Government enhances support for SMEs to Achieve Quality Growth

1.               The Ministry of Trade and Industry (MTI) announced today a series of measures to enhance support for small and medium enterprises (SMEs) to restructure and achieve quality growth. The additional support arises from a review of strategies for the SME sector. The review started in April last year and was undertaken by MTI, SPRING Singapore and International Enterprise (IE) Singapore, in close partnership with stakeholders from the SME community. They aim to enhance assistance for SMEs to transform their businesses, and help them overcome some of the key challenges that they are facing.

2.               SMEs can look forward to enhanced support in three focus areas. First, more support will be provided in the areas of productivity, innovation and capability upgrading. For example, a new SME Talent Programme has been introduced to attract talent from the Institutes of Technical Education (ITEs) and Polytechnics to work in SMEs upon graduation. Second, to help SMEs seek new business growth opportunities, assistance programmes to encourage internationalisation and promote collaboration between larger enterprises and SMEs will be enhanced. Third, the Government will work towards creating a more conducive business environment by simplifying SPRING’s assistance schemes for SMEs and enhancing the existing Enterprise Development Centres (EDCs) into one-stop, integrated SME Centres. Please refer to Annex 1 for an Overview of the Review of the SME Development Strategies.

3.               “The SME sector is an important pillar of Singapore’s economy. They contribute more than 50 per cent of economic output and 70 per cent of employment. The review of the development strategies for our SMEs aims to help them strengthen their business competitiveness. I urge all SMEs to invest in skills upgrading, new technologies and innovative processes, and to tap on the various schemes available to step up productivity improvements. The Government will support our SMEs in their move to intensify their business transformation to achieve quality growth,” said Minister of State for Trade and Industry, Mr Teo Ser Luck.

Greater Government Support to Boost SME Capabilities

4.               The Government will enhance support for SMEs in the areas of productivity, innovation and capability upgrading. This will help SMEs boost their capabilities, restructure their business and remain competitive.

Encouraging productivity and innovation

5.               As announced in Budget 2013, the Government will introduce a Productivity and Innovation Credit (PIC) bonus. Companies that invest a minimum of $5,000 in productivity and innovation activities in a year will receive a cash bonus equivalent to the amount spent. The bonus will be capped at $15,000 over three years of assessment, from 2013 to 2015. It will be paid over and above existing PIC benefits. This will help SMEs defray the cost of implementing their productivity improvements.

6.           In addition, the PIC will be expanded to include Intellectual Property (IP) in-licensing. This will help SMEs innovate and develop new products. With this, SMEs can claim 400% tax rebate and/or 60% cash payment when they in-license the IP for application in their business. This will lead to lower costs as companies embark on innovation. In addition, the capital allowance under PIC will also be enhanced to include more automation equipment such as basic tools of trade to improve productivity.

Encouraging industry collaboration for productivity improvements

7.            To encourage industry collaboration for productivity improvements, the Government will work with industry players and partners such as Trade Association and Chambers (TACs), to identify sector-wide productivity issues faced by companies. Consortia comprising solution providers and users will be formed to come up with initiatives with deployable and scalable solutions that can be adopted to improve productivity within the sector. The Government will co-fund the development and adoption costs of these solutions. Please refer to Annex 2 for more information on the Collaborative Industry Projects.

Nurturing talent for the SME sector

8.            SMEs can expect a flow of talent with the new SME Talent Programme targeting ITE and Polytechnic students. Jointly administered by SPRING and TACs, the programme enables SMEs to attract and recruit local talents early by sponsoring a study award for students, followed by a job opportunity upon graduation. This will help SMEs build a strong core of local talents for sustainable business growth. Please refer to Annex 3 for more information on the SME Talent Programme.

Seizing Opportunities for Growth

9.            SMEs looking to grow their business overseas can get easier and faster help with the new Market Readiness Assistance Grant (MRA Grant). SMEs accessing markets can tap the grant to get advice from pre-approved consultants on areas like market assessment, market entry and business restructuring through internationalisation. Please refer to Annex 4 for more information.

10.         Recognising SMEs’ lack of resources in seeking business leads overseas, SMEs will get greater support for in-market business development. The Government will fund TACs through the Local Enterprise and Association Development Programme (LEAD) for in-market intermediaries to help SMEs identify and harness business opportunities.

11.         SMEs can also access more business opportunities by tapping on the enhanced Partnerships for Capability Transformation (PACT) scheme, which has been expanded beyond the manufacturing sector. The enhanced PACT scheme will support collaboration projects between SMEs and large enterprises

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in areas that involve co-innovation, technology test-bedding, knowledge transfer and sharing of best practices. Such collaboration projects will help SMEs build a better track record and expand their businesses. Please refer to Annex 5 for more information on the enhanced PACT scheme.

