C. Invest In New Capabilities
- 90 To stay ahead in the race, we must redouble our efforts to invest in new capabilities.
- 91 Even before COVID-19, we had started to restructure our economy. Through the Industry Transformation Maps, or ITMs, we have been steadily building up the capabilities we need for the future.
- 92 We have also opened new avenues of growth, by strengthening our network of Free Trade Agreements, and enhancing cooperation with like-minded partners in the digital and green economy.
- 93 But much more work lies ahead. Crucially, we have a window of opportunity over the next few years to establish leading positions in key market segments. So we will accelerate our investments in new capabilities to power our next stage of growth.
Strengthen our Digital Capabilities
- 94 Our first priority is to strengthen our digital capabilities.
- 95 Today, we are one of the most connected cities in the world, and among the first to roll-out a 5G standalone network. In parallel, we have built digital utilities, like SingPass, Myinfo and PayNow, that allow our people and businesses to access digital services and transact seamlessly and safely.
- 96 We will invest further to meet our future needs.
- a. We will upgrade our broadband infrastructure to increase broadband access speeds by around ten times over the next few years.
- b. We will also invest in future technologies like 6G, to ride the next communications and connectivity wave.
- c. The use cases for such high speeds are still nascent, but there are many new possibilities for augmented and virtual reality tools, limited only by our imagination.
- 97 Alongside infrastructure improvements, I will set aside an additional $200 million over the next few years to enhance schemes that build digital capabilities in our businesses and workers. More details can be found in the Annex. (See Annex C-1.) The Minister for Communications and Information will also elaborate further at the COS.
Make Innovation Pervasive
- 98 Second, we will push for pervasive innovation across the economy.
- 99 Innovation is built on strong R&D foundations. That is why, over the years, we have steadily increased the Government’s investment in R&D, maintaining it at about 1% of GDP, comparable to other small advanced economies. I will continue to sustain our investments in R&D, with $25 billion set aside under the Research, Innovation and Enterprise, or RIE2025 strategy.
- 100 Public investments in R&D also serve as a catalyst for similar investments in the private sector. Unfortunately, our total business expenditure on R&D still lags other economies.
- 101 Presently, most of this R&D is driven by MNCs, which have greater scale and better resources. Local enterprises, which comprise about 80% of all firms, account for only about a quarter of total business R&D expenditure in Singapore.
- 102 I will therefore provide more support for our local firms to undertake R&D activities. We currently have a network of more than 80 centres across our Polytechnics and ITE engaging in technology, innovation, and enterprise activities. These centres work closely with SMEs to undertake industry projects, many of which have led to new innovations.
- 103 For example, Nanyang Polytechnic’s Automation & Robotics Innovation Centre collaborated with Sanwa-Intec Asia, an SME that supplies the automotive industry, to design and implement robotics and automation solutions. (See Annex B-1.)
- 104 One of the solutions is a robotic tool that emulates an operator’s handling of hot moulded products. Previously, a human operator would have had to do the work manually. Now, they get the job done using the robotics system. As a result, Sanwa-Intec has significantly raised production volume, while reducing its energy consumption. (See Annex B-1.)
- 105 Students from Nanyang Polytechnic also had the chance to work on these projects. One of them is Alysia Ong, who is now working at Sanwa-Intec after completing her internship there. (See Annex B-1.)
- 106 Such collaborations are a win-win – SMEs get to tap on the R&D capabilities in our polytechnics and ITE, while students can contribute meaningfully to these projects and gain valuable hands-on industry experience.
- 107 To further support such collaborations, I will increase the capacity of the centres so that they can provide research and innovation support to more SMEs. Over the next five years, these centres will be able to undertake close to 2,000 innovation projects across five pilot sectors: Agri-Tech, Construction, Food Manufacturing, Precision Engineering and Retail. This amounts to an eight-fold increase in the number of innovation projects undertaken in these sectors. We look forward to many more success stories in the coming years.
Strengthen Local Enterprises
- 108 Third, we will strengthen our local enterprise ecosystem.
- 109 For the broad base of SMEs, our priority is to raise their productivity. SMEs can make use of the Productivity Solutions Grant, or PSG, to implement digital and automation solutions.
- 110 I will set aside around $600 million to expand the range of available solutions under the PSG and push for greater take up of productivity solutions by SMEs. We estimate that this will support more than 100,000 productivity projects over the next four years. This is more than double the number of projects supported since the scheme began.
- 111 Larger local enterprises need more customised assistance to scale up and invest in overseas markets. I will support them with a new initiative called Singapore Global Enterprises. Under this initiative, we will provide bespoke assistance tailored to the needs of promising local enterprises, in areas like innovation, internationalisation and fostering of partnerships with other firms.
- 112 Many of these enterprises also need more support in talent development. So, we will launch a new Singapore Global Executive Programme, to help them to attract and nurture their next generation of leaders through industry and overseas attachments, mentorships, and peer support networks.
