of insurance from 50% to 70%for the LIS.

GOVERNMENT TO SUPPORT AND ADOPT A PAYMENTCODE OF CONDUCT The SBF National Business Survey 2019/2020found that almost 50% of the late paymentsexperienced by companies were above 30 dayspast due, which is on top of the average twomonths credit term they offer. This trend in latepayment had caused seven in 10 businesses toface moderate to severe cash flow issues. The Australian Government had implemented aSupplier Payment Code in May 2017. In theirCode, the signatories commit to pay eligibleAustralian small business suppliers on time andwithin 30 days of receiving a correct invoice. 69%of the respondents to the SBF National BusinessSurvey 2019/2020 felt that a similar code wouldhelp reduce late payment in Singapore. SBF is prepared to take the lead in setting up asimilar payment code of conduct for our localbusiness community. It would be important forour Government to endorse and adopt thepayment code of conduct, as it plays animportant leadership role that catalysesbehavioural change in local businesses. Theadoption of payment timeliness and e-invoicingcould be further stimulated with shorter paymentterms to businesses that issue e-invoicing forGovernment contracts.

Recommendation: Our Government to support SBF in thedevelopment of a Payment Code ofConduct for Singapore. GovernmentProcurement Entities should endorse andadopt this code. Our Government shouldalso use this development to proliferatethe adoption of e-invoicing by paying itssuppliers that e-invoice even faster andintroduce incentive schemes for largerenterprises to onboard their SMEsuppliers onto e-invoicing platforms.

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PROMOTE COLLABORATION BETWEEN A*STAR ANDLOCAL ENTERPRISES TO CONDUCT MORE RESEARCHAND DEVELOPMENT (R&D) ACTIVITIES AND CHANNELMORE RESEARCH FUNDS DIRECTLY TO PRIVATEENTERPRISESR&D is an investment in Singapore’s future as aknowledge-based economy. This thrives oninnovation and enterprise. A stronger push toencourage collaboration between ResearchInstitutions (RIs) like A*STAR and our local SMEs isneeded. This will ensure that our SMEs, which areoften constrained by a lack of resources, are alsoable to develop new capabilities through R&D. The SMEC noted that public sector R&D needs tohave a greater focus on supporting local SMEs toensure a sustainable and vibrant economy in thefuture. More can be done to expand theallocation of funds to private enterprises directly.In this way, institutional and domain R&Dknowledge in commercial areas can be built upfaster and in areas and projects that are relevantto the needs of the industry. The need for local enterprises to developintellectual property is critical in our drivetowards becoming a knowledge-based economy.By developing new technologies and intangibleassets, our companies can move up the valuechain and thereby drive economic growth.

Recommendation: 1. There should be more funding help forcompanies in the areas of creation,regulation and the administration oftheir intellectual property filing in globalmarkets. 2. To place greater focus and channelmore resources towards collaborativeR&D between RIs/Institutes of HigherLearning (IHLs) and our local SMEs.Taking reference from ESG’s EnterpriseDevelopment Grant and ProductivitySolutions Grant , to offer support of upto 70% of eligible R&D cost directly toprivate enterprises to conduct appliedR&D to develop industry-relevanttechnologies and innovations, in closepartnership with our RIs and IHLs. The RIsand IHLs can also help to identifycommon challenges faced by similarcompanies and aggregate the demandfor R&D for the same outcome.

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2 ESG Enterprise Development Grant (www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/overview) 3 ESG Productivity Solutions Grant (www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/productivity-solutions-grant 3

FINANCIAL INCENTIVES FOR PRODUCTIVITY-DRIVENINNOVATIONAn option for a cash or cash-back system forcompanies that are not paying tax can beintroduced to drive R&D activities amongst SMEswhich are not yet profitable. This is currentlypractised by the Australian government. Underthe Australian scheme, the tax incentive reducescompany R&D costs by offering tax offsets foreligible R&D expenditure. Eligible companies witha turnover of less than A$20 million receive arefundable tax offset, allowing the benefit to bepaid as a cash refund if they are in a tax lossposition. All other eligible companies receive anon-refundable tax offset to help reduce the taxthey pay.

Recommendation: To introduce a research expenditurerebate for R&D activities for local SMEsthat are in the non-taxable group,similar to that provided by the Australiangovernment, to supplement the currentR&D tax benefits.

