On February 18, 2022, Minister Lawrence Wong delivered his first address as Minister of Finance, announcing the much-anticipated Singapore Budget 2022.
We have archived all of the significant updates, split into two parts. Don’t forget to read the first part of this article to know more about the Jobs and Business Support Packages. This part of the article elaborates more on the financing support, support for digitisation and workforce transformation.
Enhanced Financing Support
The government has extended the following support initiatives to help local businesses with temporary cash flow issues due to rising prices or in their foreign expansion:
Temporary Bridging Loan Programme
During the COVID-19 crisis, the Temporary Bridging Loan Program (TBLP) was established in March 2020 to aid businesses with working cash.
In light of the ongoing impact of COVID-19 and recent increases in business expenses, the TBLP will be extended for another six months until September 30, 2022, with amended limits.
The concurrent expansion of the MAS SGD Facility for Enterprise Singapore (ESG) Loans will complement this. You can refer to the MAS website for more information on the Facility.
Parameters of the Scheme
The TBLP’s amended parameters are as follows:
| Dimensions | Features |
| The revised maximum loan amount | From S$3,000,000 to S$1,000,000 per borrower, up from S$3,000,000 earlier.
Each Borrower Group will get a total of S$20,000,000. |
| Repayment period maximum | Up to 5 years |
| The revised Risk-sharing by the government | Up to 70% |
| The revised interest rate | Capped at 5.5% (down from 5% earlier). |
Enterprise Financing Scheme–Trade Loan
The Enterprise Financing Scheme–Trade Loan (EFS-TL) assists Singapore-based businesses with their trade financing needs, such as short-term import, export, and guarantee requirements.
Due to COVID-19, the EFS-TL was initially expanded in April 2020 to give businesses greater access to trade finance during slower business operations and longer payment cycles. However, given the persistent uncertainty in the global trade environment, the improvement to EFS-TL will be extended for another six months, through September 30, 2022, with amended conditions.
For new firms and enterprises dealing in countries with an S&P rating of BB+ or lower, including non-rated countries, the higher risk share of 70% will be maintained until 30 September 2022. The increased risk-sharing support seeks to encourage businesses to expand internationally and take advantage of possibilities in those nations.
Parameters of the Scheme
The enhanced EFS-TL’s updated parameters are as follows:
| Dimensions | Features |
| The revised maximum loan amount | is $5 million per borrower, down from $10 million earlier.
Each Borrower Group will get a total of S$20,000,000. |
| Repayment period maximum | Up to 1 year |
| The revised Risk-sharing by the government | is 70% from April 1, 2022, until September 30, 2022,
From October 1, 2022:
|
| The revised interest rate | Participating in Financial Institutions will analyse the situation. |
Enterprise Financing Scheme–Project Loan
The Enterprise Financing Scheme– Project Loan (EFS-PL) assists Singapore-based businesses with their overseas project finance needs, such as working capital, guarantee, and fixed assets financing.
In January 2021, the EFS-PL was updated to help domestic building projects cope with COVID-19’s problems.
The EFS-PL upgrade will be extended for another year until March 31, 2023, to assist construction companies in completing domestic projects despite growing costs and constrained cash flow.
Parameters of the Scheme
The upgraded EFS-PL’s parameters are as follows:
| Dimensions | Features |
| Qualification | Construction-related businesses in Singapore are identified by SSIC codes beginning with 41, 42, or 43. |
| The revised maximum loan amount | Domestic Projects: S$30,000,000 per Borrower or Borrower Group |
| Repayment period maximum | Up to 15 years |
| The revised Risk-sharing by the government | Standard up to 50%
Young Enterprises up to 70% |
| The revised interest rate | Participating in Financial Institutions will analyse the situation. |
Enterprise Financing Scheme – Merger & Acquisition Loan
The Enterprise Financing Scheme– Merger and Acquisition Loan (EFS-M&A) assists Singapore-based businesses in acquiring foreign or local businesses to expand internationally.
For four years, from April 1, 2022, to March 31, 2026, the EFS-M&A will be upgraded to encompass domestic M&A activity. This is to assist firms in scaling and expanding through mergers and acquisitions, as well as going into complementary industries and developing areas.
Parameters of the Scheme
The increased EFS-M&A parameters are as follows:
| Dimensions | Features |
| Qualification | Singapore companies interested in acquiring local or international targets |
| The revised maximum loan amount | Each borrower or Borrower Group receives S$50,000,000. |
| Repayment period maximum | Up to 5 years |
| The revised Risk-sharing by the government | Standard up to 50%
70% for young enterprises operating in countries with an S&P rating of BB+ or worse, including non-rated nations. |
| The revised interest rate | Participating in Financial Institutions will analyse the situation. |
This upgrade encourages local enterprises to merge and expand their skills to take advantage of commercial prospects.
The government’s decision to just extend the Temporary Bridging Loan Program and Enterprise Financing Scheme for six months to a year may be insufficient to help SMEs overcome cash flow challenges, particularly in industries still affected by the epidemic.