- 113 Besides grants and bespoke assistance, some companies also need help with their financing needs. We provide such help through the Enterprise Financing Scheme. I will enhance two components
of the Scheme (See Annex C-1.):
- a. I will expand the M&A loan programme to include domestic M&A activities from 1 April this year to 31 March 2026. This will support companies to grow and expand through mergers and acquisitions.
- b. I had earlier announced the extension of the enhanced Trade Loan till September this year. Beyond this six-month extension, I will maintain the enhanced 70% risk-share under the Trade Loan for enterprises venturing into more nascent markets like Bangladesh or Brazil. We hope this will encourage our enterprises to seek untapped opportunities in these markets.
- 114 The Minister for Trade and Industry will share more about our enterprise development strategy at the COS.
- 115 I will also make further refinements to our tax schemes, to support businesses and strengthen our competitiveness and resilience. More details are in the Annex. (See Annex C-2.)
Other Enterprise-Related Measures
Invest in our People
- 116 Finally, and most importantly, we will continue to invest in our people.
- 117 We continue to invest significantly in education, to help every child achieve their full potential. Through SkillsFuture, we are also empowering and equipping Singaporeans for their lifelong journey of acquiring new skills, and sharpening existing ones.
- 118 To support this, we are transforming our Institutes of Higher Learning, or IHLs, which include the Autonomous Universities, into institutes for continual learning. We will review the programming in our IHLs, and enhance their provision of quality continuing education and training. The Minister for Education will say more about this at the COS.
- 119 Our enterprises also play a critical role in fostering a culture of lifelong learning at the workplace. Employers are well placed to identify skills that are in demand and provide industry-relevant training.
- 120 We support employers to do so through the SkillsFuture Enterprise Credit. Today, only employers that have had at least three local employees, and contributed at least $750 of Skills Development Levy over a qualifying period, are eligible for this Credit – and these have tended to be larger enterprises.
- 121 To better support our smaller and micro enterprises, I will grant a waiver of the Skills Development Levy requirement for the qualifying period of 1 January 2021 to 31 December 2021. This is estimated to double the number of eligible employers, from 40,000 today to 80,000. The deadline to claim the credit will also be extended by a year, to 30 June 2024, to give employers more time to use the credit. (See Annex C-1.)
- 122 To maximise the investments in our people, we must also ensure a good match between the skills demanded by the industry, and those offered by the workforce.
- 123 This means bringing together the various parties involved – training providers, employment facilitation providers, employers, and jobseekers themselves – to anticipate the areas where new skills are required, and ensure that effective training is provided in a timely manner.
- 124 At the same time, employers need to redesign jobs to harness technology more effectively, and make better use of the upgraded skills of their workers. Our tripartite partners, especially the unions, help to achieve this.
- 125 One approach that NTUC has championed and that has proved effective is the Company Training Committees, or CTCs. The CTC model brings together the unions and employers to develop concrete firm-level transformation plans, including the relevant training needed for their workers, so that they can enjoy better wages, welfare, and prospects. These plans are then implemented with the support of relevant Government agencies.
- 126 To date, NTUC has formed more than 800 CTCs with companies of various sizes. One SME that has benefited from this partnership is Speco Singapore.
- 127 Speco started out in cleaning services, and later shifted its operations to provide disinfection services through technology solutions. The Building Construction and Timber Industries Employees' Union, or BATU, worked with Speco management to form a CTC, and to map out the training needed to reskill its workforce. (See Annex B-1.)
- 128 One beneficiary is Shamsul Nurhakim, who joined Speco on a Work-Study Programme. Shamsul will be completing a Diploma in Applied Science from Republic Polytechnic this year, under the sponsorship of Speco. Through the support of the CTC, he has acquired new skills, and will be well positioned to excel in his career. (See Annex B-1.)
- 129 NTUC would like to do more. I will therefore set aside about $100 million to support NTUC in its efforts to scale up the CTCs. Part of this will go into a new grant which will be administered by NTUC, to support companies that have set up CTCs to implement their transformation plans.
- 130 Besides the CTCs, we will continue to extend our outreach, especially to smaller companies, through other platforms. This includes partnering with industry leaders or Queen Bee companies to provide training and advice to smaller companies, and working closely with the Trade Associations and Chambers as well as the Singapore Business Federation.
- 131 We will also pay special attention to our mid-career workers, especially those in their 40s and 50s. They are more vulnerable to churn and disruptions in the workplace. But they have valuable experience to contribute, and with some help, many are able to learn, adapt and do well in new jobs.
- 132 For example, Mr Manokaran was 58 years old when his job as an events manager was badly affected by the pandemic. He decided to move to a new area, and took a leap of faith into digital marketing. Through the Career Conversion Programme for Digital Advertising Professionals, he joined an IT business solutions company, and picked up new skills. Now, he is a Digital Marketing Manager, a job with good prospects in the digital economy. (See Annex B-1.)
- 133 Today, we have a range of support measures to help mid-career workers. For Mr Manokaran and his employer, what worked was a place-and-train arrangement, meaning he was first hired and then given on-the-job training by the company.
