After weeks of anticipation, Singapore’s 2022 Budget statement was delivered by Finance Minister Lawrence Wong at the Parliament House last February 18.
Singapore’s 2022 Budget statement is generally divided into several parts:
- Economic Performance and Outlook
- Moving Forward Together
- Invest in New Capabilities
- Advance our Green Transition
- Renew and Strengthen our Social Compact
- Build a Fairer and More Resilient Tax System
- Fiscal Outlook
Wong began by noting that Singapore committed close to SG$100 billion over the past two years to “support Singaporeans and businesses through the uncertainties of COVID-19,” and added that the measures have produced successful results, highlighting that the resident unemployment rate has declined to 3.2%, which is close to pre-COVID levels.
He also shared that the median income of full-time employed residents increased by around 1% in real terms last year, after a decline of 0.4% in 2020.
The Finance Minister said he expects to see “steady recovery” with the economy growing by 3% to 5% this year.
As a whole, the 2022 Budget covered several areas that may influence enterprise technology in Singapore – and perhaps in the Asia-Pacific region as well.
Wong believes Singapore is making good progress, and remarked that the country’s productivity is increasing.
“Last year alone, 11 Singapore-based start-ups achieved unicorn status (i.e. start-ups with a value of over US$ 1 billion) – no mean feat for a small city-state. These and other technology firms create many highly-skilled jobs and opportunities for Singaporeans,” he said.
The Finance Minister added that the pandemic has “turbocharged the move to a digital future”, which may be partially attributed to the previous year’s budget dedicating SG$1 billion to digitalisation.
Wong also asserts that every time a task is digitalised, it becomes easier to use software to automate and optimise it. “Such new digital technologies will disrupt and reshape businesses, and impact a wide range of jobs across all sectors of the economy,” he said.
According to Mr Wong, Singapore’s local businesses – especially the digitally savvy ones – will be able to take advantage of current opportunities, but reasoned that this benefit “cuts both ways,” as it will also be possible for multinational companies to “reshore” more functions to their home countries, as they seek to simplify and localise their supply chains.
To adjust to this concern, the Finance Minister said Singapore’s enterprises and workers will need to accelerate their (digital) transformation and develop new capabilities to “stay ahead of the competition”, and look beyond the city-state’s shores and in new areas.
“In the coming years, we expect an increasing shift in market rewards towards those with the highest skills and who are best able to take advantage of new technologies. This will make it harder to keep our growth inclusive and to hold our society tightly together,” he speculated.
Investing in digital capabilities
To “stay ahead” in the race, Wong says that Singapore must redouble efforts to strengthen its digital capabilities.
“Today, we are one of the most connected cities in the world, and among the first to roll-out a 5G standalone network. In parallel, we have built digital utilities, like SingPass, Myinfo and PayNow, that allow our people and businesses to access digital services and transact seamlessly and safely,” he said.
This digital capabilities improvement plan consists of the following parts:
- Upgrading Singapore’s broadband infrastructure to increase broadband access speeds by around ten times over the next few years.
- Investing in future technologies like 6G, to ride the next communications and connectivity wave.
He added that the use cases for such high speeds are still nascent, but there are “many new possibilities for augmented and virtual reality tools, limited only by our imagination.”
Alongside infrastructure improvements, the Finance Minister will set aside an additional SG$200 million over the next few years to enhance schemes that build digital capabilities in Singapore’s businesses and workers.
Investing in innovation
Wong said Singapore will also push for “pervasive innovation” across the economy.
“Innovation is built on strong R&D foundations,” he said. “That is why, over the years, we have steadily increased the government’s investment in R&D, maintaining it at about 1% of GDP, comparable to other small advanced economies.”
The Finance Minister added that Singapore will continue to sustain its investments in R&D, with SG$25 billion being set aside under the Research, Innovation and Enterprise, or RIE2025 strategy.
“Public investments in R&D also serve as a catalyst for similar investments in the private sector. Unfortunately, our total business expenditure on R&D still lags other economies,” he observed.
Presently, said. Mr Wong, most of this R&D is driven by multinational companies, which he thinks have greater scale and better resources. Local enterprises, which comprise about 80% of all firms, account for only about a quarter of total business R&D expenditure in Singapore.
“I will therefore provide more support for our local firms to undertake R&D activities. We currently have a network of more than 80 centres across our Polytechnics and ITE engaging in technology, innovation, and enterprise activities. These centres work closely with SMEs to undertake industry projects, many of which have led to new innovations,” the Minister said.
As an example, Wong cited Nanyang Polytechnic’s Automation & Robotics Innovation Centre collaborating with Sanwa-Intec Asia, an SME that supplies the automotive industry, to design and implement robotics and automation solutions.
One of the solutions is a robotic tool that emulates an operator’s handling of hot moulded products. Previously, a human operator would have had to do the work manually. Now, they get the job done using the robotics system. As a result, Sanwa-Intec is said to have “significantly raised” production volume while reducing its energy consumption.
Students from Nanyang Polytechnic had the chance to work on these projects as well, he said.
The Finance Minister sees such collaborations as a win-win, because SMEs get to tap on the R&D capabilities in Singapore’s polytechnics and ITE, while students can contribute meaningfully to these projects and gain valuable hands-on industry experience.
To further support such collaborations, Mr Wong plans to increase the capacity of the centres so that they can provide research and innovation support to more SMEs.
“Over the next five years, these centres will be able to undertake close to 2,000 innovation projects across five pilot sectors: Agri-Tech, Construction, Food Manufacturing, Precision Engineering, and Retail. This amounts to an eight-fold increase in the number of innovation projects undertaken in these sectors. We look forward to many more success stories in the coming years,” he said.
Strengthening local enterprises
For the broad base of SMEs, the Finance Minister said the priority is to raise their productivity. These enterprises, he said, can use the Productivity Solutions Grant (PSG) to implement digital and automation solutions.
Wong said SG$600 million will be allotted to expand the range of available solutions under the PSG and push for greater take up of productivity solutions by SMEs. He estimates that this will support more than 100,000 productivity projects over the next four years, which is more than twice the number of projects supported since the scheme began.
Furthermore, a new initiative called Singapore Global Enterprises will be launched to give larger local enterprises more customised assistance and to help them scale up in overseas markets.
The initiative will provide “bespoke assistance tailored to the needs of promising local enterprises”, in areas like innovation and fostering partnerships.
Investing in people
Another area that the Finance Minister focused on in his address is education. Of particular interest to enterprises is ensuring a suitable match between skills demanded by the industry, and those offered by the workforce.
“This means bringing together the various parties involved – training providers, employment facilitation providers, employers, and jobseekers themselves – to anticipate the areas where new skills are required, and ensure that effective training is provided in a timely manner,” said the Finance Minister.
“At the same time, employers need to redesign jobs to harness technology more effectively, and make better use of the upgraded skills of their workers. Our tripartite partners, especially the unions, help to achieve this,” he added.
As a result, SG$100 million will be allotted to support the National Trade Union Congress (NTUC) in its efforts to scale up Company Training Committees (CTC).
“Part of this will go into a new grant which will be administered by NTUC, to support companies that have set up CTCs to implement their transformation plans,” announced Mr Wong.
The 2022 Budget will also pay “special attention” to mid-career workers, especially those in their 40s and 50s, as they are said to be more vulnerable to churn and disruptions in the workplace.
While support measures are in place to help mid-career workers, a new, highly subsidised SkillsFuture Career Transition Programme will be introduced. After the training, mid-career workers will be provided employment facilitation services to maximise their prospects.