TODAY Singapore. English., © 2010 MediaCorp Press Limited

SINGAPORE - Budget measures to spur business growth may be too specific to effectively support the expansion of the small- and medium-sized enterprise (SME) sector.

This concern was raised during the Budget debate in Parliament yesterday.

Proposed schemes like the Land Intensification Allowance came under scrutiny as being too focused on specific sectors.

The Singapore Government budget is aimed at spurring growth for all companies, big and small.

But during the debate in Parliament, some expressed concern that some measures, like replacing the Industrial Building Allowance (IBA) with the Land Intensification Allowance (LIA) may slow growth for sectors outside the nine incentivised industries.

"Industries which are key to growth, examples, port facilities, energy plants, warehousing, telecommunications, have high capital expenses and these are not included," said Ms Jessica Tan Soon Neo, Member of Parliament, East Coast GRC.

"The phasing out of IBA in the short term may be contrary to promoting the eco-system of SMEs as part of the cluster."

The LIA currently incentivises the construction of structures in the petrochemical, petroleum, chemical, semi-conductor, aerospace, marine and offshore, as well as solar cell manufacturing and other speciality industries.

There were also concerns raised that for SMEs that fall outside incentive schemes, paying for industrial or office space on the open market may be costly.

Some Members of Parliament suggested tailoring the schemes to match the specific needs of SMEs, rather than businesses in general.

They say bigger firms were more likely to be able to support their own growth, especially during a recession like last year's.

"Total overseas revenue of the 100 biggest local companies rose even more, a respectable 17.9 per cent to hit $204.9 billion," said Liang Eng Hwa, Member of Parliament, Holland-Bukit Timah GRC.

"Top tier Singapore companies were able to grow their overseas revenues far larger than the smaller players, despite deeper and more direct exposure to the global recession."

Calls were also made in Parliament to remove the cap of $5 million per year for tax incentives on mergers and acquisitions, which speakers said could restrict the M&A market.

Without the cap, they said that SMEs might be more willing to grow through the consolidation, helping them catch up with local blue chips.

Meanwhile, Dr Wilson Chew, group principal consultant and chief executive officer of consulting firm StrategiCom said that "the role of the budget is to provide an overarching direction in terms of addressing the needs of the SMEs. I think as always, the government agencies like Spring, IE Singapore and IDA will then operationalise the budgets and ensure the allocations meet the SME needs".

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