Against a backdrop of the COVID-19 outbreak and broader global economic uncertainties, Singapore’s new budget aims to tackle the new decade with innovation.
Deputy Prime Minister and Minister for Finance Heng Swee Keat delivered the Singapore Government’s Budget Statement for Financial Year 2020 in Parliament on 18 February 2020.
Presented against a backdrop of the ongoing COVID-19 outbreak, as well as broader uncertainties in the global economic landscape, Budget 2020 outlines a strategic financial plan to prepare Singapore and Singaporeans to seize new opportunities amid short-term uncertainties and longer-term structural changes, by:
- Growing the economy and transforming enterprises
- Caring for and nurturing Singaporeans at every stage of their lives
- Building and securing the nation
- Working together with Singaporeans
Long-term structural shifts are taking place around the world – a decline in support for globalisation, a shift in economic weight towards Asia, technological disruption, and an ageing population in many countries.
The Singapore government’s immediate concern is to protect Singaporeans from the risk of a further spread of the COVID-19 virus. S$800 million will be set aside for the Ministry of Health and other ministries to respond to this outbreak.
Concurrently, there are concerns about the economy and jobs. A S$4 billion Stabilisation and Support Package will help workers and enterprises weather near-term economic uncertainties. The government will introduce a Jobs Support Scheme to provide wage support to enterprises that retain local workers, and enhance the Wage Credit Scheme to help enterprises with the cost of wage increases.
A corporate income tax rebate for YA 2020 will also be granted, together with other measures to help enterprises with their cashflow.
Back in 2018, the Singapore government announced plans to raise the Goods and Services Tax (GST) rate some time from 2021 to 2025. After reviewing its revenue and expenditure projections, and considering the current state of the economy, the planned GST rate increase will not take effect in 2021. However, when the GST rate is raised, the government will provide a S$6 billion Assurance Package to cushion the increase for all Singaporeans.
“Budget 2020 is a welcome relief for local businesses,” said Khor Chern Chuen, Chief Operating Officer, SAP South East Asia. “While measures appear to provide short- to medium-term relief, they give businesses the opportunity to recalibrate and scale up for an uncertain decade ahead.”
“The economic challenges we face in the first quarter of 2020 have disrupted supply chains, cashflows and the forward planning capabilities for businesses across most industries here.” To overcome this, he believes that businesses in Singapore need to harness Budget 2020 to accelerate digital transformation “because innovation is the most effective strategy for hedging against volatility in the global economy.”
He explained: “In Singapore, we have the advantage of an open economy that sits on the axis of the global economy – this makes us an attractive test bed for disruptive ventures. Coupled with the fact that Singapore is a leader in adopting emerging technologies such as AI and 5G, 2020 is the watershed moment for local businesses to transform for the future.”
By placing digital technologies at the core of what they do, Singapore enterprises will be able to innovate with speed and agility, aligning themselves with the ever-changing business environment. To this end, SAP is committed to partnering Singapore in accelerating digital transformation for businesses in Singapore.
For example, the Leonardo Center and SAP.iO Foundry have been set up to strengthen the country’s innovation ecosystem, by fostering a collaborative environment for businesses, start-ups and SMEs to experiment with emerging technologies – so they can better deliver clear and concise business outcomes that will help them succeed in the new digital paradigm.
On the talent front, Khor said: “Together with the five polytechnics in Singapore, we launched the SAP Skills University Singapore in 2018, with the objective of equipping mid-career professionals with critical digital skillsets that is helping local businesses harness technology to drive better business outcomes.”
“The year ahead will continue to be fraught with uncertainties, but if businesses can heed the clarion call of Budget 2020 to strengthen their digital capabilities, they will be poised to reap the economic benefits of the digital decades ahead,” he concluded.
Good step forward
“In view of the uncertainties around the global economy and hits to business sentiment, the announcements made are a good step forward to combat and mitigate any negative fall-out,” said Leslie Ong, Country Manager, Southeast Asia, Tableau Software.