Key Notes:
- The MAS SGD Facility for Enterprise Singapore (ESG) Loans will provide Singapore Dollar (SGD) funding at an interest rate of 0.5% per annum for a two-year tenor to eligible financial institutions to support loans made under the TBLP and the Enterprise Financing Scheme–SME Working Capital Loan from 1 April 2022 to 30 September 2022.
- A Borrower Group consists of the following:
- Borrower;
- Corporate shareholders holding more than 50% at all levels up;
- Subsidiaries where the Applicant company holds more than 50% shareholdings and subsequent subsidiaries at all levels down; and
- Subsidiaries where the Applicant’s Ultimate Parent Company holds more than 50% shareholdings and their subsidiaries at all levels down.
- Young enterprises refer to firms formed within the past five years with at least one employee and more than 50% equity owned by individuals.
Investing in Digital Capabilities
Advanced Digital Solutions (ADS)
The Government will expand assistance to adopt cutting-edge digital solutions through the Infocomm Media Development Authority’s (IMDA) Advanced Digital Solutions (ADS) project to strengthen our enterprises’ competitive advantage and boost commercial growth.
ADS was established in 2020 to promote and expand the use of advanced integrated solutions (such as in robotics, the Internet of Things, and other technologies).
The plan will be expanded on April 1, 2022, to cover solutions that use Artificial Intelligence (AI) and Cloud technology to assist businesses in enhancing operational efficiency and making better business decisions. Participating companies will receive up to 70% financing support for these solutions.
Grow Digital
The government will also expand the Grow Digital scheme to assist firms in better using digital platforms to access foreign markets.
The Grow Digital initiative, launched in June 2020, assists SMEs in digitally accessing abroad markets through pre-approved Business-to-Business (B2B) and Business-to-Consumer (B2C) e-commerce platforms and ecosystem partners. Since then, the programme has aided over 2,500 businesses in expanding their presence to as many as ten nations.
Grow Digital will be expanded to include more pre-approved digital platforms on April 1, 2022, allowing more enterprises to internationalise without the need for an in-market presence. SMEs may also develop skills to more effectively access new markets using these platforms, such as AI-powered business matching to link SME suppliers with potential foreign clients, cross-border e-payment facilities, and training to establish competitive, globally-oriented enterprises.
Participating businesses would get up to 70% financing to help them integrate the B2B and B2C platforms.
TechSkills Accelerator (TeSA)
In conjunction with industry partners and the National Trades Union Congress, the TechSkills Accelerator (TeSA) project seeks to produce a trained Information and Communication Technology (ICT) workforce for Singapore’s digital economy (NTUC). TeSA has taught approximately 120,000 people a variety of tech skills, including cybersecurity and artificial intelligence, since 2016. A total of 12,000 people have been put in ICT occupations due to the initiative.
TeSA will grow on numerous fronts in the coming year to develop a strong Singaporean core of ICT expertise. These include:
Collaborating with industry leaders to increase Singapore’s product development teams;
Expanding TeSA to SMEs and startups to create additional job possibilities for mid-career professionals; and
Upskilling our present digital workforce to keep their skills relevant.
Through focused efforts for students at our Institutes of Higher Learning (IHLs), the government will continue to expand the national pipeline of digital talent. MCI’s Committee of Supply (COS) will provide more information.
Encouraging Enterprise and Workforce Transformation
SkillsFuture Enterprise Credit (SFEC)
The SkillsFuture Enterprise Credit (SFEC) promotes businesses to modernise their operations and workforces. Eligible employers receive a one-time credit of up to $10,000 to cover up to 90% of out-of-pocket expenses for supported enterprise transformation programmes (e.g. Enterprise Development Grant, Productivity Solutions Grant) and workforce transformation programmes (e.g. Enterprise Development Grant, Productivity Solutions Grant). In addition, a ring-fenced $3,000 of a $10,000 credit for a qualifying firm is set aside for workforce transformation efforts.
In Budget 2022, the SFEC eligibility requirements were changed to enhance SFEC coverage during the qualifying period of 1 January 2021 to 31 December 2021:
- [New] No minimum Skills Development Levy (SDL) contribution is required over the qualifying period. However, employers who had an inactive ACRA status throughout the qualification procedure or missed an SDL payment during the qualifying period will be eliminated.
- [There is no change] Over the qualifying period, at least three Singapore citizens or permanent residents must be employed each month.
- [There is no change] In any of the previous times, I did not qualify.
In April 2022, newly eligible employers will be notified. In addition, to provide firms more time to plan for and implement transformation efforts, the deadline to claim the credit for all employers (including those that previously qualified) will be extended by one year, to 30 June 2024.
Key Notes:
- Previous SkillsFuture Enterprise Credit (SFEC) qualifying periods were:
- 1 April 2019–31 March 2020,
- 1 July 2019–30 June 2020,
- 1 October 2019–30 September 2020, and
- 1 January 2020–31 December 2020.
Adjustment to Foreign Workers’ Policies
Several revisions to Singapore’s foreign labour laws, announced in the 2022 budget on February 18, 2022, seek to increase Singaporean national employment rates while reducing the number of foreign employees. So while hiring you should take note of these changes to benefit from the different schemes available. Also, the employer and employee contributions to the Central Provident Fund (CPF) will gradually increase for employees aged 55 to 70 on January 1, 2023.
