Utilisation of Productivity and Innovation Schemes by Businesses

Date: 12 February 2015

Parliamentary Questions by Assoc Prof Randolph Tan:

To ask the Deputy Prime Minister and Minister for Finance what are the statistics on the proportion of businesses for which the utilisation of schemes such as the Productivity and Innovation Credit and Innovation and Capability Voucher has been followed by a moderation in manpower requirements and/or an expansion in revenue. 

To ask the Deputy Prime Minister and Minister for Finance if he can provide an ordering, by number and value of applications, of the six qualifying activities of the Productivity and Innovation Credit scheme. 

Reply by Senior Minister of State for Transport and Finance Josephine Teo:

The Government adopts a multi-pronged approach to promote productivity and innovation. It includes both broad-based and targeted initiatives designed to complement one another in supporting industries and businesses. As productivity is shaped by many factors, including demand for a firm’s products or the cyclical conditions it faces, it is difficult to attribute productivity changes to specific schemes. We are also mindful of the fact that the business transformations that underpin productivity growth are a medium to long-term endeavour. It is hence best to assess results of a firm’s efforts – be they an investment in equipment, software or intellectual property or improvement in employee engagement and work processes – over a sustained period .

Nevertheless, the take-up rates of various schemes are an indication of their relevance to businesses. Both the Productivity and Innovation Credit (PIC) and Innovation and Capability Voucher (ICV) schemes that Associate Professor Tan asked about have been well-received. 54,000 or 46% of active companies filed claims under the PIC scheme in the Year of Assessment (YA) 2014^[1], up from 36,000 or 33% in the YA 2011 when the scheme was introduced. As for the ICV scheme, about 13,000 SMEs have benefitted since the scheme was launched in June 2012.

Associate Professor Tan also asked for the number and value of applications of the six qualifying activities under the PIC scheme. Based on corporate income tax returns for YA 2014, the 54,000 companies who filed PIC claims made more than 75,000 claims on the six qualifying activities in total^[2]. The highest number of claims is for automation equipment, followed by training. Please refer to Table 1 for the proportion of claims and the expenditures incurred on the six activities for YA 2014.

Table 1. Number, proportion of claims and expenditures incurred by qualifying activity for YA 2014

^[1] Based on corporate income tax returns as at 31 December 2014.

^[2] Businesses could claim PIC for more than one qualifying activity.

^[3] This includes claims for acquisition and in-licensing of Intellectual Property Rights, registration of Intellectual Property Rights and approved Design projects.