GREATER ASSISTANCE FOR ADOPTION OFCYBERSECURITY SOLUTIONSAs cyber threats grow in scale and sophistication,SMEs will need to make their systems as secureas possible. Cybersecurity will be an increasinglyimportant aspect to protect our economy, giventhat our systems are increasingly networked.Apart from the cost of technology adoption,cybersecurity risk was also listed as one of thetop three barriers to adopting technologies . The needs of SMEs in cybersecurity areincreasingly complex as enterprise IT systems sitacross in-house and outsourced systems,incorporating desktops and mobile platforms andhaving to cater to the needs of the public,customers, suppliers and employees. As such,SMEs need expert assistance, to be layered overincumbent government assistance schemes, thatcan provide cybersecurity advisory to (1) conduct diagnosis to identify vulnerabilities, and (2)develop cybersecurity solutions to protect SMEs'day-to-day operations.

Recommendation: Our Government to introduce anEnterprise Cybersecurity Advisorsprogramme where selected advisors aredeployed to SMEs to facilitate theadoption of comprehensive cybersecuritysolutions and customised training for theneeds of individual SMEs.

4 SBF National Business Survey 2019/2020

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INCREASE SUPPORT FOR COMPANIES TO EMPLOYOLDER WORKERSThe Special Employment Credit (SEC) is directsupport to employers that hire older workers, byproviding subsidies of up to 11% of the olderemployees' monthly wages. The SEC provides astrong signal of our Government's support foremployers to keep older workers employed.During the 2019 National Day Rally, it wasannounced that the retirement and re-employment age will be further increasedprogressively over 10 years, up to the year 2030.In addition, CPF contribution rates for olderworkers will also increase between 4% to up to11% over the same period. To help employers adjust to the increase inemployers’ CPF contributions for older workers in2015, Government introduced the TemporaryEmployment Credit (TEC) which helped to cushionemployers’ cost when the CPF contributions forolder workers were increased. One other concern for employers when hiringolder workers is the high cost of employeebenefits, particularly medical benefits. TheGovernment had introduced the Portable MedicalBenefits Scheme (PMBS) which enables employeesto bring along the medical benefits when theychange employers. However, only 5% of companies offer PMBS .Awareness of the benefits of PMBS, therefore,must be increased. The SBF SMEC will work withother TACs and the Singapore National EmployersFederation for greater outreach to companies onthe PMBS.

Recommendation: 1. Our Government to extend the SECbeyond December 2020 in tandem withthe plans to progressively increase theretirement and re-employment age by2030. 2. Our Government to reintroduce theTEC at every occasion when the CPFcontribution rates for older workers areincreased over the next decade.

5 Report Of The Tripartite Workgroup On Older Workers

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Main Committee Advisors Mr Chee Hong TatMr Zaqy MohamadMr Teo Ser Luck Mr Lawrence Leow ChairmanMr Kurt Wee Vice-Chairman Mr Ernie KohMr Melvin Tan MembersMs Audrey YapMr Benedict SohMr Dennis FooMs Donna LeeMr Irvin SeahMr Kenneth LooMr Linus Goh Mr Low Ming WahMr Ng Siew QuanMr Patrick ChangDr Ricky SouwMr Ridjal NoorMr Roderick ChiaMr Royston Tan Mr Supaat SaktiandiMr Stanley LimMs Susan ChongDr T.ChandrooMrs Wong Sioe Hong Business Finance & Cost Competitiveness Sub-Committee ChairmanMr Linus Goh Vice-Chairman Mr Tay Hong Beng MembersMr Alvin YappMr Benjamin TanMdm Cynthia PhuaMs Irene KhooMr Kenneth LooMr Roderick ChiaMr Royston Tan Ms Yu Sze Min Markets & Internationalisation Sub-Committee ChairmanMr Ernie Koh Vice Chairman Ken Koh MembersMr Abdul Rohim SaripMr Andrew KhngMs Irene BoeyMr Jesher LoiMr Kelvin ChiaMr Samuel Lim

Senior Minister of StateMinister of StateChairmanChairmanDeputy ChairmanBoard DirectorChairman & CEO Council MemberPresident Presidential AdvisorManaging Director Managing PartnerChairmanImmediate Past PresidentAdvisorExecutive DirectorImmediate Past PresidentHead, Global Commercial BankingPresidentCouncil MemberCouncil MemberAdvisorBoard MemberChairman & FounderHead of Sales, Middle Market, Global Commercial ServicesExecutive Vice PresidentHonorary TreasurerCEOChairmanVice President Head, Global Commercial Banking Head of Tax and Real Estate Sector Director of Corporate AffairsManaging DirectorChairmanPartner, Audit and AssuranceImmediate Past PresidentChairman & FounderHead of Sales, Middle Market,Global Commercial ServicesDirector Presidential Advisor Group CEO Managing PartnerHead of AdministrationConsulting DirectorDirectorSenior PartnerCEO

