What initiatives would you like to see included in this year’s Budget announcement to help businesses and the economy generally?
Danny Teoh Managing Partner KPMG
WHILE there are sufficient drivers in the domestic economy to keep Singapore in growth over the next two to three years, Singapore must not take its eye off the competition it faces from other lower-cost economies in Asia. The government has already taken steps to address this competition with tax incentives for pioneering industries and products in Singapore.
However, in order to stay ahead of the competition, Singapore should do more to retain the intellectual property and value streams arising from these activities through additional exemptions and tax deductions designed to reward? value creation?. These incentives should be targeted at foreign and home-grown industries alike.
Tax cuts Phillip Overmyer Executive Director Singapore International Chamber of Commerce
FOR several years now, the Singapore International Chamber of Commerce (SICC) has been representing our members through the submission of recommendations to the government, on issues related to tax and other budget policies. In November 2007, we submitted our recommendations to the government and we hope they will be addressed in the Budget statement this year. Amongst the list of recommendations are these items:
Incentives for corporate participation in eco-friendly initiatives.
Promotion of Singapore as Asia’s telecommunications hub through the provision of concessionary tax rates.
Exemption of tax on foreign income whereby it will help signify and enhance the competitiveness of Singapore’s territorial income tax system.
Abolition of estate duty in Singapore.
The SICC has also been urging the government to amend tax laws to encourage companies to develop private pension savings plans for their employees that will enable both employers and employees to jointly participate in tax preferred schemes. This will provide a simple process for employers to implement retirement plans that make it easy for employees to develop a life-long plan for retirement savings above and beyond their CPF savings.
Fong Loo Fern Managing Director CYC The Custom Shop Pte Ltd
COMPANIES big or small, but especially smaller ones like us, would appreciate a further cut in corporate tax and more incentives - anything that will help us cut operating costs. We can then use some of the savings to reward our staff with pay increases to help them manage rising inflation. Without sounding too greedy, it would be appreciated if Budget 2008 can also include the provision for another cut in corporate tax should businesses be dragged down by the downward spiral of the US economy.
A cut in personal taxes will be much welcomed by everyone. This will help many of us to deal with the rising cost of living as well as fuel spending to keep the economy humming. On a less selfish note, I wish that the government will use the budget surplus to do more in helping the poor and the underprivileged in Singapore.
Sam Yap SG PhD (Entrepreneurship), USA Group Executive Chairman Cherie Hearts Group Int’l Pte Ltd
A ONE to two percentage point reduction in corporate tax will definitely be a great hongbao for businesses, given the rising cost of operations, driven by property inflation and skyrocketing fuel prices. This will give a boost to our economy by making it more attractive to potential investors and retaining those which have already set foot here.
In addition, an economic slowdown gives companies more reason to focus on training and development of staff to prepare us to ride the waves when the economy booms again. Government help in supporting such training in the form of increased subsidies will be a boost.
Personally, I’d like more to be done to support the childcare industry, which plays a pivotal role in supporting Singapore’s pro-childbirth policy. Assistance could be in the form of more subsidies, both for childcare centres and parents.
Mohamed Ismail CEO PropNex Realty Pte Ltd
MY wish list for the Year of the Rat is a reasonable hongbao from the Inland Revenue Authority to all tax payers in Singapore - to enjoy a waiver for the first $50,000 chargeable income, amounting to $1,750 for the year of assessment 2008. This proposed measure is in consideration of the government’s healthy collection in revenue last year, as a result of the various increases in GST, property taxes, ERP charges, stamp duties, development changes and so on.
Also I would like to propose for the personal income tax to be reduced to a maximum cap of 18 per cent, down from its existing 20 per cent. This move will certainly help many people to cope with the increase in inflation and higher cost of living.
Also with the increasing cost of private property , many younger couples are sandwiched between not being able to afford a private property and being disqualified from applying for a direct HDB home due to their household income exceeding $8,000. My wish would be for HDB to raise the household income bracket of new home buyers for HDB flats to $10,000 to help the younger generation.
Bernard Lim Chief Executive Officer Design Studio Furniture Manufacturer Ltd
FIRSTLY, we hope to see a further decline in the corporate tax rate over time. When implemented together with industry-specific measures, it will go towards enhancing Singapore’s economic competitiveness.
