D. Growing Our Economy And Equipping Our Workers


D. Growing Our Economy And Equipping Our Workers

  1. 60. Economic competition will get stiffer in this new era where countries compete for power and influence. Singapore will have to adapt quickly to these changes, to survive and prosper in a troubled world.

Building Capabilities and Anchoring Quality Investments

  1. 61. We will therefore redouble our efforts to attract high-quality investments. We will focus on growth sectors where we can be highly competitive. For example, we are a leading international financial centre in Asia. We are a global trading hub with strengths in transportation and logistics, anchored by our air and sea ports. We also have a vibrant manufacturing sector, supported by key segments like electronics, chemicals, and biomedical science.
  2. 62. These attributes and strengths will enable us to attract more MNEs to anchor their regional, or even their global operations and headquarters in Singapore. With more high-value activities and best-in-class facilities based here, we will be able to build new capabilities, develop key industries, and create good jobs for Singaporeans. We will also create spin-offs for our local enterprises as they serve the MNEs based here, plug into global networks, and eventually grow to become industry leaders in their own right.
  3. 63. But we must expect global competition for investments to get tougher. With the Base Erosion and Profit Shifting initiative, or BEPS 2.0, on the horizon, we will have less scope to use tax incentives to attract new investments. Meanwhile, the US and other countries are rolling out vast subsidies to build up their strategic industries. It will not be possible for us to outbid these countries with even bigger subsidies just to get their MNEs to invest here. But neither can we afford to be complacent, and simply take our competitive position for granted.
  4. 64. We will therefore have to work harder to enhance our overall productivity and workforce quality to stay competitive in this new environment. We currently have the National Productivity Fund, which supports a wide range of measures for productivity enhancement, and continuing education and training.
  5. 65. I will top up the National Productivity Fund with $4 billion, and expand the scope of the Fund to include investment promotion as a supportable activity. We will use the fund to anchor more quality investments here. This includes supporting companies to build new capabilities, add greater value to our domestic ecosystems, and upskill our workers. And ultimately, these efforts will lead to better-paying jobs for Singaporeans.

Nurturing and Sustaining Innovation

  1. 66. Besides anchoring investments and deepening capabilities, we must nurture and sustain pervasive innovation across the economy. We have to push new frontiers, and differentiate ourselves in quality and value.
  2. 67. This is why the Government has consistently committed resources to R&D.
    1. a. We are investing $25 billion from 2021 to 2025 to catalyse research, innovation, and enterprise.
    2. b. We are restructuring and raising our game, industry by industry, through the Industry Transformation Maps.
  3. 68. Our efforts are bearing fruit. But innovation is not without risk, which businesses may find difficult to undertake amidst slower growth and higher cost.
  4. 69. So to help our businesses press on with innovation, I will introduce a new Enterprise Innovation Scheme.
    1. a. This scheme will significantly enhance the tax deductions for five key activities in the innovation value chain:
      1. i. R&D conducted in Singapore;
      2. ii. Registration of intellectual property, including patents, trademarks, and designs;
      3. iii. Acquisition and licensing of intellectual property rights;
      4. iv. Innovation carried out with Polytechnics and ITE;
      5. v. And training via courses approved by SkillsFuture Singapore and aligned to the Skills Framework.
  5. 70. Today, businesses can enjoy tax deductions of up to 250% of qualifying expenditure on some of these activities. I will raise the tax deductions to 400% of qualifying expenditure on each of these five activities. The qualifying expenditure will be capped at $400,000 for each activity, except for innovation carried out with Polytechnics and ITE, for which the expenditure will be capped at $50,000. With these enhancements, businesses that make full use of the scheme could enjoy tax savings of nearly 70% of their investment.
  6. 71. Some firms have yet to turn profitable, or do not have sufficient profits to maximise the benefits from the tax deductions. To support these firms, I will allow businesses the option to convert 20% of their total qualifying expenditure per Year of Assessment into a cash payout of up to $20,000. This will help smaller firms defray the costs of their innovation activities, even if they pay little or no taxes. (See Annex D-1.)

