Government support for business costs

THE government will continue to keep a close eye on business costs, even as it took the stance of letting market forces set the price of rentals. But where there are possible market failures, such as when it is not commercially-viable to provide space for startups, the government will step in – and has indeed done so.

In the retail and the F&B (food and beverage) sectors, rental costs as a share of business costs is around 30 per cent. Rental costs make up between 0.7 and 4.8 per cent of total business costs in the manufacturing sector, and constitute about 5 per cent of business costs in most services sector.

Rentals across all sectors – industrial, commercial, retail and office spaces – have been declining for the past 3 years– thus the rental problem has not been so severe.

JTC has set up LaunchPad@one-north 2 years ago and future plans include building a network of LaunchPads around Singapore — the next one to be completed in the Jurong Innovation District in 2017.

The government has ways to support businesses, such as the Capability Development Grant (CDG), the SME Working Capital Loan and Automation Support Package (ASP). CPG defrays up to 70 per cent of qualifying project costs and thus encourages businesses to build business capabilities. SME Working Capital Loan has catalysed over S$700 million and 4,800 loans as of Dec 31, 2016, to the benefit of about 4,300 SMEs. Under the initiative, SMEs can access unsecured working capital of up to S$300,000 to help them address cash flow concerns and growth financing needs. The CDG and ASP schemes, which help companies achieve productivity improvements through automation, collectively supported 226 automation projects in 2016.

The government also introduced Bridging Loan for Marine & Offshore Engineering (M&OE) companies in November 2016 and enhanced the Internationalisation Finance Scheme for M&OE.

Both schemes aim to facilitate the access of these M&OE companies to working capital and financing to stabilise the sector as it copes with prolonged weaknesses in oil prices. Applications for loans amounting to over S$90 million have been approved as of February 2017. These support measures are expected to catalyse about S$1.6 billion in loans over one year.

The government continues to monitor the sector closely by tracking indicators such as order books and output levels, and evaluating feedback from industry players.

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