- 134 In other cases, an attach-and-train modality may be more appropriate, for example, if a company is not yet ready to commit upfront to hiring more staff. Under the SGUnited Mid-Career Pathways Programme, we have provided company attachments for mid-career workers to undergo skills upgrading with a training allowance. We will make such company attachments for mature mid-career workers a permanent feature of our training and placement ecosystem. (See Annex C-3.)
- 135 Finally, there is the train-and-place route, where individuals first attend training in areas with good hiring opportunities, before searching for a new employer.
- 136 In recent years, and especially during the pandemic, we have significantly expanded such training opportunities. We will continue to enhance our provision of high-quality, industry-oriented training courses through a new SkillsFuture Career Transition Programme. These courses will be highly subsidised, and after the training, we will provide employment facilitation services to maximise the jobseekers’ prospects. (See Annex C-3.)
Better Skills Matching
Support for Mid-Career Workers
Adjustments to Foreign Worker Policies
- 137 Even as we invest in Singaporeans, we must continue to stay open and bring in manpower and skills from around the world. By combining local and foreign professionals, we form the best teams in Singapore to create value together. This gives us that extra advantage to excel amidst intense global competition, and to create many more good jobs and career choices for Singaporeans.
- 138 We have in place a comprehensive foreign worker policy framework to allow companies to access a diverse pool of manpower. We continually review and adjust the key policy parameters in the framework and will introduce several changes. (See Annex C-4.)
- 139 First, we will update the framework for Employment Pass or EP holders. EP holders should be professionals and senior executives who can contribute to our economy, sharpen the skills of those they work with, and strengthen our workforce. To ensure that EP holders are of the right calibre, we adjust the minimum qualifying salary from time to time – because how much the employer is prepared to pay is a practical indicator of the quality of the EP holder.
- 140 We will aim to ensure that incoming EP holders are comparable in quality to the top one-third of our local PMET workforce (those with professional, managerial, executive and technical jobs).
- 141 Therefore, from September this year, the minimum qualifying salary for new EP applicants will be raised from the current $4,500 to $5,000. For the financial services sector, which has higher salary norms, this will be raised from the current $5,000 to $5,500. The qualifying salaries for older EP applicants, which increase progressively with age, will also be raised in tandem. For renewal applications, these changes will apply from September next year to give businesses sufficient time to adjust.
- 142 Beyond the qualifying salary, we will refine how we assess EP applications, to improve the complementarity and diversity of our foreign workforce, and also to increase certainty and transparency for businesses.
- 143 Likewise for S Pass holders, we have a minimum qualifying salary to ensure that those coming in are of the right quality.
- 144 We will aim for the S Pass holders to be comparable in quality to the top one-third of local Associate Professionals and Technicians. Similar to the EP framework, we will increase the qualifying salary for S Pass holders to achieve this, and we will do so in phases.
- 145 In the first step, we will raise the minimum qualifying salary for new S Pass applicants from the current $2,500 to $3,000 in September this year. We will also introduce a higher minimum qualifying salary of $3,500 for the financial services sector. The qualifying salaries for older S Pass holders will be raised in tandem.
- 146 Thereafter, the minimum qualifying salary for new S Pass applicants will be raised in September next year, and again in September 2025. The specific salary values will be announced closer to the implementation date, based on the prevailing local wages then. Similar to EP, the changes will apply to renewal applications one year later, to give businesses time to adjust.
- 147 In addition, we currently regulate the number of S Pass holders with sub-Dependency Ratio Ceilings and levies. To better manage the flow of S Pass holders, we will progressively raise the Tier 1 levy from the current $330 to $650 by 2025.
- 148 Finally, our work permit policies in the construction and process sectors will be adjusted, to spur greater productivity improvements and support more manpower-efficient solutions. This will help transform the sectors that have been more heavily dependent on foreign workers.
- 149 The Dependency Ratio Ceiling, or DRC, will be reduced from the current 1:7 to 1:5. The current Man-Year Entitlement (or MYE) framework will be replaced with a new levy framework that will encourage firms to support more offsite work and employ more higher-skilled work permit holders. To give companies time to prepare for the moves, these changes will take effect from 1 January 2024.
- 150 The Minister for Manpower will elaborate further on the foreign worker policy changes at the COS.
- 151 Sir, let me emphasise that Singapore will continue to stay open and welcome talent from around the world. The adjustments in our foreign worker policies apply mainly to the broad middle of the workforce. This is where we have Singaporeans doing the jobs, but we need to continually adjust our rules to ensure better complementarity between our foreign and local workforce. At the higher end of the workforce, where there are acute skills shortages, we will continue to bring in professionals with the right abilities to be part of Team Singapore.
- 152 Ultimately, our investments to develop stronger capabilities across our businesses and workforce reflect our mindset of continuous improvement. We must always strive to do better and achieve more. This will put us in good stead to meet the challenges of the future.