Singapore's Budget 2023 emphasises innovation

Concept art on technology
by dream by WOMBO.

Singapore's Budget 2023, delivered mid-February, focused on weathering global economic challenges through making the country more productive and competitive, particularly through innovation.

"We are seeing a huge contest for leadership in key technologies, which is likely to escalate with time," said Singapore's Deputy PM and Minister for Finance, Lawrence Wong, of the US ban on the flow of high-end chips and chipmaking to China, which has in turn sparked domestic investments in technology.

"All this is setting off a dangerous dynamic towards greater economic nationalism and protectionism around the world."

Wong highlighted the global race to attract foreign investments and said the only way to stay ahead would be for Singapore to become even more attractive to investors. "We will therefore have to work harder to enhance our overall productivity and workforce quality to stay competitive in this new environment," he said. 

Budget highlights included:

Jobs-Skills Integrators 

Wong noted that training programmes vary in quality and outcomes, proposing Jobs-Skills Integrators which would help to train workers in areas that are most likely to require resources. 

"There is therefore a need to develop labour market intermediaries who can work with industry, training, and employment facilitation partners to optimise training and job placement. So we will appoint and equip Jobs-Skills Integrators to do this work. The Integrators can be existing institutions. But they will have new responsibilities and outcomes to deliver," he said.

“Increasingly, job creation is impacted by the emergence of new occupational profiles tailored to new technologies and to respond to the demand for new technology-based products and services. As such, the Job Skills Integrators initiative will also help boost ICT jobs in the tech sector and elsewhere. We believe the initiative should be expanded to other industries, including ICT and SGTech is ready to work closely with relevant stakeholders to enhance this initiative's robustness,” said Ivan Chang, Co-Chair, SGTech Talent & Capabilities Committee. ICT stands for information and communications technology.

Cecily Ng, Senior VP and GM, Salesforce Singapore & Taiwan said: "The government’s commitment to bringing together industry partners and training providers via the Job-Skills Integrators programme is a necessary step to ensure that training leads to favourable employment outcomes. These joint efforts across the ecosystem are needed to capture the potential of Singapore’s emerging and diverse talent pool, drive resilience and growth, and enhance business competitiveness.

"We must collectively work towards lowering the barriers to entry to tech roles, and leveraging untapped talent in the workforce. Salesforce is committed to addressing the training and reskilling imperative in Singapore through multiple pathways including our online learning platform Trailhead."

Ng added that leaders in the private and public sector must ensure that "a digital-first mindset and culture of continuous learning is part of their organisation’s DNA in order to help close the digital skills gap more efficiently."

"Building the digital economy has been a longstanding goal in Singapore. The Singapore government continues to solidify its Smart Nation commitment by empowering the Singapore workforce with upskilling and reskilling initiatives, including new ‘jobs-skills integrators’ that will work closely with employment facilitation agencies, industry partners, and training partners, as highlighted in the 2023 Budget announcement," noted Lee Hawksley, Senior VP and MD of Asia Pacific and Japan, UiPath.

"Democratising information, access, and learning should be a key priority as we focus on capitalising on the strengths of human and digital workforces in the future of work. 

"Developing new initiatives and programmes that build new transferable digital capabilities can create new opportunities for growth to propel the Singapore Economy 2030 vision forward." 

Hawksley observed that automation, in particular, "has the transformative power to bring out the best in people, and this in turn gives people the potential to bring out the best in society". "But to unlock the massive potential of automation, we need to strengthen collaborations among the government, the academia, and the private sector, to drive sustainable technological adoption across industries and better propagate role-based education," he said.

Enterprise Innovation Scheme

Under the new Enterprise Innovation Scheme features tax measures that will be enhanced or introduced to encourage research and development (R&D), innovation, and capability development activities. Specifically, Wong said tax deductions will cover five aspects of the innovation value chain:

i. R&D conducted in Singapore;

ii. Registration of intellectual property, including patents, trademarks, and designs;

iii. Acquisition and licensing of intellectual property (IP) rights;

iv. Innovation carried out with polytechnics and ITE; and

v. Training via courses approved by SkillsFuture Singapore and aligned to the Skills Framework.

