Help is at hand: Budget 2022 offers SMEs one-off cash support, government risk-share loans, salary support, productivity boosts, digitalization initiatives and help with reskilling workers. Infographic: Lina Tay; photo credit: Unsplash
Budget 2022 was delivered on 18th February 2022 by Finance Minister Lawrence Wong, who took over the reins from Deputy Prime Minister Heng Swee Keat, who in turn delivered Budget 2021 .
It focuses on how Singapore can chart a new way forward together in the face of the ongoing pandemic, cautious optimism and rising inflation.
Here are key points that SME owners need to take note of.
The $500 million Jobs and Business Support Package comprises the Small Business Recovery Grant and Jobs Growth Incentive.
The Small Business Recovery Grant offers a one-off cash support to businesses that were most impacted by the Safe Management Measures imposed as a result of COVID-19.
Eligible firms will receive S$1,000 for each local employee with mandatory CPF contributions in the period from 1st November 2021 to 31st December 2021, up to a cap of S$10,000 per firm.
Sole proprietorships and partnerships that are run by at least one local business owner without any local employees will receive a flat payout of S$1,000, if the local business owner is earning a net trade income of no more than S$100,000, filed with IRAS in the Year of Assessment 2021 by 31st December 2021.
Sectors that qualify for the support include:
Read about the qualifying criteria here or go here for more details.
The Jobs Growth Incentive (JGI) provides salary support for employers to expand local hiring from September 2020 to March 2022 (inclusive).
The scheme has been extended for another six months to September 2022, with stepped-down rates in lieu of the improved labour market conditions.
The extension only applies to mature workers aged 40 and above who have not been employed for six months or more, persons with disabilities, and ex-offenders.
The Temporary Bridging Loan Programme (TBLP) has been extended to another six months until 30th September 2022, albeit with revised terms.
The maximum loan quantum for the TBLP is now S$1 million per borrower, and S$20 million per borrower group. The maximum repayment period is still 5 years, and the government risk-share percentage remains at 70%. However, the interest rate is now 5.5%, from 5% previously.
The Enterprise Financing Scheme – Trade Loan (EFS-TL) will also be extended to 30th September 2022 with revised parameters – S$5 million per borrower, S$20 million per borrower group, maximum repayment period of 1 year and the risk-share percentage at 70%, then 50% after 30th September 2022.
The Enterprise Financing Scheme – Project Loan (EFS-PL) will be extended for another year to 31st March 2023 to support construction enterprises in fulfilling their domestic projects.
The maximum loan quantum will be S$30 million per borrower or per borrower group for domestic projects, with a maximum repayment period of 15 years, and government risk-share percentage at 50%, and 70% for young enterprises.
Young enterprises are firms formed within the past 5 years with at least one employee, and more than 50% equity owned by individuals.
The Enterprise Financing Scheme – Merger & Acquisition Loan (EFS-M&A), which supports Singapore-based enterprises’ acquisition of overseas or local enterprises, will be enhanced for four years, from 1st April 2022 to 31st March 2026.
The maximum loan quantum will be S$50 million per borrower or borrower group, with a maximum repayment period of 5 years, and government risk-share percentage at 50%, and 70% for young enterprises.
Firms can get support for adoption of cutting-edge digital solutions through the Infocomm Media Development Authority (IMDA)’s Advanced Digital Solutions (ADS) initiative, which was first launched in 2020 to promote the adoption of advanced integrated solutions such as robotics, Internet of Things, and other technologies.
From 1st April 2022, the scheme will be expanded to include solutions that leverage Artificial Intelligence (AI) and cloud technologies. Participating enterprises will receive up to 70% funding support for these solutions.
From 1st April 2022, the existing Grow Digital scheme will be expanded to include more pre-approved digital platforms, so that more businesses can expand internationally without requiring an in-market presence. Participating enterprises will receive up to 70% funding support.
Employers that are eligible for the SkillsFuture Enterprise Credit (SFEC) will receive a one-off credit of up to $10,000 to cover up to 90% of out-of-pocket expenses for programmes such as Enterprise Development Grant, Productivity Solutions Grant, and various workforce transformation programmes.
Of the $10,000 credit for an eligible employer, $3,000 is ringfenced for workforce transformation initiatives. The SFEC eligibility criteria have been adjusted to expand the coverage of SFEC for the qualifying period from 1st January 2021 to 31st December 2021. The minimum Skills Development Levy (SDL) contribution will be waived over the qualifying period.
