Singapore Budget 2016: What’s in store for startups

Innovation and enterprise were some of the keywords in Singapore’s finance minister Heng Swee Keat’s speech during the 2016 Budget announcement today. A big part of the speech focused on the need for Singaporean businesses to grow, embrace modern technology, and grow beyond the country’s borders.

Here are the key highlights of the budget speech that are relevant to startups:

Industry transformation

Under the general heading Industry Transformation Program, the minister outlined a S$4.5 billion (US$3.3 billion) range of tax incentives, grants, and support schemes aimed at small- and medium-sized enterprises (SMEs) that are supposed to foster growth and global expansion, including incentives for mergers and acquisitions (M&A) and automation.

The minister said  that in order to help SMEs, the government will raise the existing corporate income tax (CIT) rebate from 30 percent to 50 percent, at a cap of S$20,000 (US$14,600). Total support to SMEs under the CIT rebate will be close to S$1 billion (US$730 million) over two years. It will also lower the Productivity and Innovation Credit (PIC) cash payout rate from 60 percent to 40 percent for expenditures incurred on or after 1 August 2016. The PIC scheme will expire 2018.

More support for startups

When it comes to research, technology, and tech startups, the government wants to continue promoting growth and diversity. To that end, it will set up a new entity called SG-Innovate that will match entrepreneurs with mentors, introduce them to venture capital firms, give them access to talent in research institutes, and help them expand to new markets.

SG-Innovate will work with SPRING Singapore and EDB to build on the support that has been offered by Infocomm Investments (IIPL), the investment arm of Singapore’s Infocomm Development Authority (IDA). Sectors of focus will be emerging tech like internet of things (IoT), smart energy, fintech, digital health, and more.

Research top-up

Up to S$4 billion (US$2.9 billion) will go toward collaboration of industry and research, the minister announced. The National Research Fund (NRF), which has made considerable investments in startups in the past, will be topped up with S$1.5 billion (US$1.1 billion) this year.

Building technical talent

The minister stressed that education at all stages of life will play a huge part in the transformation of Singapore’s economy. As part of SkillsFuture, he announced the TechSkills Accelerator, “to pioneer a new way of enabling our people to acquire expertise and skills.”

The Tech Skills Accelerator is the government’s response to the current scarcity of technical professionals in Singapore. As the need for engineers, coders, data scientists, and cybersecurity specialists increases, the Accelerator will identify ICT skills in demand and provide training, as well as certification on those skills.