12.         The Government will also continue to provide support and extend outreach to high-growth enterprises to help them become the next Singapore-grown MNCs of the future.

A More Conducive Business Environment

13.         To help SMEs better access government assistance, SPRING has undertaken an exercise to streamline its schemes. The various grant programmes offered by SPRING have now been streamlined into one main Capability Development Grant (CDG), which supports SMEs in their productivity improvement and capability development efforts. This will make it easier for SMEs to apply for government assistance as they no longer need to decide upfront which programme to apply for. SPRING has also shortened and standardised its application forms to two pages, and will be introducing a new online grant portal to reduce paperwork for businesses. The CDG will take effect from 1 April 2013. Please refer to Annex 6 for more information on the Streamlining of Schemes.

14.         Currently, SMEs that need assistance can approach any of the Enterprise Development Centres (EDCs) for advice. In future, these EDCs will be expanded into integrated one-stop SME Centres, where SMEs can access information, seek advice on a wide range of assistance programmes from relevant government agencies and private-sector organisations. Such centres will also extend outreach to more businesses, providing more concerted government help and easier access to the schemes. Please refer to Annex 7 for more information on SME Centres.

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MINISTRY OF TRADE AND INDUSTRY

11 March 2013

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Annex 1

Overview of the Review of SME Development Strategies

1.            In April 2012, a review of the existing development strategies for the SME sector in Singapore was launched. The Government worked closely with industry partners, such as the SME Committee (SMEC) and various TACs, to undertake this review. The objective was to review the existing SME development strategies and propose new measures to help SMEs cope in the new operating environment.

2.            The review team held focus group sessions and open discussions with several SME leaders to better understand the challenges that SMEs are facing today. The team took in feedback on how the Government can improve its assistance provided to SMEs. The suggestions and recommendations were taken into consideration during the review.

3.            Recognising the importance of the SME sector, the review focused on developing strategies which will invigorate and transform the sector, so as to achieve two key outcomes:

(i)        A productive, competitive and vibrant SME sector; and

(ii)       A source of meaningful jobs for Singaporeans.

4.            To achieve these outcomes, the Government will focus on helping SMEs along three broad areas with eight strategies as outlined below:

A.        Driving productivity and capability upgrading

i.          Boost productivity across the SME segment

ii.         Continue to support innovation, capability upgrading and business restructuring

iii.        Attract and develop human capital for SMEs

B.        Creating opportunities for growth

iv.        Help SMEs access global opportunities

v.         Provide better support for more high-growth enterprises

vi.        Leverage large enterprises and government to upgrade SMEs

C.        Creating a conducive environment for SMEs

vii.      Simplify & enhance access to government schemes

viii.     Strengthen support, service & engagement of SMEs 

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Annex 2

Collaborative Industry Projects (CIP)

业界合作项目

SPRING Singapore will work with key industry players and partners such as TACs, Centres-of-Innovation (COIs) and productivity centres to identify industry-specific productivity challenges, and issue calls-for-solutions that have the potential for mass adoption within the sector.

Companies will be encouraged to form consortia comprising solution providers and users to develop initiatives with deployable and scalable solutions that can be adopted to improve productivity within the sector. The proposed solutions should be market-ready with room for customisation where necessary, widely deployable across companies, and result in more productive processes within the companies.

SPRING will be looking at the Collaborative Industry Projects (CIP) in six priority sectors: Food Manufacturing, Food Services, Furniture, Printing & Packaging, Retail and Textile & Fashion. 

Who will qualify?

Each consortium must have at least three SMEs committed to implementing the solution and projected to have productivity improvements arising from the efforts. The consortia projects must be carried out in Singapore. The SMEs can apply for funding support for adoption costs if they meet the following criteria:

·           Are physically present and registered in Singapore

·           Have at least 30% local shareholding

·           Have group annual sales of not more than $100 million or group employment size not exceeding 200 employees

How will SMEs benefit?

With successful development and adoption of the bottom-up productivity solutions, SMEs will benefit from improved processes, higher output, or cost savings from reduced wastage and/or reduced usage of resources such as manpower.

Approved consortia projects will be eligible for up to 70% funding support for qualifying development and adoption costs.

The CIP will commence in the second half of 2013.

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Annex 3

SME Talent Programme

中小企业人才培育计划

Overview

This programme helps local SMEs attract local talent from the Polytechnics and Institutes of Technical Education (ITEs) by sponsoring a study award and a job opportunity upon graduation. 

SPRING will partner the TACs to assist their participating SMEs in recruiting local Polytechnic and ITE students, with part of the costs co-funded by SPRING.

Who will qualify?

Singaporean students in the Polytechnics and ITEs can apply for the programme if they meet the following criteria:

·         Have completed at least the first year of study;

·         Have good academic results and exhibit good leadership skills; and

·         Are prepared to enter the workforce immediately after graduation.

