Singapore to encourage innovation with $3b top up

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Lawrence Wong, Singapore’s finance minister and deputy prime minister, has announced a S$4 billion (US$3 billion) top up to the National Productivity Fund in order to “anchor more quality investment” to the city-state.

“But innovation is not without risk, which businesses may find more difficult to take amidst slower growth and higher cost,” Wong said in his speech about Singapore’s 2023 budget statement.

This year, Singapore is also introducing the Enterprise Innovation Scheme, which will increase tax deductions for companies that conduct research and development activities in or register their intellectual property in the country, among other criteria.

The scheme “presents a good opportunity for companies to mitigate their investment risks by investing more in R&D with financial support from the government,” explained Lee Bo Han, a partner at KPMG in Singapore. “The cash payout for R&D is also encouraging for entrepreneurs in technology development.”

According to Wong, the government has also been mobilizing investments in SMEs through Heliconia Capital. “To date, we have committed S$1 billion to this effort, and invested in about 60 Singapore-based companies. This has in turn catalyzed around S$2 billion of additional investments into these companies,” he noted.

An additional $150 million via the SME Co-Investment Fund will be allocated to invest in promising SMEs, Wong said.

Though global inflation has reached 9%, Singapore still expects 0.5% to 2.5% economic growth this year. Regardless, Wong pointed out that the country is likely to experience high headline inflation in the first half of this year.

Currency converted from Singapore dollars to US dollars: US$1 = S$1.33.

See also: Mapping Temasek’s role in the startup space