What to look out for by businesses in Budget Speech 2009

Tomorrow, the Minister for Finance, Mr. Tharman Shanmugaratnam, will deliver the Budget Speech for the Financial Year 2009 in Parliament at 3:30pm. Unlike the past budget speech which is delivered in the month of March of that year, this budget speech came early in the midst of a global financial crisis. In the past few days before the budget, there are already suggestions that our government may dip into our reserves to deal with the current financial downturn (and perhaps the worst of our times) and even the possibility of a minimum wage law to support labour. What should an entrepreneur expect in such times? Here are some of the possiblities which might happen:

• Tax Rebates for Businesses: Singapore is known to be pro-businesses. In order not to cause further unemployment, the government might decide to lower corporate taxes. In that way, the companies will not make so much retrenchments to cut costs. Of course, particularly in the manufacturing sector, the NTUC are doing their part to help retrenched workers to get retraining and at the same time, trying to get companies to give flexible wage cuts but not retrench workers in such difficult times. Perhaps, in the tech business which is going to be hit the hardest, there will be rebates and grants to aid research and product development purposes. Such schemes are already available. So be sure to tune in about this and you will be hearing SPRING a lot in the speech.
• Possible Minimum Wage Law?: Although the idea is floated, the government has rejected this with the official reason that it does not encourage competitiveness. However, desperate times call for desperate measures. In order to help the workers in the lower income range to tide over such times and to ensure that the employers do not exploit labour, a minimum wage law might just pop up. Even that is the case, I doubt that it will surface in this speech.
• Grants for Innovative and High Tech Sector: In order to ensure long term stability of our economy which is transitioning towards a knowledge based one, the budget will provide grants for those who venture in the technology sector, mainly in three dominant areas that the National Research Foundation and A-STAR has ear-marked namely – biomedical sciences, interactive digital media and renewable energy and water technologies.
• Financial handouts for Singaporeans: The government will dispense funds in a proportional manner to the different income levels like the Progress packages in the past. That will help to ease the rising costs of living and make things better. With so much rumours about dipping into the reserves, the question will be how much the handouts will be.
• Encourage banks to lend out money to businesses: Currently, due to the global financial climate, the banks are not helping matters by not providing loans for businesses in the realm of growth and sustainability. It is likely that the government will introduce policies in this budget speech that will guarantee loans and ensure that the banks are not subjected to too much risk in lending out money.
• Interest Rate and Exchange Rates change?: To encourage banks to lend and the businesses to borrow, the interest rate is required to be adjusted. The question is how much so that the banks won’t make a loss and the businesses will consider borrowing. As for the exchange rate, it is likely that the government will let the market to make the adjustments or if needed, they will buy up more of the currency.

This coming budget will be an interesting one in the midst of such challenging and difficult times. Of course, the key is to know how it can help to make your businesses survive in such adversity and create new opportunities in the process.

Photo of Parliament House by edwin.11.

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