Secondly, our investments in computerised, automated equipment and facilities have greatly improved our production efficiency. We are confident we will be in a better position to harness automation investments with more tax incentives from the relevant authorities.
Lastly, we hope to differentiate ourselves by focusing on delivering training to our staff both local and foreigners in terms of design, project management or innovation. This will keep them attuned to market trends as well as the technologies that we employed. As such, a greater variety of employee-training incentives will be greatly welcomed.
Tan Kok Leong Principal TKL Consulting
SINGAPORE probably should strive to have the best corporate tax rate in Asia, in absolute terms, where companies would choose to operate. The lead in corporate rate may enhance its ever increasing role as a global city and to help her to compete more effectively for investment internationally. This is necessary because of lack of hinterland.
Chaly Mah CEO Deloitte Asia Pacific
CORPORATE tax has been reduced from 20 per cent to 18 per cent and partial exemption has been increased from $100,000 to $300,000. Corporate tax at 18 per cent is quite competitive. However, to assist SMEs, consideration should be given to increase partial exemption from $300,000 to $500,000.
For personal taxes, the maximum personal tax rate should be reduced to 18 per cent. This will make Singapore more competitive in our efforts to attract talents, against Hong Kong which has a much lower top marginal personal tax rate of 15 per cent. In addition, reducing the top personal tax rate to 18 per cent should reduce the incentive to arbitrage the difference between the corporate tax rate (currently 18 per cent) and the top marginal personal tax rate.
The government could also consider increasing the current tax exemption of the first $20,000 chargeable income for resident individuals to $50,000. This will help mid-income individuals who are only eligible for limited government assistance and at the same time have to face the increase in cost of living. As 2007 has generally been a good year for Singapore, a one-off tax rebate for Year of Assessment 2008 would be a welcome bonus for all individual taxpayers.
Another area which the government could consider is to scrap estate duty - this will remove one impediment to the further development of Singapore as a wealth management hub. In order to ease the shortage of foreign workers in the construction industry, the foreign workers ratio and foreign workers levy structure should be reviewed.
In addition, the further relaxation of rules on the hiring of foreign workers from non-traditional sources for the hospitality industry will help solve the labour shortage in this sector, especially in view of the anticipated increase in demand from the opening of the integrated resorts.
Tackling inflation
Wee Piew CEO HG Metal Manufacturing Ltd
I THINK top on every business’ and Singaporeans’ wish list for the coming Budget is to see specific measures to help mitigate the rising rate of inflation. With good fiscal revenue from a good 2007, the government would be in a strong position to be more generous this year in terms of hand-outs, especially to the lower income people. Besides rebates for conservancy charges, the government should give some form of cash bonuses to the lower income and senior citizens to help defray higher cost of living.
For the broader Singapore economy, I think consumption might be affected as Singaporeans and businesses tighten their spending in face of higher prices. While the government is unlikely to further reduce corporate tax rates, they can be more generous in the forms of various capital allowances and deductions for tax purposes.
I would also like to see a reduction in personal income tax rates. While the top rate should be reduced to 18 per cent to align itself with the corporate rate, income tax rates should also be reduced for lower income brackets. This will help boost disposable income and help mitigate the impact of lower consumer spending as a result of higher inflation.
Matthew Chan Managing Director SCHOTT Singapore Pte Ltd
I WOULD like to see the following initiatives to be included in this year’s Budget announcement to help businesses and the economy in general.
One-off inflation tax-concession package to help corporates to buffer/manage the cost escalation due to the record high inflation in 2007 and 2008.
Taxation on benefits in kind to be further relaxed to encourage creative staff retention programme to attract and retain staff in the tight labour market. For example, grant administrative concession or remove taxation on benefit in kind such as staff retreat and other similar staff activities.
SME corporate tax regime should be attractive enough to attract both local and foreign SMEs to set up their base here and to build up the ecosystem in order to support the high-end and niche businesses in Singapore.
Charles Reed CEO interTouch
SMALL businesses and start-ups will benefit most from financial incentives. Setting aside capital in the Budget to encourage such companies to grow and flourish will help boost the economy.
Financial perks, however, are only a short-term solution. For companies to achieve their profit and growth objectives in the long run, they must implement strategic measures to overcome any possible economic challenge. I would like to see three areas of focus:
1) Programmes and support to organisations that provide relevant training and mentoring to entrepreneurs.