Developing Local Enterprises

  1. 72. As our companies grow, we will support them in accessing capital to scale up and be globally competitive.
  2. 73. A key part of this effort is to strengthen our enterprise financing ecosystem, so that promising firms can tap on a wide range of private equity and venture capital funds, as well as financing from other financial institutions based here. The Government has also been mobilising investments in SMEs through Heliconia Capital, which deploys equity financing to SMEs and catalyses additional growth capital from the private sector.
    1. a. To date, we have committed $1 billion to this effort, and invested in about 60 Singapore-based companies. This has in turn catalysed around $2 billion of additional investments into these companies.
    2. b. The total revenue of this portfolio of companies has more than doubled after this investment, and over half of them have developed new capabilities or expanded beyond Singapore.
    3. c. Given the positive outcomes, I will set aside an additional $150 million via the SME Co-Investment Fund. We will use this to invest in promising SMEs, and we will also aim to catalyse an additional $300 million of private investments to support our SMEs.
  3. 74. We are also developing a healthy pipeline of enterprises with a strong track record of international success and the potential to move to the next level.
  4. 75. One example is Mooreast, which I visited recently. The company provides specialised anchor and mooring solutions for the offshore and marine, or the O&M, sector. We all know what a floating rig is; we do not always see what lies under a floating rig. But good design, engineering, and manufacturing capabilities are needed to customise mooring solutions for very different seabed and offshore conditions. And Mooreast, a homegrown company, is now one of the top three global players in this niche area. But it also recognises the long-term challenges of the O&M industry. And so the company is now diversifying and applying its capabilities in the offshore renewable energy market. It has already secured contracts to provide the anchors for offshore wind turbines in Japan and Europe. And there should be many more opportunities to come, with the growing global demand for offshore wind and other renewable energy projects. (See Annex D-2.)
  5. 76. We will do more to help promising companies like Mooreast grow into globally leading companies. In last year’s Budget, I introduced the Singapore Global Enterprises initiative to provide such companies with more dedicated and customised support. I will now set aside $1 billion to provide a further boost to this initiative.
    1. a. Promising companies will be offered specialised capability building programmes tailored to their needs. This could involve working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline.
    2. b. Enterprise Singapore will also support them to secure resources to execute their growth plans, and to build sustained research and innovation capabilities so they can strengthen their value proposition and stay competitive.
  6. 77. The Enterprise Innovation Scheme, the boost to the SME Co-Investment Fund, and the Singapore Global Enterprises initiative are part of a wider suite of government measures to help nurture and develop our enterprises. So I encourage all our companies, big and small, to make full use of these measures to innovate and grow.

