Staying competitive in a challenging world: Will Budget 2023 turbocharge the S’pore economy?

In his Budget speech last week, Deputy Prime Minister (DPM) Lawrence Wong did manage to pull off his Valentine’s surprise to Singaporeans. 

But lost in the chatter of GST vouchers, baby bonus cash, and higher tobacco taxes are a slew of measures to help businesses in Singapore stay competitive in this brave new world. 

A million here and a billion there, DPM Wong vowed to redouble our efforts to attract high-quality investments, nurture and sustain innovation, develop local enterprise and empower our workers. 

These are all laudable goals that would move Singapore forward in a new era. But the question is, will they succeed at turbocharging our economy in an increasingly challenging post-COVID world?

Turbocharging our economy

In his speech, DPM Wong warned that an era of zero-sum thinking has begun.

Small economies such as Singapore will find it difficult, if not impossible, to compete with countries with massive manufacturing capabilities and resources. 

That is why Singapore must go all out to ensure that businesses are given enough wiggling room to innovate and expand their capabilities, ideally into niche areas that will provide them with a competitive advantage. 

In a roundabout way, grants to businesses are a way of investing in Singaporeans without putting the money directly in our pockets. 

While we admit that the latter option is always welcomed, building the foundation to create vibrant industries is a better approach in the long run since it is a prerequisite for wage growth and job opportunities. 

This is perhaps why DPM Wong is dropping more money into businesses for this Budget than the bombs America dropped during the Vietnam war. 

For a quick recap of what is being dished out, there is S$4 billion to top up the National Productivity Fund, S$25 billion between 2021 to 2025 to catalyse research and development, S$150 million to the SME Co-Investment Fund and another S$1 billion to the Singapore Global Enterprises initiative. 

It will take years, and hopefully, these investments should produce a trickle-down effect.

And before we tear into the problems of trickle-down economics, the Ministry of Finance has already foreseen it, which explains the implementation of the Base Erosion and Profit Shifting initiative (BEPS 2.0) to prevent tax avoidance.

Investing in the people

Besides attracting investments and strengthening our industries, Budget 2023 stands out as one that prioritises the welfare and development of Singaporeans. 

After all, the value we create as an economy must benefit Singaporeans with better jobs and higher wages, said DPM Wong. 

So how will Budget 2023 help equip and empower us with the most in-demand skills? 

For a start, the government intends to appoint Jobs-Skills Integrators, specialists with a better understanding of labour needs and skills gaps within the various industries. 

Ideally, this should steer workers and employers away from training programmes that do little at enhancing job prospects and productivity. 

Next, DPM Wong also announced the extension of the Senior Employment Credit and Part-time Re-employment Grant until 2025. 

With mature workers having a wealth of experience, it makes sense to keep them in the workforce for as long as they choose to. 

Practically, it is also a move that will benefit a country with an ageing population and shrinking workforce.

Because rather than depend on foreign talent, would it not be much better to build a Singaporean core of workers?

A Budget for the long-term

With its pulse firmly in the right place to uplift businesses and workers, it is likely that the initiatives announced in Budget 2023 will help boost our economy in the years ahead.

After all, sustainable practices with longer-term sensibilities are what help Singapore stay ahead in the global economy.

Featured Image Credit: Ministry of Finance via Facebook