A report by economist Mr Barnabas Gan was published by UOB on 30 January outlining areas of potential focus for the upcoming 2019 budget to ensure Singapore’s long term survival and sustainability.
The report highlighted key expenditure areas that may be present in the upcoming FY2019 budget. The 5 areas Mr Gan identified for expected expenditure are:
- The Merdeka Generation Package
- The healthcare needs of all Singaporeans
- Helping local companies to digitalise, innovate and internationalise
- An enhancement to the SkillsFuture credit initiative
- The need to mitigate the rising threat of crime and terrorism
The last three areas listed revolve around the digital transformation that is taking place across the globe, and particularly in South-East Asia, and the necessity for Singapore to be ready and equipped for this industry revolution.
Digitalise, innovate and internationalise to shape Singapore’s future economy
One area of focus is helping local companies to digitalise, innovate and internationalise to ensure Singapores future is sustainable.
Mr Gan said that “In the broad sense, the emerging buzz-words that we increasingly hear nowadays – Smart Nation, Artificial Intelligence, Big Data, Robotics etc. are likely to be future platforms that will transform the way Singaporeans live and work.
And he explained that in order to translate this to the business space, especially to the Small and Medium Enterprises (SMEs), there is a definite need for Research & Development, training, and incentives to develop eco-friendly systems and the digital economy.
He presented policies that could help achieve this aim:
(1) R&D incentives on qualifying R&D activities, especially given the expected expiry of the Productivity and Innovation Credit (PIC) scheme after the year of assessment 2018,
(2) the introduction of a new digital tax incentive/credit that could be offered to encourage companies to invest in new digital products/services,
(3) a potential fintech incentive to promote the adoption of digital and mobile payments, authentication and biometrics.
Investing in a digitally skilled workforce
Another area believed important to invest in is the enhancement to the SkillsFuture credit initiative given Singapore’s need to train and reskill workers to stay relevant into the next decade.
The report went on to say that according to a joint study by Cisco and Oxford Economics in Sept 2018: “Singapore will face the biggest mismatch between skills and jobs across six south-east Asian countries – 20.6% of Singapore’s full-time workforce will see their jobs displaced by 2028 given the impact of artificial intelligence”
This reinforces the need to enhance the Singapore domestic workforce and to stay relevant in the ever-changing digital environment. In the 2015 budget, the SkillsFuture initiative had allocated S$500 to every Singaporean aged 25 and above, to be topped up at regular intervals and not expire.
The report suggested a way to improve on this initiative could be to identify and introduce courses that leverage on Singapore’s digital transformation, especially in areas of robotics, digitalisation, programming etc. Mr Gan added that “We perceive that such cutting-edge courses may likely not come cheap, so a dollars-and-cents enhancement to the overall SkillsFuture credit account will likely be welcomed too.”
Cybersecurity likely to take precedence in the upcoming FY2019 budget
The report also highlighted the serious and current issue of mitigating the rising threat of crime and terrorism, be it in a form of cyber-security or physically present in Singapore. The report stated that this issue will likely take precedence in the upcoming FY2019 budget.
The rise in cybercrime-related acts (cybercrime cases grew 16.6% in 2017, up from 15.6% in the previous year), coupled with 2018’s SingHealth cyber-attack which in turn is believed to be by state-sponsored hackers4, highlighted Singapore’s need to strengthen its physical and cyber borders.
A recent survey by the Ministry of Home Affairs (MHA) of public perceptions towards terrorism showed that 60% of participants agree that Singapore is a target for terror attacks, and 97% highlighted that everyone has a part to play in preventing or dealing with terrorism. Therefore some dedication of resources towards increasing defence and security expenditure may be possible.
Singapore’s FY2019 Budget will be delivered on 18th February 2019. This upcoming budget will be the 4th budget delivered by Finance Minister Heng Swee Keat. And it will be interesting to see how much influence/impact digital transformation, industry 4.0 and cybersecurity will have on this years budget!