As much as the GDP of Singapore shrank to 5.4% in 2020; the government has taken a bold approach and put measures in place that are meant to spur growth and cushion businesses and workers from the impact of the prevailing economic changes. Here are some of the five key areas impacted by budget 2021;
The Funding of Large Local Businesses for Global Scaling
Singapore government has talked of helping the large local enterprises to scale globally by providing S$500 as growth capital. The funding capital is to be co-invested by Temasek Holdings which will then be matched by the government’s funds on a one-to-one basis. An amount of S$1 billion has been made available for investing in the large businesses.
The new platform for funding comes as the changes taking place in the global economic space have made it harder for the large local enterprises to attract private equity players. The government previously was focusing on aiding small and medium sized enterprises (SMEs) that have annual revenues of up to S$100 million.
New Launchpad Innovation
In order to encourage companies and drive innovative ideas, the government of Singapore announced of investing in a corporate venture launch pad which will be useful for the larger businesses that intend to stir up start-up mindset within their organizations. The minister of finance also added that a cloud based digital bench will be created to for its open innovation platform to help businesses further in gaining access to digital solutions alongside funding for prototype and the deployment of the innovative ideas.
With businesses innovating, the minister foresaw a rise of intellectual property and the intangible assets that businesses may need to commercialize and also protect their businesses. The government in response plans to unveil the Singapore Intellectual Property Strategy 2030 which is aimed at not only supporting businesses towards supporting such properties but also is aimed at training skilled professionals in the respective fields.
Extension of GST to Imported Low-Value Goods
While the minister of finance said that goods and service tax will not increase from 7% to 9% in the year 2021 due to the prevailing economic situation; he added that the tax will be extended to the low value goods especially the items that are valued at up to S$400 on goods imported via air or post. GST tax is designed to take effect from January 2023 onwards and is more likely to affect international purchases form eCommerce platforms.
GST will also affect the non-digital services for consumers such as counseling, fitness training and the tele-medicine services offered by overseas parties.
Adoption of Emerging Technologies
Singapore government is set to inject S$1 billion in the various sectors to help mature enterprises adapt well to the emerging technologies such as artificial intelligence, trust tech, and 5G. During the announcement for budget 2021, it was announced that the government will be launching a CTO-as-a-service initiative which is meant to provide businesses with access to digital solutions such as IT consultancies.
Support to sectors that are hardly hit
The government has taken drastic measures to support the sectors that have been badly hit by the covid-19 pandemics such as aviation, tourism, and aerospace in 2021. The government through budget 2021 is also committed to helping businesses in Singapore digitalize and also innovate as a way of building the country’s reputation as the global-Asia node.