Poll: Singapore Budget 2014 Lacks Measures to Reduce Business Costs

While an overwhelming 70 percent of C-level delegates attending a KPMG breakfast seminar early this week expressed satisfaction with the overall direction of Budget 2014, more than half, or 54 percent of respondents felt that the Budget did not sufficiently focus on rising business costs.


The seminar, organised by KPMG in Singapore to discuss the Budget announcement, was attended by about 80 invited guests from a broad range of businesses here.


Besides an audience poll to gauge the reactions of participants towards Budget 2014, a panel discussion was also conducted so that pertinent issues could be discussed in depth.


About 20 percent felt that not enough was being done to provide greater certainty and simplicity in the tax and regulatory environment.


“There are more than 100 tax incentives in Singapore, and many of them have conditions that are not straightforward. More can still be done to focus on creating certainty and accessibility to incentives, as this will help businesses plan their growth," says Tay Hong Beng, Head of Tax, KPMG in Singapore. “Simplifying the qualifying conditions for tax incentives can go a long way towards allowing businesses in Singapore to tap on available benefits.”


One of the panellists for the event, Kurt Wee, President of the Association of Small & Medium Enterprises said: “Local businesses are worried about the overall business cost environment and the lack of measures to help reduce or lower costs.


“Singapore is already helping businesses which are progressive and which are already on the bandwagon. There are no low-hanging fruits. Our concern is that high business costs might hinder a level of self-renewal. We are also not sure about the pace at which the smaller companies are being
squeezed out.”


Productivity and innovation
A majority – or about 70 percent – felt that measures to support innovation and skills were a highlight in this year’s budget.


In reference to other business-specific measures surrounding the Productivity and Innovation Credit (PIC) and the new PIC+ scheme, 58 percent admitted to using the PIC to defray operating expenses.


Thirty-nine percent of the delegates were of the opinion that while there were no measures aimed specifically at multinational companies, MNCs can also benefit from some of the existing and newly announced measures.


“Business costs are unlikely to come down soon because of rental costs and the push for a more progressive wage model,” said panellist Ms Selena Ling, the Chief Economist at OCBC Bank. “What is important is that investments and jobs must still come in, and that Singapore remains competitive. We cannot look at business costs alone, but also margins and the overall competitiveness of the Singapore economy.”


Panellist Sanjeev Agarwal, Chief Financial Officer for Singapore and South East Asia at Standard Chartered Bank added: “While business costs have gone up, Singapore is still very attractive as a business hub for multinational companies. I travel widely across the region, and I find that the authorities here are still more transparent and business-friendly.”


Commenting on what was missing in this year’s Budget, Tay said: “We are a little disappointed that there appeared little in the Budget aimed at encouraging companies to focus on growing their brand.”


“Hopefully there will be more targeted measures over the coming year to support Singapore companies in their pursuit of originality and value creation. Having stronger, local brands will make Singapore more competitive in the coming single market of the ASEAN Economic Community in 2015.”


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