2) Clear and transparent position on future tax and regulatory frameworks.
3) Another pressing issue that businesses face is soaring property prices and office rental. Putting a cap on the percentage increase of these prices or building more affordable space for companies can also be considered in the Budget.
Liu Chunlin Managing Director K&C Protective Technologies Pte Ltd
WHEN it comes to Budget time, people usually look towards the usual tax cuts. But we would like to go beyond that. After all, tax cuts on the one hand can be negated by increased government fees elsewhere. What we would like to see are initiatives which have longer-lasting effects and should be what the government can and should do but which individual companies are too small, too isolated or are not coordinated to do.
Governments should work at the macro level, to provide the economic coordination and pool Singaporean companies’ strengths to help thrust them onto the global economic stage. The government is already doing that, but we would like to see more.
First, the recent inflation and turbulence certainly prompted companies to look to the government to provide greater certainty and coordination. For example, the overheated construction sector and the government’s response by deferring government projects so as not to aggravate it is praiseworthy.
Another example is the current transport woes which do not facilitate business as these add up to additional time and cost to companies. It’s good the government is already looking urgently into this. Also there is the concern of healthcare cost as this enters into the equation of a company HR function. Overall, one cannot help but wonder why during the recession of recent years, more investment in infrastructure was not done, to pump prime the economy then to avoid the problems now. We suffered when we had lean years and we suffer now when the economy is overheated.
Secondly the global push. We would certainly like to see more business opportunities percolate to private sector companies through the government’s efforts on the international stage.
Business costs
Dhirendra Shantilal Senior Vice-President, Asia-Pacific Kelly Services
FOR Singapore to remain competitive in the region, we need to manage our rising business costs. One of the factors for consideration is to reduce the corporate tax rate further.
New job opportunities have increased last year, but filling these roles requires talent that can match the requirements for these new roles. We need to see government-aided programmes extend to professional and technical training fields to allow professionals to pick up skills which are transferable across industries.
Kees Stoute Managing Director EFG Bank
WHEN I visit a restaurant and I am informed that there is no table left, I usually don’t blame the owner for being too successful. I praise myself for making the right choice - judging from the crowd this restaurant must be good! - and at the same time I am annoyed with myself for not having made a reservation. For me it’s the same with Singapore. True, trains and buses are full, property prices and rents have increased, roads are more congested than ever, etc. Why? Because Singapore has been and still is extremely successful. The government immediately takes action: more land available for project development, impressive improvement of transport infrastructure, those who fall behind receive support, etc. With a forward-looking government like this, Singapore will continue to be successful.
Having said that, it would obviously be welcome for companies to receive some kind of relief for the increasing costs of doing business. For example, office rent has gone up significantly due to a scarcity in office space. In that sense it could be argued that companies indirectly pay a price for Singapore’s success. Wouldn’t it be encouraging if those companies who even in these days of increasing costs show a clear commitment to staying and growing in Singapore - eg companies that commit themselves in 2008 to at least a 25 per cent increase in office space for the years to come - that these companies be given an incentive in the form of a special tax rebate?
Back to the restaurant analogy: for regular guests there is always a seat and most of the time they enjoy interesting discounts. It’s that special treatment and attention that in the long term makes these guests so loyal.
Lim Soon Hock Managing Director PLAN-B ICAG Pte Ltd
I WOULD like to see draconian measures which will help contain costs, if not reduce them, before it gets out of control. Businesses today are hit on two fronts: falling revenues due to exchange losses as a result of the depreciating US dollar, and increased operating costs as a result of inflation, increase in oil prices, transportation charges, utilities bills, to name a few.
While we are now in a state of calm due to the momentum that was carried over from a good 2007, the storm will come inevitably, triggered by the financial fallout and the recession in the US. It may be prudent to take radical steps now to review CPF contributions, provide rent relief for industrial space, and maybe for once, return GST to the previous level of 5 per cent. Some of these can be prescriptive measures which we can implement straight away when the situation warrants it.
To prime the economy against a looming worldwide recession, I would like to suggest our government bring forward or fast track many of the large infrastructure projects which have been announced, for example the two new MRT lines, the Sports Hub and the proposed new waterfront town in Woodlands.