An Employment Pass for Qualifying Foreign Professionals, Managers, and Executives
Incoming Employment Pass (EP) holders should be “qualitatively similar to the top one-third of our local PMET workforce (those with professional, management, executive, and technical occupations),” according to the government. In addition, it would “refine” how EP applications are evaluated to promote “the complementarity and variety of our foreign workforce, as well as provide certainty and transparency for businesses,” according to the statement.
First-time younger EP candidates must make a minimum qualifying salary of S$5,000 (up from S$4,500) as of September 1, 2022, while older applicants (in their mid-40s) must earn S$10,500 or more (up from S$9,000). From September 1, 2023, the revised wage requirements will apply to pass renewals.
EP candidates working in the financial industry will have to pay higher fees from September 1, 2022. This will translate to S$5,500 for younger applicants and S$11,500 for elderly applicants.
Implementation of a Points-Based Immigration System for EP
In addition to earning the increased qualifying income, EP candidates will be required to obtain a minimum amount of points based on individual and corporate characteristics as part of a new Complementarity Assessment Framework (COMPASS).
To pass COMPASS, candidates must score 40 points or above on four basic criteria and two bonus criteria based on compensation, credentials, and diversity. From September 1, 2023, new EP applicants will be subject to COMPASS, and renewals will be subject to COMPASS from September 1, 2024.
S Passes for Qualifying Foreign Mid-Skilled Technical Workers
S Pass holders are expected to be “qualitatively similar to the top one-third of local Associate Professionals and Technicians,” according to the government.
The minimum qualifying wage for younger applicants for an S Pass will be S$3,000 from September 1, 2022, increasing to at least S$3,150 on September 1, 2023, and S$3,300 on September 1, 2025. (the salary amounts will be confirmed closer to the date). For senior candidates, the price will be around S$4,500. From September 1, 2023, the revised wage requirements will apply to pass renewals.
S Pass candidates working in the financial industry must earn a minimum of S$3,500 starting September 1, 2022, increasing to at least S$3,650 beginning September 1, 2023, and at least S$3,800 starting September 1, 2025. (salary amounts will be confirmed closer to the date).
On September 1, 2022, the Tier 1 S Pass worker levy rate will increase to S$450, then to S$550 in September 2023, and finally to S$650 in September 2025.
Introduction of a Levy Structure to Replace Work Permits
For qualified semi-skilled foreigners working in the construction, manufacturing, marine shipyard, processing, and service sectors, a new levy system will replace the present Work Permit on January 1, 2024. Depending on the industry sector and the nationalities of the workers, different taxes will be imposed.
In addition, the dependence ratio ceiling (DRC) for the construction and process industries will be decreased beginning January 1, 2024. Under the S Pass and Work Permit programmes, the DRC is the maximum ratio of foreign employees that can be engaged with the overall workforce.
The Introduction Progressive Wage Credit Scheme
Between 2022 and 2026, the government will implement the Progressive Pay Credit Scheme, which would co-fund wage increases for lower-paid workers. The Workfare Income Supplement will be expanded to accommodate additional lower-paid Singapore citizens and permanent residents as of January 1, 2023.
Other Labour Market Indicators
The Jobs Growth Incentive scheme, which provides pay support to firms recruiting individuals aged 40 and older who have been jobless for six months or more, people with impairments, and ex-offenders, will be updated and extended until September 2022. The Skills Future Career Transition Programme will take over many training programmes on April 1, 2022.
An Increase in CPF Contributions
On January 1, 2023, the CPF contribution rates for members aged 55 to 70 will increase once more (an increase was implemented in 2022). Employer contributions will be 14.5% for members aged 55 to 60 and 15% for workers (up from 14% paid by both employers and employees). The rates for those aged 60 to 65 will be 11% and 9.5%, respectively (up from 10% and 8.5%).
The rates for those aged 65 to 70 will be 8.5% and 7%, respectively (up from 8% and 6%). Members aged 55 to 60 would pay 37% of their total CPF contributions, while members aged 60 to 65 would pay 26%, and members aged 65 to 70 would pay 16.5%. The government will support employers with an offset compared to the CPF Transition Offset offered in 2022.
Final Thoughts
While Singapore’s economy is improving, small and medium-sized businesses (SMEs) are still dealing with the pandemic’s long-term impacts. On the 18th of February 2022, Finance Minister Lawrence Wong announced measures to assist struggling employees and companies as part of Budget 2022.
The budget for this year has expanded corporate financing initiatives, including industry-led skills training for workers and tightened rules on foreign worker inflows.
In 2022, the government will expand the implementation of existing policies while also launching new efforts to help companies in Singapore.
The government will increase its financial assistance, invest in digital capabilities, and encourage enterprise and workforce change, as stated in the 2022 budget.
Minister Wong concluded his speech by stating that Singapore businesses will have a bright future in 2022. The need to digitise is now more important than ever, with improving digital capabilities becoming a “top priority” for the future.