Newly eligible employers will be notified in April 2022. The deadline to claim the credit for all employers (including those that previously qualified) will be extended by one year to 30th June 2024.
SMEs can make use of the Productivity Solutions Grant (PSG) to implement digital and automation solutions.
Around $600 million will be set aside to expand the range of available solutions under the PSG and push for greater take up of productivity solutions by SMEs.
To help larger local enterprises scale up and invest in overseas markets, a new initiative called Singapore Global Enterprises will provide help in innovation, internationalization and partnership fostering to promising local enterprises.
To attract talent, a new Singapore Global Executive Programme will be launched to help SMEs attract and nurture talents through industry and overseas attachments, mentorships and peer support networks.
To ensure companies have access to a diverse pool of manpower, from September 2022, the minimum qualifying salary for new Employment Pass (EP) applicants will be raised from the current $4,500 to $5,000.
For the financial services sector, this will be raised from the current $5,000 to $5,500. Qualifying salaries for older EP applicants will also be raised in tandem. For renewal applications, these changes will apply from September next year.
The minimum qualifying salary for new Special (S) Pass applicants will be raised from the current $2,500 to $3,000 in September 2022. A higher minimum qualifying salary of $3,500 will apply for the financial services sector. The qualifying salaries for older S Pass holders will also be raised in tandem.
The minimum qualifying salary for new S Pass applicants will be raised in September next year, and again in September 2025.
The Tier-1 levy for S Pass applicants will be progressively increased from the current $330 to $650 by 2025.
The work permit policies in the construction and process sectors will be adjusted to help transform sectors that have been heavily dependent on foreign workers.
The Dependency Ratio Ceiling (DRC) will be reduced from the current 1:7 to 1:5. The current Man-Year Entitlement (MYE) framework will be replaced with a new levy framework to encourage firms to employ more higher-skilled work permit holders.
These changes will take effect from 1st January 2024.
To achieve Singapore’s aim of having net zero emissions by 2050, businesses and individuals need to take into account the costs of carbon, and act to moderate their emissions.
The carbon tax will be raised to $25 per tonne in 2024 and 2025, and $45 per tonne in 2026 and 2027, with a view to reaching $50 to $80 per tonne by 2030.
The current tax of $5 per tonne will remain unchanged until 2023. Subsequent increases will be announced ahead of time to provide certainty for businesses.
No additional carbon tax will be charged on the use of petrol, diesel and compressed natural gas as these already have excise duties.
Over the next two years, the Progressive Wage Model will be extended to the retail, food services, and waste management sectors; and apply to in-house cleaners, security officers, landscape workers, administrators, and drivers across all sectors.
Companies employing foreign workers must pay all their local employees at least the Local Qualifying Salary, which is currently $1,400 per month.
A Progressive Wage Mark (PW Mark) will be launched to accredit firms that pay Progressive Wages and the Local Qualifying Salary. All eligible suppliers must be accredited with the PW Mark when they contract with the government from March 2023.
The government will co-fund the wage increases of lower-wage workers between 2022 and 2026 under the Progressive Wage Credit Scheme (PWCS) to support businesses.
For workers earning up to $2,500, the PWCS co-funding rate will be 50% in the first two years, 30% in the next two years, before tapering to 15% in 2026. Support will also be given to workers earning above $2,500 and up to $3,000, at a lower co-funding ratio.
This increase will take place in 2023, and provide employers with a similar offset. This means that workers aged 55 to 70 will see a total increase of three to four percentage points in their CPF contribution rates over these two years.
The CPF Basic Retirement Sum (BRS), which provides members with higher monthly CPF payouts in their retirement years, will be raised by 3.5% per year for the next five cohorts turning 55 from 2023 to 2027.
The first increase will take place on 1st January 2023, from 7% to 8%, and the second increase on 1st January 2024 from 8% to 9%.
Need some help in figuring out how your business can leverage on these loans and initiatives? Contact the SME Centres for some helpful insight.
The SME Centres help more than 25,000 businesses yearly through the one-to-one business advisory, capability workshops and group-based upgrading projects provided by their Business Advisors.
There are various SME Centres located islandwide, so get started now!
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Belinda loves thinking about random stuff, and collecting useless bits of facts and trivia. She often roots for the underdog, and believes the world needs more happy endings.