Goh Chong Theng General Manager Singapore Branch Rabobank International
FROM a commercial standpoint, rising business costs are a foremost concern, since corporations are ultimately concerned with profitability. At present, these same issues happen to be the most complex as well, because we are currently seeing a potentially? perfect storm? of challenges that could undermine profitability.
What has brewed this perfect storm? Commodities (such as oil, metals and agricultural produce) have appreciated in price in recent months, largely due to the mismatch between the global supply and demand for these materials. The labour market is still fairly tight, which brings two consequences - high staff turnover and upward pressure on employee remuneration packages. Rental costs for residential and commercial properties (for expatriate staff and office premises, respectively) are also climbing and exacerbate the problem.
These are the main reasons why inflation is a growing concern even though the Singapore dollar has appreciated against the greenback in recent months. And if we lose cost competitiveness, multinational corporations and high net worth individuals - whom we want to attract - might relocate to Hong Kong or other Asean countries. Therefore, Singapore could do with a business-friendly Budget that cushions companies from rising costs via lower corporate taxes or other incentives.
Separately, if companies do not absorb the increased costs (and most won’t), then rising business costs will eventually lead to rising living costs. We see this phenomenon manifested in transport costs (especially petrol prices and taxi fares), food prices (like Chinese New Year delicacies), utility bills (such as electricity rates) and other forms.
According to recent media reports, supermarkets are seeing rising demand for their housebrand products. This suggests that the man in the street is increasingly cost-conscious. Thus, perhaps the Budget should also be designed to help Singaporeans (particularly the needy and underprivileged) pay for basic necessities such as transportation, food, utilities, healthcare and education.
Additionally, we need to address the needs of the hitherto-neglected middle-class Singaporeans. Most taxpayers in this group have income levels that are neither low enough to qualify for various aid schemes, nor high enough to comfortably bear the brunt of rising prices. With the spectre of inflation looming over everyone’s heads, it is perhaps high time to look at the needs of this large group of long-suffering Singaporeans.
Workforce issues
Collis Loh Country General Manager AT&T Business, Singapore
OVER the past years, Singapore has managed to successfully maintain, and in certain areas also expand its competitiveness in the global marketplace. As the world’s largest communications company, AT&T’s objective is to provide its customers around the globe with state-of-the-art IT and communication services.
At the beginning of the 21st century, Singapore made a bold strategic decision to quickly liberalise its telecommunications market, and this policy has fostered investment and competition. For Singapore to fully realise its world-class status as a global IT hub in the future, the Budget announcement should specifically focus on the supply of sufficient and qualified talent. This will help the general business environment to support economic growth.
Therefore, we support the government’s efforts to further invest in human capital development. Widespread skill enhancement is critical to improve innovation and to ensure the supply of a work-ready job force, especially to high-tech companies like AT&T. This should include worker training and upgrade, but we also feel that an additional university, as publicly discussed, may be beneficial in developing a highly skilled workforce to meet future requirements in our industry.
Eng Hong Lim CEO Avi-Tech Electronics (S) Pte Ltd
WITH respect to personal income tax, the government could give a one-off tax rebate of not less than 10 per cent, which will be eventually ploughed back into the economy through consumer spending. It is unlikely that more corporate tax cuts would be forthcoming. Nevertheless, Singapore needs to remain competitive and to continue to be able to attract investments.
The schemes for attracting foreign investment should be re-looked to see how they can be further improved. Incentives for local companies to venture abroad in order to remain competitive is another area that needs attention. The tight labour market is adding to business costs. One way of alleviating shortage of skilled labour is to keep our workforce working for longer and harnessing the skills and capabilities of older workers.
Continuing education and training for older workers should be factored into the Budget. There could be schemes introduced for smaller start-ups to help with high rental costs even as URA continues to make available transitional offices to provide intermediate term supply. Electricity charges should be adjusted, despite the hike in crude prices, as they form a significant component of both personal and business costs.
David Miller President of Asia-Pacific & Senior Vice-President Lenovo
IN today’s environment of global economic uncertainty, the processes, standards and technologies we use in our businesses will start to change even more in the coming years. To keep up with this change, Singapore’s workforce must develop specialised knowledge and skills to adapt with these changes which will allow them to become even more productive and versatile. The success of Singapore’s businesses and economy depends on it.
