Firms need calibrated support to change structurally: panel
This is crucial as businesses here face various structural challenges and the Re-Align Framework, which gives small enterprises a chance to renegotiate business contracts that they have difficulties fulfilling, will end on Feb 26.
More calibrated support is needed to help companies change structurally or engage in more research and development (R&D) opportunities, said a group of four panellists at The Business Times' Budget Roundtable.
With Singapore facing an uneven path to recovery, they hailed the targeted schemes announced during Tuesday's Budget speech to alleviate the impact on the country's worst-hit sectors. But they also noted that certain measures will still need to be fine-tuned or extended to achieve results.
Lam Yi Young, the chief executive officer of the Singapore Business Federation (SBF), said that some businesses here are facing various structural challenges, some even before Covid-19 hit.
"It may be better for these companies to try and pivot out of their existing business models into something else, and we are hoping there will also be some consideration for a scheme to help them," he added.
"An expansion and extension of the Re-Align Framework could help, such that more companies can get help and qualify under it."
The Re-Align Framework, which gives small enterprises a chance to renegotiate business contracts that they have difficulties fulfilling, will end on Feb 26.
"An extension will allow these companies to renegotiate some of their contracts so that they can more easily pivot out of existing the business into something that has better prospects," said Mr Lam. "There are many complications, contractual obligations that people may need the framework to renegotiate."
EY's head of tax Soh Pui Ming had hoped that some form of R&D credit could be given to small and medium-sized enterprises (SMEs). Instead of R&D tax deduction, a credit would be more helpful because some SMEs are quite cash-strapped, she said.
"If you have no profit, a deduction does not make too much sense. A credit would actually give them back the money to reinvest and rescale," she pointed out.
Pearl Yu, director of marketing and HR at cable manufacturing firm Keystone Cable, feels that the government could do more to engage Singapore companies for infrastructure projects here.
"In the past, many times when the government ends up choosing a foreign brand, it's likely because those brands have a very strong track record," she said.
"Granted, these (projects) might be a bit more demanding in specifications and challenging in nature as well, but what if we just open up a small window of opportunity for the locals to get to know the requirements from the end users directly?"
Through this, local companies can innovate better as well, Ms Yu added.
Eugene Tan, an associate professor of law at the Singapore Management University and a former nominated member of Parliament, said that the government could have elaborated more on addressing social inequality.
Last year, Budget 2020 tackled social inequality as a key priority, he noted. The Gini coefficient - which measures income inequality - then fell to 0.398 last year, which was the lowest since 2001.
This was mainly due to the "massive government transfers", Assoc Prof Tan said, but noted that moving forward, securing jobs could also provide a stronger guarantee of lowering Singapore's Gini coefficient.
SBF's Mr Lam added that one issue that has not quite been addressed and may continue to pose problems is the mismatch between people being displaced, and the jobs being created. "Although we are creating jobs, they may not be the jobs that the people who are being displaced from the sectors that are more affected are able to move into," he said.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.