Partnering the TACs

SPRING will partner the TACs of the different industry sectors to administer the programme. As TACs are well-connected to the needs of the sectors, they are better positioned to manage the talent requirements of their SMEs. The TACs act as a bridge to strengthen the link between the demand for talent within the SMEs and the available talent supply from the polytechnics and ITEs.

Local SMEs

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with good HR practices and offering good jobs and career opportunities can approach their participating TACs for more details on the application process.

How will SMEs benefit?

Participating SMEs will be eligible for up to 70% funding support covering the student’s tuition fee, monthly allowance and a signed-on bonus for final year students. Successful students will be bonded to the sponsoring SMEs for two years after graduation. 

To ensure that students are able to adjust to the working environment, SMEs are also required to provide training during the first year of employment.  Training cost will also be funded up to 70%.  

The programme will be rolled out in the second quarter of 2013.

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Annex 4

Market Readiness Assistance – Grant (MRA Grant)

市场备入援助金

It is increasingly critical for SMEs to look beyond Singapore to sustain growth and maximise their potential, especially with the small domestic market and uncertain economy.

As SMEs are relatively young and inexperienced in internationalisation, many require assistance in market research, legal and tax regulations. Some may also be in need of assistance to restructure their business activities during this period.

To meet these needs, IE Singapore will launch a new Market Readiness Assistance Grant (MRA Grant) to provide quick assistance to SMEs. IE Singapore will pre-qualify a group of consultants and identify pre-scoped consultancy services for market assessment and entry. These include professional services for market study, legal & tax advisory for setting up overseas, and overseas business matching. It will also cover consultancy services to help companies reconfigure their business model or activities here and abroad.

Who will qualify?

Companies with global headquarters in Singapore and annual turnover of less than S$100 million can apply for the scheme.

How will SMEs benefit?

Companies will be eligible for up to 50% of funding support for qualifying third party costs, capped at S$20,000 per company per fiscal year.

Supportable activities include:

1)     Market Assessment

Consultancy services on:

·         Assessment of the SME’s business model;

·         Determining the unique value proposition of the company’s products and services;

·         Assessing the potential of the targeted market;

·         Recommending the best mode of entry; and

·         Advising on challenges in relations to legal, tax, labour, import and export regulations.

2)     Market Entry

Professional fees incurred for documentation costs related to:

·         Setting up a business entity in the targeted market;

·         Protecting the IP rights;

·         Recommending the relevant tax structure; and

·         Identifying potential in-market business partner.

3)     Business Restructuring (Internationalisation)

Consultancy services will help SMEs achieve higher efficiency in their strategic business process through reconfiguring their business model or activities for Singapore and abroad. More details will be revealed after 1 April 2013.

Companies can apply via IE Singapore’s website after 1 April 2013.

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Annex 5

Partnerships for Capability Transformation (PACT)

提升企业能力合作计划

Introduced in 2011 by the Economic Development Board (EDB), the Partnerships for Capability Transformation (PACT) scheme encourages win-win partnerships between global companies and their suppliers by upgrading the suppliers’ capabilities through the sourcing and qualification processes.

In 2013, the PACT scheme will be expanded to include additional manufacturing sectors

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as well as non-manufacturing sectors

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. The enhanced PACT scheme will also support initiatives that improve SMEs’ productivity and capabilities by facilitating and supporting SMEs to work with Large Enterprises (LEs)

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. The Building & Construction Authority (BCA), EDB, Infocomm Development Authority of Singapore (IDA) and SPRING Singapore will lead PACT for their respective sectors.

How do we encourage Partnerships through PACT?

PACT works through three models:

1)      Supplier sourcing and knowledge transfer

SPRING will engage LEs to actively identify local suppliers and engage in procurement activities, as well as encourage the sharing of best practices with SMEs, via workshops, working together with trade associations and chambers, as well as with the centres of innovation.

2)      Supplier qualification and capability upgrading

SPRING will work with LEs to upgrade the capabilities and improve productivity among their new and existing SME suppliers, and qualify these SMEs for the LEs’ manufacturing processes.

3)      Innovation - Reference customer and co-innovation

LEs will be incentivised to be a reference customer and a test-bed for new SME technologies, so as to spur growth among local SMEs. This will help SMEs to build up track records, so that they can be more competitive when bidding for subsequent projects. SPRING will also tap on public sector agencies for co-innovation projects with SMEs.

Who will qualify?

LEs may apply for the enhanced PACT scheme, together with their SME suppliers.

How will SMEs benefit?

Approved PACT projects will be eligible for up to 70% funding support for qualifying costs. The qualifying costs include:

• Manpower-related costs;

• Professional services;

• Prototyping–related services;

• Technical support services (e.g. testing, certification);

• Equipment, materials & consumables, and software costs; and

• Intellectual property rights.

