Government schemes for higher productivity in smaller businesses

As an entrepreneur, one must better think of making the best out of our opportunities. Our world, an interconnected world with lots of opportunities, needs to commit the necessary fixed costs while scaling up and exponentiating, so our businesses can be 'cheaper, faster and better' for growth.

To grow our firms in Singapore, where space is a premium and physical resources are limited, we have to consider the capital, labour and entrepreneurship parts of production.

I believe that the Government is doing its best to support smaller businesses. After all, small and medium enterprises make up 99% of our businesses, and they employ 70% of our workforce and half of our economic output. The government defines SMEs eligible for grants and incentives as firms with some local management (at least 30% of total shareholdings) with annual sales turnover of S$100 million OR headcount of 200 workers, or less. Even companies with a hundred or so employees can build a large company, and seek to be leaner and more efficient, with government grants, if needed.

There are a few schemes smaller businesses can benefit from, namely: Productivity and Innovation Credit Scheme (PIC) by Inland Revenue Authority Singapore (IRAS), Innovation and Capability Voucher (ICV), Micro Loan Programme (MLP), SME Talent Programme (STP), Capability Development Grant (CDG) by Spring Singapore,  iSprint by Infocomm Development Authority of Singapore (IDA) and WorkPro by Ministry of Manpower.

PIC is currently used for tax deductions for activities that boost productivity. It can be used for:

- Acquiring and leasing of PIC IT and automation equipment
- Training of employees
- Acquiring and licensing of Intellectual Property rights
- Registration of trademarks, patents, designs and plant varieties for at least one year
- Research and development
- Investment in design projects

ICV is a capability development project that improves the various aspects of a business, from human resources (manpower selection, planning and developing), financial management (budgeting, cash flow control, planning), innovation (customer insights, legal diagnostics, technical feasibility studies) to productivity (quality management, productivity management, service excellence and energy efficiency audit). It can also be used on equipment, renovation and design.

A company can use eight vouchers. Each voucher cannot last more than six months, and applications for new projects are only allowed after the existing project of the company ends.

Never again should we spend time on so much unnecessary physical labour.

For local SMEs with less than 10 employees, they can consider automate and upgrade factory equipment through Micro Loan Programme, or MLP. The maximum loan given out is S$100,000. Interest rate is 5.5% for loan tenures 4 years or below, subject to group restrictions. DBS, UOB, OCBC, Maybank, Hong Leong Finance, Orix Leasing and other institutions can assist further with MLP.

The SME Talent Programme (STP) provides good hires to smaller businesses. It sounds like a win-win situation for all parties in the STP: the student has good education, acquires work experiences and skills; the employer has more certainty in a consistent stream of quality hires, while upholding professionalism in their businesses and expanding their possibilities; and the Government can rely less on big corporations, whose decisions can shake Singapore. Students have to be hired through the different trade associations and chambers.

The Capability Development Grant (CDG) gives 70% funding support to businesses that develop businesses to scale up. Notable areas of support include brand and marketing strategy, something that expands the revenue base of firms, and service excellence, which most front-line firms need for better reputation and customer retention.

iSprint is a scheme that allows firms to scale up with provable sector-specific solutions, with a grant that covers total qualifying costs. It must be new solutions that the applicant companies do not already use. A grant of 70% of total costs that are qualified under IDA guidelines is given.

WorkPro is a scheme where the National Trades Union Congress (NTUC) and Singapore National Employers Federation (SNEF) work together to hire and retain mature and back-to-work workers. It involves an age management grant of up to S$20,000 per company, a job redesign grant of S$150,000 to back-to-work locals and mature employees respectively, a work-life grant of S$40,000 to co-fund 80% of work-life training, 50% for employee infrastructure, and a reward scheme of S$40,000 annually for 3 years.

Only when smaller businesses are nimble enough to make the most out of the assistance the Government gives to offer smaller businesses, while staying focused on their core capabilities, then the smaller businesses can make wonders.