“The Singapore government has redoubled its efforts in the global R&D race to attract innovation and R&D activities to be conducted in Singapore through the introduction of Enterprise Innovation Scheme by additional tax deductions on qualifying expenses for qualifying activities. In particular, on local R&D activities, I hope the Singapore government can also relax the definition of R&D to include innovation and development projects that may not have a novelty factor so that more Singapore enterprises would benefit under the new scheme,” observed Lennon Lee, Partner, Tax, PwC Singapore.

Tan Ching Ne, Corporate Tax Leader, PwC Singapore, also commented on the scheme, saying: "The three pillars of the proposed Enterprise Innovation Scheme will help businesses defray a significant portion of the expenses connected to innovation and the creation of IPs.”

“With the option to convert 20% of the total qualifying expenditure into a cash payout of up to S$20,000 under the Enterprise Innovation Scheme, we should see more SMEs willing to take risks by conducting R&D and innovation activities in Singapore partially funded by the cash subsidies,” Lee of PwC added.

“While additional tax deduction to promote a pervasive innovative environment is welcome, it needs to be seen if Singapore can quickly build substantial capacity and capability to be innovative and remain relevant as the competition for global talents and innovative funding grows stiffer. We may have to seek opportunities to collaborate with other countries, global businesses and international educational institutions to nurture the innovative ecosystem in Singapore,” said Abhijit Ghosh, Partner specialising in Corporate Tax, PwC Singapore.

Enterprise Financing Scheme

"For our tech ecosystem to thrive, our innovative tech companies need to scale regionally and even globally. Hence, it is good news for growth-stage tech firms to be able to continue tapping on the Enterprise Financing Scheme to address their rising costs and potentially, short-term funding gaps," said Patrick Yeo, Venture Hub Leader, PwC Singapore.

Global Enterprises initiative

"The Singapore Global Enterprises initiative is timely to take advantage of the changing market dynamics and geopolitical environment. This scheme will be useful to create more global winners headquartered in Singapore so that our tech ecosystem can thrive in the face of increasing competition," Yeo from PwC added.

Chern-Yue Boey, Senior VP, Asia Pacific, SailPoint said: “Budget 2023 signals a shift in the mandate for Singapore, from immediate pandemic-focused relief measures to ensuring Singapore’s long-term economic relevance and viability through a concerted focus on innovation. Especially amidst global headwinds that precipice the nation-state against a tough business climate, the newly-announced added support for local enterprises provides a much-needed boost for businesses to build on existing digital transformation efforts to innovate for greater competitiveness and resilience. After all, heeding the digital imperative will remain critical for businesses to survive - with the requisite advanced technologies, skills, and talent for it.

"Yet, this concerted push towards growing our digital economy will inevitably see the threat surface expand. With emphasis on technology adoption and innovation, we will witness explosive growth of non-human identities as our reliance on robotic process automation (RPA) technologies and IoT devices grows in tandem.

"We must therefore ensure the necessary guardrails are in place to manage these machine identities along with employee, contractor and third-party identities. With a comprehensive identity management strategy, businesses can automate the discovery, management, and control of all user access throughout their digital life cycle, and ensure each identity (human or machine) always has the proper access needed to do their job."

“SGTech welcomes the new enterprise innovation initiatives (Enterprise Innovation Scheme, SME Co-Investment Fund and Singapore Global Enterprises Initiative) that will help boost the productivity of our enterprises. These generous programmes signal that our enterprises must stay ahead of the curve and find creative and innovative ways to grow. In this regard, tech can be a major enabler in areas such as artificial intelligence (AI), digitalisation and trust-related technologies. We look forward to working with the relevant agencies to learn more about these programmes and provide industry input on the key tech growth trends Singapore could redouble efforts on,” said Wong Wai Meng, Chair, SGTech.