Singapore, 26 February 2014
|Lack of measures to reduce business costs and simplify the tax environment remain key concerns
An overwhelming 70 percent of C-level delegates attending a KPMG breakfast seminar yesterday expressed satisfaction with the overall direction of Budget 2014.
In particular, a majority – or about 70 percent – felt that measures to support innovation and skills were a highlight in this year’s budget.
This 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.
Mr Tay Hong Beng, Head of Tax, KPMG in Singapore said: "Delegates were mostly in agreement that Budget 2014 is an uplifting one that offers Singaporeans hope for the future.
"Beyond paying tribute to our nation's pioneers through the Pioneer Generation Package, this year’s Budget also offers a wide range of subsidies and initiatives to help businesses and different segments of the population."
Business costs insufficiently addressed
However, the audience poll also shed light on areas C-level executives thought the Budget could have better addressed.
More than half, or 54 percent of respondents felt that the Budget did not sufficiently focus on rising business costs.
About 20 percent felt that not enough was being done to provide greater certainty and simplicity in the tax and regulatory environment.
Mr Tay added: "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.
"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, Mr 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
In reference to other business-specific measures surrounding the Productivity and Innovation Credit (PIC) and the new PIC+ scheme,
- 21 percent felt that the scheme would be effective in raising productivity, while
- 58 percent admitted to using the PIC to defray operating expenses.
- 39 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 Mr 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."
A fair and equitable society
As for social measures:
- 49 percent welcomed the CPF rate increase, hoping that this move would avoid any future need to increase other taxes to fund subsidies, keeping premiums for Medishield Life affordable
- 70 percent felt that the Pioneer Generation package was the key highlight of social measures, while
- 28 percent felt that measures introduced to keep healthcare affordable were the highlight.
Panellist Dr Gillian Koh, Senior Research Fellow at the Institute of Policy Studies (IPS) said: "I like that the Pioneer Package is almost all paid for right up-front, and will place no burden on subsequent generations."
"There is a lot of help for companies to grow and contribute to enlarging our economic pie, because there cannot be wealth redistribution without economic growth if we want that redistribution to be sustainable."
Commenting on what was missing in this year's Budget, Mr 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."
The panel discussion was moderated by Mr Melvin Yong, General Manager at CPA Australia in Singapore.
Visit the KPMG Budget 2014 microsite.