SG Budget 2023 – Forging resilience in an increasingly uncertain and polarised world

The Singapore Budget announced by Deputy Prime Minister Lawrence Wong on 14 February 2023 was designed to assuage the anxiety of many Singaporeans over rising costs and housing, and maintain Singapore’s competitive advantage in an increasingly uncertain and polarised world.

For the year ahead, the Singapore government has outlined several challenges that will affect the country’s economic trajectory, as well as corresponding measures to address the challenges. Global inflation could remain elevated due to higher costs as countries, driven by geopolitical polarisation, prioritise diversification and strategic resilience. Unevenness in global economic growth, where the US and EU might see slower growth while Asia is expected to grow with the reopening of China playing a major role in boosting global economy. 

The schemes announced in this Budget to support businesses reflect a continuation of many broad policies that are already being implemented, especially around innovation and upskilling. However, it is also evident that the government is refining or giving more emphasis for certain policies after taking into consideration the evolving global conditions.

Productivity – a recurring challenge

The government is doubling down on driving productivity to maintain the competitive edge of Singapore and safeguard the livelihoods of workers. Rising productivity as a government priority is not new. Minister Tharman Shanmugaratnam, during his time as Finance Minister, also made productivity a key thrust of his Budget speech in 2010 and attention on Singapore’s productivity growth continued well into mid-2010s.

In this latest Budget, the government has committed resources to prioritise both innovation and upskilling to enhance the country’s overall productivity and workforce quality. SGD 4 billion will be added to the National Productivity Fund, which provides grants for companies to invest in productivity, training and further education, and will now be expanded to include investment promotion.

Under a new Enterprise Innovation Scheme, the government has increased the qualifying expenditure cap for businesses to receive larger tax deductions of up to 400 per cent, for five key activities in the innovation value chain including R&D conducted in Singapore, registration of intellectual property (IP), acquisition and licensing of IP rights, innovation with polytechnics and training under SkillsFuture.

The new scheme signalled the government’s clear intent to reward companies for specific innovation activities that help entrench Singapore’s competitiveness and position as the region’s IP hub.

Championing Singapore in a new era of internationalism

Budget 2023 signals Singapore’s manoeuvre into a new era of internationalism even as superpowers of the world are looking inwards. The government has channelled investments in SMEs through venture capital funds to encourage more Singaporean firms to scale up and be globally competitive.

Budget 2023 announced an additional SGD 150 million via the SME Co-Investment Fund that will be invested in promising SMEs. The government also aim to catalyse an additional SGD 300 million of private investments to support Singaporean SMEs. A further SGD 1 billion will also be set aside to boost the Singapore Global Enterprise initiative that provide companies going abroad with more dedicated and customised support. 

The journey to internationalise Singaporean SMEs will require promising companies to be offered specialised capability programmes tailored to their needs. The government recognised that SMEs would need to work with experts to strengthen the core leadership team and accelerate their internationalisation plans. 

As Singapore companies take advantage of the government’s support to internationalise, it is key that companies quickly learn to differentiate themselves and profile their strengths in international markets. The Singapore brand remains strong abroad and can help Singapore SMEs gain trust with their target audiences if articulated well. Proper corporate profiling as part of any firm’s market entry strategy would be the difference between success or failure.

More details of the plans outlined in the Singapore Budget 2023 will be shared at an upcoming Committee of Supply debate.

How will your company benefit from the new and extended schemes announced in Budget 2023? Will your company be taking up the challenge of internationalising in 2023? These are issues companies will need to carefully consider in 2023, to ensure they build the appropriate business and communication strategies to deliver success.

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