Budget 2019 – Challenges Facing Singapore’s Economy And How SMEs And Workers Can Prepare For Them
The world is changing, and three big shifts, in particular, will make their effects felt more clearly in the coming years. Many people may look at global events but do not really understand the impact it could have on us. Here we examine several challenges facing our economy, and more importantly, how we can all work to prepare and overcome these developments.
The first of these shifts is the continuing trade friction between the US and China, which is raising geopolitical uncertainty. As a small nation reliant on international trade, Singapore will feel any shockwaves significantly, and relatively quickly.
Protectionism is also trending up, with societies in many of the world’s most powerful nations starting to show declining support for globalisation. What is the impact on a small, open economy like Singapore that depends heavily on free trade?
On the bright side, the countries in the region are growing and brimming with opportunities – with the ASEAN economy projected to become the fourth largest in the world by 2030, with a rapidly growing middle class.
We’ve done well so far, but we need to stay adaptable
Despite the moodiness some may have felt at the start of 2018, it turns out Singapore’s economy did better than expected, with a good 3.2% growth.
A growing economy means that most of us can look forward to earning more. Over the past five years, the real median income of Singaporeans has grown by 3.6% per year.
That is why keeping the economy vibrant and innovative is key, and we have to continue pushing ahead with necessary restructuring and transformation, ensuring that our businesses and workers stay competitive.
Simply put, as individuals and business owners, that means we need to be prepared for change and be adaptable.
With so many initiatives announced in each year’s Budget, we do not have to look hard and far for support and resources that can help us meet both future challenges and opportunities.
Here’s how we need to grow and adapt in 2019
Budget 2019 highlighted different ways where our government will give a boost to support industry transformation, focusing on SMEs, on workers, and on forging partnerships.
Turning our openness into an advantage
Singapore is small, and that is a fact. But beyond our physical size lies our strengths of openness and connectivity.
Since the early days of independence, we have looked globally to attract innovation and entrepreneurial resources to grow our economy. Our modern day success has roots in our air hub and sea port (anyone remember our old Social Studies textbooks?).
In the next few decades, as ASEAN continues to grow, local SMEs can ride their wave of growth to scale and take advantage of newer and bigger markets outside of Singapore.
And the government is helping SMEs to grow, scale up and venture overseas by providing customised assistance, better financing options and technological adoption. Here are some of the programmes designed in view of these goals:
- Scale-up SG – Aims to help businesses grow and reach out to overseas markets.
- Innovation Agents programme – Gives businesses access to experienced industry experts who can help them in their plans for innovation and commercialisation.
- SME Co-investment Fund III – $100 million pumped into the private sector funding to help SMEs scale up.
- SMEs Go Digital Programme – This expands the Industry Digital Plans to more sectors and offers more choices in order to enable businesses to better leverage digital technology.
Staying ahead of rapid changes
At the centre of our businesses are our people. And Singapore continues to invest heavily in education, jobs and skills training to help individuals realise their potential, seize opportunities and acquire deep capabilities. So expect to see more initiatives aimed at helping workers do just that, such as the following:
– Global Ready Talent Programme (GRTP)
This programme offers support for students who wish to undertake local and overseas internships, as well as young working adults who wish to get overseas job experience.
When students take up internships under the GRTP, whether with a local company or an overseas one, they will receive a monthly stipend as well as, for those who do their internship abroad, an overseas allowance.
For young working adults with up to three years of working experience, the GRTP aims to help them take up overseas job postings. Employers will receive funding support to defray the cost of sending these employees overseas.
– Enhanced Workfare Income Supplement (WIS)
The scheme supplements the incomes and CPF savings of low income workers aged 35 and above.
With higher annual payout and increase in monthly income cap from $2,000 to $2,300, almost 440,000 Singaporeans will benefit from greater wage support from Jan 2020. The maximum amount a worker can receive will now be $4,000 a year rather than the current $3,600 a year. The exact amount a worker receives depends on age and income.
– Special Employment Credit and Additional Special Employment Credit
Aimed at encouraging employers to hire older low-wage workers earning up to $4,000 a month, this scheme will be extended to 31 Dec 2020.
This way, more older workers can look forward to being employed, allowing them to not only earn more but to save more for their retirement.
Strength in numbers
Besides nurturing nimble workers and building strong companies, individual businesses can do more collectively by teaming up with trusted local and overseas partners.
Apart from strengthening governmental support for Trade Association and Chambers through the Local Enterprise and Association Development (LEAD) programme to help our businesses solve challenges, exploit new opportunities and gain access to international markets, Finance Minister Heng also announced plans to position Singapore as a Global-Asia Node of Technology, Innovation and Enterprise.
Here are some initiatives to look out for:
- Singapore Week of Innovation and Technology (SWITCH) and Singapore Fintech Festival (SFF) – Brings start-ups, investors and innovators together to explore and collaborate in technology innovation.
- Centres of Innovation in Aquaculture and Energy – Set up to create and drive opportunities in the food supply and energy sectors.
Just keep swimming….
With faster and deeper changes ahead, from a few Budgets ago, the government has already signalled the need for Singapore to embark on the important transformation journey to innovate and internationalise.
While our businesses and Singaporeans have been making their mark in various fields, changing external forces will continue to shape our future. So we must each play our part to continue to reposition ourselves and become more outward-looking.
As long as we stay relevant and useful to the world, we should be able to take advantage of new opportunities, and even create new ones.
Do you have any questions about the initiatives mentioned above? Ask away in the comments!