Developing employees through education is even more important to economic growth than investing in physical capital. Providing ongoing education and training for staff is an excellent way to increase productivity, flexibility, and solidify employee loyalty. A nation of highly skilled and creative workers will also attract high value multinational employers to Singapore, creating a virtuous cycle.
With this in mind, I’d like to see the Singapore government set aside an additional budget to partner with business and industry organisations to promote and deliver learning at work. With flexible and nimble staff, we will be able to adapt better to market changes and ensure Singapore maintains its leadership position as a regional business hub.
Others
Teng Yeow Heng Michael Managing Director TR Formac Pte Ltd
1. Manufacturing/Construction
YOUNG people are not attracted to studying engineering and technical disciplines, as they are drawn to financial, banking and commercial studies which are deemed to offer better paying jobs. This is shown in the declining top student intakes in our polytechnics and universities for engineering diploma and degree programmes. This trend is detrimental to the manufacturing/construction sector in Singapore as we continue to find it difficult to recruit good local engineers and technicians. Conversely, India and China still draw their best students to study engineering and technical subjects.
Our government should offer more scholarships to attract students to study engineering and also promote engineering as a career to be pursued.
2. Small and medium-sized enterprises (SMEs)
I believe that the greatest challenge for our local SMEs is first changing the mindsets of the top management and then to manage change during this difficult economic time. Some funding from the government in this area of training and mentoring will be useful.
3. Export of Singapore management talent
Singapore is becoming a major exporter of management talents, which can become another major source of national income. Singapore management executives are in demand in the region as we have the reputation of understanding the Eastern and Western culture, coupled with our strong proficiency in English and the regional languages.
Unfortunately, many of these executives do not return to Singapore even if they want to, as their children are unable to fit into the mainstream education system in Singapore. The government can help make it easier for these executives’ families by setting up more overseas Singapore-style international schools. Also, online studies through the Internet can be offered if Singapore international schools are not available.
4. Loss of Singapore talent
In our quest to bring in overseas talents we are also losing many of our Singaporean talents overseas. Our citizens need to be accorded more privileges as currently the permanent and overseas residents enjoy almost the same privileges. I know there are many overseas scholars who left us 10 years later after being sponsored by our government to study in Singapore universities. Ultimately it is the Singapore citizens who have truly established their roots here with their families who are less likely to leave Singapore in the event of a crisis.
However, today, many countries value and want to attract the Singaporean talents as they are in demand globally. If these Singaporeans are not well taken care of at home, the attraction is to migrate to another country which will take better care of them and recognise their talents. It is a classic example of in trying to chase after someone better, we often lose what is most valuable to us.
5. Hiring of older workers
In the US and European Union, corporations are valuing more and more the role played by their older employees. After the dotcom crash in the early 2000s, hiring of older workers is in vogue as years of experience and maturity that come with age become more important. Corporations have found their older employees to be less rash and more measured in their actions - particularly valuable during these days of strict corporate governance and risk management. Thus today in corporations we are seeing more grey haired executives dominating the board of directors and senior management.
The government needs to hire more older workers in administrative and managerial positions to set an example to the private sector, instead of retiring them after a certain age. It is encouraging to see that the government is giving financial incentives to companies for hiring older workers.
6. Education
Private education organisations (PEOs) need some help from the government. It is great to note that the government is promoting Singapore as an education hub and PEOs are recognised as an important component. The government should consider issuing university licences to some of the well-run and reputable PEOs. In the US and Japan, many private universities command a premium over the publicly-funded ones. In addition, PEOs have the flexibility to bring the Singapore style of education all over the world and run many more specialist programmes.
Bryan Low Vice-President, Sales and Marketing for South Asia AMD
THE Singapore government has done a tremendous job last year, from investing more in R&D to enhancing IT connectivity infrastructure. Corporate tax was low in 2007 and we hope this pro-business policy will continue into 2008-09.
For 2008-09, the Singapore government would have a stronger focus to encourage and lead the adoption of green technology for consumers and enterprises. The green issue has gained dominance on the international arena, from the Bali talks to the recent Davos conference, not without valid reasons. Sustainable growth and growth with a long-term vision is key to the prosperity of, not only Singapore, but the whole region and even the world.
