Singapore Budget 2013: Essentials that startups should know about
February 25, 2013 by Terence LEE
The Singapore government has earlier today announced the Budget 2013, essentially the government’s vision for how it will allocate its money. This year’s Budget has several focus areas: lowering dependency on foreign workers, raising work productivity, ramping up investments in sports, arts, and innovation, and making Singapore a more sane city to live in for families and seniors.
Singapore’s tech startups should definitely watch this Budget and subsequent announcements closely. To make your task easier, here are the highlights:
Lowering companies’ reliance on foreign workers
The government has stipulated that the Dependency Ratio Ceiling will be cut further. What this means is that the allowable ratio for locals and foreign workers will continue to shift in favor of Singaporeans. In the services sector, the DRC will be reduced by 5 percent to 40 percent.
Finance Minister Tharman Shanmugaratnam has said that selected industries, which had significant growth in foreign workers and productivity levels well below international levels, will be affected most. He adds that the services industry will be the most impacted.
Levies on foreign manpower for all sectors will be increased, with the bulk of it going towards foreign worker dependent industries. The levies will go up in July 2014 and July 1015.
The government will also make it more difficult for foreign workers to get the S Pass, which apply to mid-level talent. Qualifying monthly salary will be upped to SGD 2,200 (USD 1,800) from SGD 2,000. A tiered salary system based on age and qualification will be introduced, where older and more experienced S Pass applicants would only qualify at higher salaries.
Encouraging productivity and innovation in the Singapore economy
To help companies reduce reliance on foreign workers, the government will be introducing a 3-year transitional support program to help them cope.
This Transition Support Package includes the following:
- Wage Credit Scheme: The government will co-fund 40 percent of wage increases for Singaporean employees over the next 3 years, at a cost of SGD 3.6B (USD 2.9B). This scheme will apply to salary increments for Singaproeans workers up to a gross monthly wage of SGD 4,000 (SGD 32,00). There is no need to apply for this scheme, as the funds will be automatically paid out to employers.
- PIC Bonus: The government has a Productivity and Innovation Credit scheme in place that rewards companies for investing in productivity, up to 400 percent tax deduction or 60 percent cash payout. Only companies with at least 3 local employees may apply for the cash payout. In this Budget, the government is introducing a PIC Bonus, which invests a minimum co-matching of SGD 5,000 per year of assessment for qualifying expenditure, up to SGD 15,000 over three years.
- Corporate Income Tax rebate: It will be at 30 percent of tax payable up to SGD 30,000 per year of assessment. The program will last for three years.
- SME Talent Programme: This scheme is designed to encourage students of polytechnics and Institutes of Technical Education to work for SMEs.
In addition to these measures, the Finance minister also announced a Future of Manufacturing plan in which the Economic Development Board will devote SGD 500M (USD 404M) to over the next five years.
Thoughts on the Budget? Comment below or write to us and if we like it, we’ll feature your comments in a follow-up article.
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About The Author
Terence LEE - Editor
Terence writes mainly about technology trends and startups in Asia. He believes in crafting smart content: Not just a regurgitation of text, but well thought-out pieces that serve the reader using a combination of data, design, narratives, analysis, and visual impact. His articles have been published on Venturebeat, Yahoo!, Straits Times, Today, and The Online Citizen. He also co-founded NewNation.sg, a satirical news site covering Singapore affairs. Engage him on LinkedIn and Twitter.Read other posts by Terence LEE