Equipping and Empowering Our Workers

  1. 78. Ultimately, the value we create as an economy must benefit Singaporeans in the form of wage growth and job opportunities.
  2. 79. And this is why we have invested, and will continue to invest heavily in our people. Through SkillsFuture, we are providing strong support for both employers and individuals to invest in upskilling. The results so far have been encouraging. But we have to do more, and shift our efforts into higher gear, as we enter an era of greater volatility and economic disruptions.
  3. 80. As part of the Forward Singapore exercise, we are studying several policy moves to further strengthen our SkillsFuture ecosystem and to enhance support for displaced workers, and improve pathways to better jobs. In this Budget, I will focus on ensuring that training translates into good employment outcomes.
  4. 81. We all know that it is good to have more skills training. But training programmes can vary in quality. Some lead to recognised certifications, or help workers gain specialised skills that are sought after by industry. But others may not be so relevant to industry needs.
    1. a. Workers themselves may not know what training programmes to go for, or what competencies and skills they need to secure better jobs.
    2. b. Employers, especially amongst the SMEs, may also be unfamiliar with the training landscape, and often struggle to fill job vacancies despite available jobseeker pools.
  5. 82. There is therefore a need to develop labour market intermediaries who can work with industry, training, and employment facilitation partners to optimise training and job placement. So we will appoint and equip Jobs-Skills Integrators to do this work. The Integrators can be existing institutions. But they will have new responsibilities and outcomes to deliver.
    1. a. For example, the Jobs-Skills Integrators will have to engage enterprises to understand the manpower and skills gap in the industry.
    2. b. They will have to work with training providers to update existing training programmes, or develop new ones that will close the skills gap.
    3. c. They will also have to work closely with employment facilitation agencies, get buy-in from industry partners and unions, and identify individuals with the right aptitude and fit for training. Most importantly, they must ensure that training translates into better employment and earnings prospects.
  6. 83. We will pilot the Jobs-Skills Integrators in the Precision Engineering, Retail, and Wholesale Trade sectors, where there are higher concentrations of mature workers and SMEs. And the Minister for Education will share more about this at the COS.
  7. 84. We will also continue to provide additional employment support for senior workers who wish to continue working.
    1. a. We have made several moves in this area, for example raising the retirement and re-employment ages, providing wage support through the Senior Employment Credit, and supporting employers who offer part-time work. Many seniors have benefited from these schemes.
    2. b. One example is Mr Rahmat Hamid, who is 62 this year. He retired after nearly 40 years in the hotel and F&B industries, as his children were all grown up. But he soon found that he wanted to continue working, and importantly, to contribute to society. He tried out initially as a security officer, but decided he really wanted to do something to help the elderly. So he applied for a job as a cleaner at All Saints Home, which is a senior daycare facility. And When All Saints Home saw that Mr Rahmat had valuable people management skills, they offered him a role instead as a community care associate, different from what he had applied for. This is a much better fit for Mr Rahmat. He is now able to put his skills to good use, and he continues to learn new skills to interact with and take care of his clients. (See Annex D-2.)
  8. 85. We want to encourage and support employers who recognise the value that seniors like Mr Rahmat offer, invest in them, and enable them to keep earning a good living. I will therefore extend the Senior Employment Credit till 2025, to continue providing wage offsets to employers that hire senior workers. I will also extend the Part-time Re-employment Grant till 2025, to encourage employers to offer part-time re-employment, other flexible work arrangements, and structured career planning to senior workers. The Minister for Manpower will share more details at the COS.
  9. 86. At the same time, we will continue to help lower-wage workers achieve better career progression and wages.
    1. a. We made several major moves last year: we expanded the Progressive Wage Model to more sectors and occupations, and we required companies that employ foreign workers to pay all local employees at least the Local Qualifying Salary.
    2. b. Taken together, these moves cover the vast majority of lower-wage workers, and will help to uplift their wages.
  10. 87. To provide transitional support for businesses, I introduced the Progressive Wage Credit Scheme, or PWCS, at last year’s Budget. And last June, I raised the Government’s co-funding share for the 2022 PWCS. I will maintain the increase for this year, and top up the PWCS fund by $2.4 billion for this purpose. (See Annex D-3.)
  11. 88. I will also do more for specific groups of workers who may need more help to secure employment. To support employers to hire persons with disabilities, or PwDs, I will enhance the Enabling Employment Credit to cover a larger proportion of wages and a longer duration for PwDs who have not been working for at least six months.
  12. 89. We know many PwDs want to work, and if given the chance, have valuable skills to offer. As a society, we should give them the opportunity to do so.
  13. 90. I will also introduce a new Uplifting Employment Credit in the form of a time-limited wage offset to encourage firms to employ ex-offenders.
  14. 91. More details on these schemes will be shared by the Minister for Manpower at the COS, and we will review the outcomes in 2025.
  15. 92. In the end, financial incentives are just one way we support PwDs and ex-offenders. We also need dedicated efforts on the ground, through organisations like SG Enable, Yellow Ribbon Singapore, and their community partners, as well as close cooperation with employers to provide meaningful job opportunities for PwDs and ex-offenders.
  16. 93. The moves I have outlined represent a major investment in our enterprises and people – from SMEs to large companies, and workers across various life stages and different forms of employment. We are doing all this so that our workers and businesses can be well prepared for the future, with all its uncertainties, challenges, and opportunities.
  17. 94. I encourage employers and workers to make the most of the support that the Government is offering. Upgrade your businesses. Invest in innovation and training. Reskill and upskill to stay competitive and seize new opportunities. This is how we will continue to achieve quality growth in an economy that works for all.