We hope to see the government engaging more actively with the private sectors in open dialogue to facilitate greater exchange of ideas. This goes beyond just having feedback sessions or ?suggestion boxes?, but actually increasing engagement by bringing in private sector professionals in developing various policies and plans, even review some of the practices that involve the private sector. I am confident that the private sector can contribute and enhance the already sound environment policies that are in place.
Deborah Ho CEO DBS Asset Management
THIS year’s Budget announcement comes at a juncture where concerns of a US recession and the highest inflation in Singapore in two decades are on the radar of most market watchers. While Singapore is a small open economy, I believe that it will pull through these challenges as it enjoys sound economic fundamentals, along with the rest of the region.
To strengthen Singapore’s role as the region’s premier wealth management centre, a favourable tax structure for investors is needed. Wealthy individuals from around the globe will come into contact with Singapore through a series of events like Formula One and the integrated resorts. With a favourable tax structure they will be enticed to invest via the local asset managers. A review of the estate duty at this juncture could be timely.
Secondly, the cost of doing business in Singapore has risen sharply. Budget incentives to help defray business costs or training incentives to boost productivity will help to combat these cost pressures.
Lars Ronning President, Asia-Pacific (excluding China and Japan) TANDBERG
SINGAPORE can benefit from broad-based tax incentives: tax cuts for businesses foster entrepreneurship and innovation conducive to economic growth. This gives enterprises reason to inject more investment into the local economy. Tax breaks also guide economic activity in favourable ways such as increasing the attractiveness of employing people over capital.
The government also needs to roll out initiatives in order to continually manage employment. For the economy to be given the push it needs over the next year, the unemployment rate needs to be kept low.
Poh Mui Hoon CEO NETS
AFTER a strong period of economic growth, the outlook has been clouded with a possible recession in the US accompanied with a weakening of consumer confidence. A slowdown in the US economy, which is one of Singapore’s larger trading partners, will help moderate growth domestically.
The Budget should take a measured stance in terms of being able to use fiscal policy more readily, should the economic slowdown be more dramatic than anticipated.
Flexibility in using taxation tools and government spending to balance growth will help the economy stay its course whilst still keeping it competitive. As Singapore’s leading electronic payments service provider, Nets will also play its part by offering competitive payment solutions so as to simplify payment, thereby making it convenient for consumers to manage their expenses and to balance their personal budgets.
VR Srivatsan Vice-President, South Asia Business Objects
IT is imperative that there is continued and sustained development of Singapore’s economy, as it helps fuel business confidence and growth, and ensures a steady influx of foreign investments. As a business leader, I would like to see further commitment to investments in key infrastructure resources that support economic growth, and initiatives that provide more conducive business operating environments for multinational corporations as well as SMEs.
The growth prospects for Singapore still exist; government leaders have said that they are confident of positive economic growth in 2008. Although a few industries have cautioned slow to moderate growth, the overall outlook for many industries such as the technology sector is still very optimistic and the initiatives announced should support growth in those sectors.
Dora Hoan Group CEO Best World International Ltd
SINGAPORE occupies an enviable place in the top half of the world’s wealthiest nations. However, keeping it there and striking a balance within the island city state is a tightrope act for everyone.
We have a robust economy which has been growing at an average of 7.6 per cent a year since 2004. Business has grown and remains relatively strong, with salary scales among the most competitive and unemployment at its lowest levels in 10 years. But along with all this, the cost of living has skyrocketed. Persistent inflation is the issue and even with the strides we have made, we are all the poorer for it.
As tough times loom ahead, I am hopeful that the 2008 Budget will prioritise measures to stimulate enterprise and investment, which is the bedrock of sustained economic progress. Despite the expected rough sailing this year, we can reduce the rates at which taxes for business are imposed, and then give targeted rebates or credits.
I also wish for funding support geared towards the enhancement of branding management and IP protection and valuation, as these intangibles are powerful driving forces in today’s global market. As business profitability depends on the public’s purchasing power, we are all for definitive measures to help Singaporeans cope with inflation and the higher cost of living.
Alongside, there has to be more value for money in quality, accessible healthcare and education. Not to be neglected are fiscal incentives for environmental protection particularly to fight global warming.
Source : Business Times - 11 Feb 2008