Businesses with scalable business models and strong growth potential will be considered favourably. The project must be carried out in Singapore.

The enhanced PACT scheme will take effect from 1 April 2013.

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Annex 6

Streamlining of Schemes

SPRING has concluded a streamlining exercise of its schemes to address feedback that some SMEs found it difficult to understand the many government schemes available to them.

The various grant programmes which SPRING used to offer have now been streamlined into one main Capability Development Grant能力发展津贴 (CDG). SPRING has also shortened and standardised its application forms to two pages, and will be introducing a new online grant portal to reduce the paperwork for businesses.

The CDG will support up to 70%

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of the productivity improvement and capability development costs that will result in greater enterprise competitiveness and business growth.

The grant supports a wide range of productivity and capability upgrading initiatives that enable SMEs to successfully compete and grow their markets globally. SMEs can receive assistance in the following 10 supportable areas:

1.         Business Innovation & Design

Development of innovative capabilities and integration of design-thinking in business strategies to accelerate innovation process and maintain competitive edge.

2.         Business Strategy Development

Enhancement of business management capabilities by identifying gaps in key areas and developing plans to improve these areas.

3.         Brand Development

Development of branding capabilities to enhance business competitiveness and differentiate products and services from competitors.

4.         Enhancing Quality & Standards

Adoption of international or industry standards to develop capabilities, improve processes, increase competitiveness and access new markets.

5.         Financial Management

Enhancement of financial management capabilities to ensure good management of financial resources and develop strong financial resilience. 

6.         Human Capital Development

Development of strong human capital foundation for business sustainability through strengthening of leadership, cultivation of strong corporate culture, and retention of talents.

7.         Intellectual Property & Franchising

Protection and management of Intellectual Property (IP), including the creation, ownership, protection and commercialisation of IP for competitive advantage and sustainable profits. This includes development of franchising systems to replicate successful business models.

8.         Productivity Improvement

Implementation of projects to improve processes, optimise resource allocation, leverage technology, and develop employees for productivity gains.

9.         Service Excellence

Adoption of service innovation to increase service standards and enhance customer experience.

10.      Technology Innovation

          Strengthening of technological innovation capabilities for the development of critical technology, products and services to enhance market competitiveness and profitability.

Who will qualify?

SMEs can apply for funding support if they meet the following criteria:

·         Are physically present and registered in Singapore;

·         Have at least 30% local shareholding; and

·         Have group annual sales of not more than $100 million or group employment size not exceeding 200 employees.

The CDG will take effect from 1 April 2013.

In brief, SMEs can now look forward to assistance in five easy-to-remember broad categories of toolkit, voucher, tax incentive, grant and loan.

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Annex 7

SME Centres

中小企业中心

The Enterprise Development Centres (EDCs) form an integral pillar of the overall EnterpriseOne network, which provides face-to-face general advice to SMEs as well as a self-help portal and call helpdesk.

Over the course of the year, the five EDCs will be expanded to become SME Centres. Each SME Centre will be an integrated one-stop shop for SMEs to obtain information, advice and assistance from relevant government agencies and private-sector organisations.

How will SMEs benefit?

The SME Centres will build on existing work done by EDCs to deliver more relevant and efficient services to SMEs. The additional features will include:

i.       Access to a comprehensive suite of government schemes and programmes

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. The centres will also serve as channels to provide feedback from the SMEs to the agencies on issues faced;

ii.      Provide both general and expert advisory services in areas such as productivity, human resources, financing, overseas expansion and more. SMEs will receive business diagnosis to help prioritise critical areas for improvement, referrals to subject matter or technical experts to support capability development, and help with scheme or voucher applications to ensure SMEs have the right support to develop;

iii.     Facilitate business networking and matching services to connect SMEs with local and external partners; and

iv.     Promote the growth and success of SMEs. The SME Centres will help to showcase and profile SMEs and their innovative products and services, to attract more business opportunities.

The SME Centres will be introduced progressively from 1 April 2013.

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Large enterprises refer to large local enterprises as well as MNCs.

[2]

Local SMEs are defined as entities with at least 30% local shareholdings, have group annual sales of not more than S$100 million or group employment size not exceeding 200 employees.

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Additional manufacturing sectors such as Food Manufacturing, Furniture Manufacturing and Printing.

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Non-manufacturing sectors such as Retail, Food Services, ICT and Construction sectors.

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LEs encompass both large local enterprises as well as MNCs.

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SPRING’s funding support for capability development projects was enhanced from 50% to 70% with effect from 1 April 2012. The enhanced support will be for three years until 31 March 2015. 

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These schemes include those offered by WDA, IRAS, IDA, IE Singapore and other government agencies with broad-based schemes.