“The strong relief packages provide support for both households and businesses as they counter the downturn from Covid-19, and forward-looking initiatives – like the SkillsFuture top-ups and Mid-Career Support Package – reinforce the need for essential support to help both the current and future generation of the workforce prepare for the future of work. After all, it is imperative for Singapore to continue leveraging its workforce as its most valuable and resilient asset, and invest in building a highly-skilled and competent workforce that is future-ready.”
Ong believes 2020 is bringing to light the inflection point organisations are at: they are investing heavily in technology and transformation efforts, but the workforce is still playing catch-up. “New Budget measures, such as the SkillsFuture Enterprise Credit, which encourages employers to transform their workforce through job redesign and skills training, illustrate how crucial it is for organisations across the board to capitalise on their workforce. At the same time, with the SkillsFuture top-ups expiring in five years, there is an impetus for employees to take charge of their skills development now.”
He added: “Ultimately, collaboration is central to this strategy, where there must be a concerted effort across the government, enterprises and individuals themselves, to equip the workforce with the skills they need to succeed and ensure Singapore’s continued progress in the long term.”
Committing to the digital economy
As Singapore grapples with a labor crunch, local businesses should also look at implementing technological solutions that improve the efficiency and productivity of their workers, said Lim Fang How, Regional Director for Southeast Asia, Zebra Technologies. Up to 68% of organizations surveyed in Zebra’s Warehousing Asia Pacific Vision Study cited labor efficiency and productivity among their top challenges.
“The measures announced at Budget such as the Enterprise Grow Package – which aims to help enterprises innovate, adopt digital technologies and enter new markets – is a commendable effort by the government to help local businesses gain competitive edge to contest abroad,” said Lim.
“Additionally, the introduction of easy-to-use technology translates to faster onboarding for staff which reduces the time and effort needed for reskilling and training. It also eliminates the need for costly and risky upgrades and backend changes that may disrupt operations.”
He added: “The Singapore government has introduced a slew of initiatives and pledged to invest S$19 billion into research and development (R&D) efforts, under its new Research, Innovation and Enterprise (RIE) 2020 plan, as it seeks to achieve its smart nation ambition. While it is encouraging to see resources being put into spurring innovation through technology, it is equally important to ensure that investments are made in the right technology, that can help businesses make data-driven decisions swiftly and accurately.”
Gaps in digital security
Claribel Chai, Country Manager, Singapore, Palo Alto Networks, said: “The government’s commitment to Singapore’s cyber and data security capabilities and the safeguarding of its critical information infrastructure systems (CIIs), despite COVID-19 and current economic uncertainty, is a reflection of Singapore’s foresight and regional leadership when it comes to digitalization.”
As more of the island-state’s public and private infrastructures go online and into the cloud, there is a greater need to examine its approach to designing CIIs and keeping them safe. “In fact, during challenging times, it has been observed that threat actors may often make use of public panic and disinformation to target users in order to steal security credentials or introduce malware. Hence, these additional resources from the budget will provide much-needed support to monitor industry systems such as those vital to the energy, water, telecommunications and transportation sectors and detect potential attacks.”
However, she pointed out some possible gaps: “While infrastructure owners understand the significance of information confidentiality with the introduction of the Personal Data Protection Act in recent years, the other two principles of information security – integrity and availability – are often overlooked. We hope that these areas continue to be addressed promptly with the continued support from the Budget resources as more public services move towards industry 4.0 technologies and rely on accurate yet secure data.”
Chai cautioned: “If we are to realize the full potential of Singapore’s digital economy, we must recognize cybersecurity as a shared responsibility and CII owners have to cultivate a preventive security posture that lives and breathes security to guard against ever-evolving cyberthreats. As we enter the next level of cybersecurity, infrastructure owners must move away from a compliance-driven approach and relook the way they secure and protect their CII systems by embracing automation and machine learning.”