FEBRUARY 24 — With global and economic uncertainty looming large, Singapore’s Budget 2017 struck an expansionary and inclusive tone, with a focus on growth from within. In this brave new world of “Trumponomics”, and rhetoric on protectionism and anti-globalisation, the Budget speech by Finance Minister Heng Swee Keat came across as balanced and prudent.

There was a reassuring sense of cautious confidence running through the initiatives in this year’s Budget.

And while even the most jingoistic will acknowledge Singapore’s continued dependence on the global economy, Budget 2017 sought to reaffirm that the little red dot’s fate was primarily in its own hands.

Following on from the Committee on the Future Economy’s (CFE) recommendations, Budget 2017 outlined additional measures to create an innovative, digitised and internationalised Singapore. Mr Heng identified three key capabilities to strengthen Singapore enterprise: The capability to exploit digital technology, embrace innovation, and scale up. He also outlined the importance of building agility through capability growth and through partnerships. All in, S$2.4 billion was set aside for use over the next four years to implement the CFE strategies.

Budget 2017 also sought to continue the inclusive and progressive social agenda of previous Budgets. There was additional support in housing and education, measures to help families with greater needs, and various funds to strengthen community bonds. The Budget also incorporated a significant green agenda aimed at sustaining a high-quality living environment for future generations, not least by introducing a new carbon tax to reduce emissions.

Evidently, these measures have an eye on domestic politics. Nonetheless, they are also a clear sign as to how Singapore remains confident that it can continue to grow in the right way, and not just grow at all cost.

Indeed, in the context of global uncertainty, some economists were predicting, in the run-up to the Budget announcement, that this would be a Budget for businesses more than individuals. Given this, the increased emphasis on individuals, families, and social and green measures may have come as a surprise.

That is not to say businesses were left out. Small- and medium-sized enterprises (SMEs) were arguably the standout winners in Budget 2017, reflecting the objective of domestic-led growth. SMEs stand to benefit from support for skills training, innovation and digitisation schemes, internationalisation plans, and increased corporate tax rebates.

In contrast, there were relatively few headlines for multinational corporations (MNCs). The introduction of an Intellectual Property Development Incentive may provide additional opportunities for MNCs seeking to invest here.

However, the incentive is expected to largely replicate what a number of other countries have already implemented elsewhere. Singapore’s reluctance to aggressively chase broad-based foreign investment may be a sign of self-assurance, confidence and maturity, but the world is arguably in an era of unprecedented competition for foreign investment and trade.

In general, we have seen a decline in global corporate tax rates, led by parts of the European Union, with the United States’ Trump administration seemingly intent on following suit. Competitive tax incentive regimes have also been on the rise globally.

All this means that Singapore’s 17 per cent headline corporate tax rate and existing incentive regime may appear less competitive. Budget 2017 could therefore be viewed as a bold one, in that there are relatively few headlines to grab the attention of foreign investors at such a competitive time.

Singapore’s reputation as a progressive and innovative business hub is important to maintain, and in this, the country has a difficult balancing act on a high-wire.

In the current environment of intense scrutiny on corporate tax affairs, the need to show that Singapore has a responsible, robust tax administration is arguably now just as essential to attracting MNC investment as low rates.

It will be important to see the level of transparency which is included in the new Intellectual Property Development incentive and the revised Global Trade Programme incentive when full details are available.

In a further sign of cautious confidence, Mr Heng announced that investments in infrastructure would be accelerated to support growth in the construction sector and enhance the vibrancy and connectivity of the city state. These include continued investment in Changi T5, the KL-Singapore high-speed rail link, and the Tuas Terminal.

To many, this will be commendable in a time when global policymakers are revisiting the age-old question of whether to spend to grow, or to batten down the hatches for choppy seas.

In an era of global uncertainty and increased competition for growth, one has to admire the cautious confidence exuded throughout Budget 2017.

Its domestic growth focus is to be applauded for the increased resilience it seeks to provide against global change and uncertainty.

To continue to pursue an expansionary, modern and inclusive agenda right now shows how far Singapore believes it has come in its ability to determine its own destiny, even in potentially difficult global times. — TODAY

* Charles Collett is director of value chain transformation at PwC Singapore

** This article was first published here.

*** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.