How Budget 2022 promotes innovation and sustainability
For the past two years, Singapore has invested much of its Budget into combating the COVID-19 pandemic and supporting businesses and households through the economic downturn. This year’s Budget 2022 entitled “Charting Our New Way Forward Together” was delivered by Singapore’s Finance Minister, Mr. Lawrence Wong, on 18 February 2022 amidst Singapore’s transition out of the pandemic and emergence into a new normal. It further extends the support of initiatives to encourage companies to adopt the use of technology and empower workers to up- and re-skill. More importantly, this year’s Budget also highlights the government’s shift in focus to other matters such as the transition to a greener Singapore and strengthening of our social compact.
Here, we provide our thoughts on the Budget and what you need to consider while you navigate your businesses through the policy changes.
Budget 2022 continues to support local businesses and workers through the expansion of existing measures such as the Productivity Solutions Grant (PSG), the Jobs Growth Incentive and other digitalisation schemes such as the Grow Digital Scheme. The availability of such schemes helps businesses to digitalise and deploy productivity solutions. Digitalisation and productivity solutions enable firms to increase efficiency and cut costs, crucial for maintaining profits in light of the upcoming 2% GST hike over the next 2 years. Singapore also seeks to invest in new technologies, such as better network infrastructure and 6G. In the future, technology such as augmented and virtual reality may become common and businesses that leverage these technologies will stand to benefit.
New schemes such as the SkillsFuture Career Transition Programme also provide mid-career workers greater mobility in transitioning to technology-intensive fields. As the technology field provides an attractive career proposition for many, companies looking to hire professionals with technology-related skillsets are likely to benefit from the more flexible mid-career switch programmes.
Singapore’s green transition
To meet Singapore’s goals of peaking emissions by 2030, several new policies have been revealed to enhance Singapore’s Green Plan 2030. Singapore aims to be a hub for carbon credits, which are tradeable allowances for carbon emissions, and can even offset up to 5% of a firm’s taxable emissions from 2024. Given that carbon taxes are projected to increase at least tenfold by 2030, the use of carbon credits will appeal to many businesses.
Furthermore, commitments to greening our traditional industries, including aviation and tourism, and to explore green technologies such as carbon capture or hydrogen could have great effects on all businesses in Singapore. This bodes well for companies in the business of exploring innovative, sustainable technologies. The government is being intentional in making our red dot a green dot, heavily encouraging firms to make the transition to becoming more sustainable. Companies will be rapidly seeking out sustainable technology alternatives to minimise the toll the carbon tax may have on their business costs. Technology firms working with any form of sustainable technology alternative to current products will likely experience a surge in demand for their products or services and will have the greatest advantage in Singapore’s green transition.
As for SMEs in Singapore, the shift to sustainable technologies may seem daunting but is ultimately necessary. Firms that hesitate to transition to greener technologies throughout their operations will feel the greatest effects from not only Singapore’s carbon tax, but also from the global rising cost of resources brought on by global warming. Not to mention, it would be increasingly difficult to remain competitive against firms that made the transition earlier and have already adapted operations to suit their newer technological solutions.
More than just social responsibility
Budget 2022 also seeks to improve inclusivity in Singapore through strengthening its social compact. It outlines plans to support lower-income households in Singapore, from underprivileged youths to working individuals, and provides plans to strengthen healthcare to meet the needs of the growing ageing population. It also aims to encourage a culture of generous giving through several funds, supporting giving to our charity, sports and arts sectors.
Although these measures may not concern or benefit SMEs directly, we believe the increasing focus on social issues is part of a wider agenda for sustainability and reflects the recent push for companies to focus on Environment, Social and Governance (ESG) factors on top of their business performance. Consumers are increasingly alert to the growing climate and social issues both locally and internationally, and have shown increased favour towards companies with transparent, environmentally and socially responsible practices. This Budget mimics the sentiment of consumers, by indicating a great interest in supporting social causes and rewarding sustainable firms. As such, firms will have to exercise greater environmental and social responsibility to remain relevant to consumers, investors and governments. Singapore government programmes such as the Enterprise Sustainability Programme (ESP) can assist firms in incorporating sustainable practices through courses, capabilities development or partnerships with industry players.
Budget 2022 marks Singapore’s transition out of the battle against the pandemic, back into adapting our businesses and our industries for the future. Regardless of scale, businesses should be looking towards an age of constant innovation and sustainable business practices. As Singapore strives to be a hub for innovation, the future landscape for businesses may be drastically changing, but will definitely be ripe with opportunity.
This article is contributed by Dylan Lester Lim of the Data Science team.
To find out how our team can assist you in technology or sustainability management matters, please consult our specialists:
Partner & Industry Lead, Technology, Media & Telecommunications
T +65 6594 7876
Senior Director and Practice Leader for Sustainability Management
T +65 6594 7892