Ministry of Trade & IndustryMinistry of ManpowerBRC Asia LtdNufindata Pte LtdSerial Systems Ltd United Engineers LtdCrescendas Group SBFASME SFICCyclect Group Yusarn Audrey Kingsmen Creative LtdSNBAFLADBS BankSCALOCBC Bank SPETASCCCISMFSPETASMCCIrodVENTUREAmerican Express, Inc Maybank GroupSLAGreenpac (S) Pte LtdSICCISRA OCBC Bank KPMG (Singapore) BusAdsHo Lee GroupRental Practices Working GroupBDO LLPSCALrodVENTUREAmerican Express, Inc Grant Thornton Singapore SFIC Yang Kee Logistics A. Rohim Noor Lila & PartnersTiong Seng Contractors (Pte) LtdIntegral Solutions Pte LtdYa Kun International Pte LtdKelvin Chia PartnershipReebonz

Manpower, Talent & Skills Sub-Committee ChairmanMs Susan Chong Vice-ChairmanMr Dennis Foo MembersMs Adele PngMr Arthur PohMr Chan Wing KaiMr Danny LienMr Erman TanMr Foo Chek WeeMr Jeffrey YuMr Kay Kong SwanMr Kwa Kim ChiongMr Ong Chew MengMs Pearl YuMs Peggy LimMs Tan Kai Xin Technology, Innovation and Productivity Sub-Committee ChairmanMs Audrey Yap Vice-ChairmanMr Mark Lee MembersMs Annie TanMr Carlos FernandesMr Casey KesavanMr Christopher NgDr Govindharaju VenkidachalamDr Lee Eng WahMr Melvin TanDr Ricky SouwMr Roderick ChiaMr Terence KokMr Wong Shih Jon Research Sub-committee ChairmanMr Irvin Seah MembersDr Clive ChooMs Lee Lay KengDr Lim Tai Wei Mr Kenneth Wong SBF SMEC Secretariat Mr Ho Meng KitMs Joanne GuoMr Jason ChanMr Edwin HengMr Lin GuoliangMs Jeanette LeeMs Sacha Ong

CEO Immediate Past President Head, Talent Acquisition DirectorDirectorPresidentCEOVice PresidentCouncil Member ChairmanCEOGeneral ManagerDirectorDirectorDirector Managing Partner President DirectorCEOCEOGroup CEOSenior Director Deputy Executive DirectorManaging DirectorAdvisorChairman & FounderDirectorManaging Director Executive Director Senior LecturerHead, ResearchSenior LecturerSenior Research FellowLecturer Chief Executive OfficerAssistant CEO, Strategy and DevelopmentDirector, Advocacy and ActionsDirector, Research and PublicationsDeputy Director, Advocacy and ActionsSenior Manager, Research and PublicationsSenior Executive, Advocacy and Actions

Greenpac (S) Pte Ltd SNBA KONE CorporationSITSeed Global InvestmentSASSAsia Polyurethane MfgOrienteSCALSLAJustlogin Pte LtdSystematic Holdings Keystone Cable Pte LtdSkillsFuture SingaporeEnterprise Singapore Yusarn Audrey TaFf TSK Foods Pte Ltd RecordTV Pte LtdDiamond Glass Pte LtdRigel Technology (S) Pte LtdHyfluxshop Holdings SimTechCyclect GroupSPETA rodVENTUREOrion Five EngineeringV3 Smart Technologies Pte Ltd DBS Bank NTUKeppel CapitalSUSSNUSITE

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About Singapore Business Federation As the apex business chamber, the Singapore Business Federation (SBF) champions theinterests of the business community in Singapore in trade, investment and industrialrelations. Nationally, SBF acts as the bridge between businesses and government inSingapore to create a conducive business environment. Internationally, SBF representsthe business community in bilateral, regional and multilateral fora for the purpose of tradeexpansion and business networking.

Singapore Business Federation160 Robinson Road, #06-01

SBF Center, Singapore 068914Tel: +65 6827 6828

Email: smec@sbf.org.sgWebsite: www.sbf.org.sg