Incentives and Support for Businesses in Singapore’s Budget 2022

In the second part of our series covering Singapore’s 2022 budget, we look at the incentives impacting businesses.

Singapore’s S$109 billion (US$80 billion) budget provides a variety of new tax measures, such as plans to increase the goods and services tax from 2023 and an increase in personal income tax for those earning more than S$500,000 (US$371,000) from 2024.

The incentives offered to businesses include more than US$300 million in grants, loan schemes, and the expansion of reskilling programs for workers.

Singapore’s Finance Minister Lawrence Wong announced a deficit of S$3 billion (US$2.2 billion) or 0.5 percent of GDP, a decrease from the S$5 billion (US$3.7 billion) deficit in 2021. The country has committed over S$100 billion (US$74 billion) over the last two years to cushion the economic impact caused by the virus, and the government will draw a further S$6 billion (US$4.4 billion) from Singapore’s vast reserve to fund public health measures.

Recovery is expected to remain uneven, especially for the aviation and tourism industries, which will take longer as concerns over the virus and new variants remain.

Singapore’s jobs and business support package

The government has prepared S$500 million (US$371 million) for a jobs and business support package.

The small business recover grant

Under this package, the government has introduced a new small business recovery grant, which provides a one-off cash payment for small and medium-sized enterprises (SMEs) most affected by the pandemic.

SMEs can receive a S$1,000 (US$743) per local employee, up to S$10,000 (US$7,433) per company); and

In addition, the government will distribute S$1,000 (US$743) to SFA-licensed hawkers, markets, coffee shop holders, and local sole proprietors.

Extension of the jobs growth incentive scheme

The government has extended the jobs growth incentive (JGI) scheme until September 2022. The JGI is a program that helps local businesses expand local hiring by the government paying a portion of the salary of the employee.

During Phase 1 of the scheme (local hires from Sept. 2020 – Feb. 2021), the government provided up to 25 percent of the first S$5,000 (US$3,715) of gross monthly wages for 12 months. Further, Phase 1 provided up to 50 percent of the first S$5,000 (US$3,715) gross monthly wages for local hires above the age of 40, persons with disabilities (PwDs), or ex-offenders for wages paid between September 2020 and February 2021.

During Phase 2 of the scheme (local hires from Mar. 2021 – Sept. 2021), the government provided up to 25 percent of the first S$5,000 (US$3,715) of gross monthly wages for 12 months, or up to 50 percent of the first S$6,000 (US$4,459) for local hires above the age of 40, persons with disabilities (PwDs), or ex-offenders for 18 months.

Finally, during Phase 3 (local hires from Oct. 2021 – Mar. 2022), the government provided up to 25 percent of the first S$5,000 (US$3,715) of gross monthly wages for six months, or up to 50 percent of the first S$6,000 (US$4,459) for local hires above the age of 40, persons with disabilities (PwDs), or ex-offenders for 12 months.

To be eligible for the JGI from March to September 2022, businesses must show an increase in the local workforce size and the increase in their earnings ≥$1,400/month (US$1,040), compared to those in Phase 1, 2, and 3.

Extension of the temporary bridging loan program

The temporary bridging loan program (TBLP) has been extended from April 1, 2022, to September 30, 2022.

The program provides businesses with working capital of up to S$3 million (US$2.2 million) per borrower (until March 2022), which will be reduced to S$1 million (US$743,000) per borrower from April to September 2022.

The maximum loan repayment period is five years and the government’s risk share of the loan is 70 percent. Further, the borrower is responsible to repay 100 percent of the loan.

There is also up to S$20 million (US$14.7 million) available per borrower group.

Extension of the enterprise financing scheme – trade loan

The enterprise financing scheme – trade loan (EFS-TL) has been extended for six months from April 1, 2022, to September 30, 2022.

The EFS-TL provides enterprises with trade financing of up to S$10 million (US$7.3 million) per borrower, until March 31, 2022, which will be reduced to S$5 million (US$3.6 million), per borrower from April 1, 2022, to September 30, 2022. The type of loan facilities used for the scheme include trade financing for inventory/stock financing, or for structured pre-delivery working capital, among others. 

Under this extension, the government’s risk share on the loan remains at 70 percent and the maximum repayment period is one year.

There is also up to S$20 million (US$14.7 million) available per borrower group.

Extension of the enterprise financing scheme project loans

The enterprise financing scheme project loans (EFS-PL) will be further extended until March 31, 2023. The program provides financing for certain overseas projects.

The supportable loan types include:

• Land/building/factory (including purchases/renovation/construction);
• Working capital loans;
• Machinery, equipment, other fixed assets; and
• Guarantees.

There is up to S$50 million (US$36.9 million) available per borrower, for overseas projects, and S$30 million (US$22.1 million) per borrower, for domestic projects.

Further, there is also up to S$50 million (US$36.9 million) available per borrower group, for overseas projects, and S$30 million (US$22.1 million) for domestic projects.

The government’s risk share is 50 percent, and 70 percent for young companies — defined as companies incorporated within the past five years and is more than 50 percent equity owned by individuals.

The maximum repayment period is up to 15 years for fixed asset loans and up to five years for working capital loans and guarantees.

Aviation support package

The government has extended a support package for the aviation industry although details of the incentives will be announced at a later date by the Committee of Supply Debate (CSD) by the Minister for Transport.

It is believed that the package will include salary support measures and rebates on aircraft landing and parking charges.

Adjustment to foreign worker permit policies

There are several changes to foreign worker policies in Singapore.

Changes to the Employment Pass

The qualifying minimum monthly salary for the Employment Pass (EP) has been raised to S$5,000 (US$3,694), up from the current S$4,500 (US$3,332).

For the financial sector, the qualifying minimum salary has been increased from S$5,000 (US$3,694) to S$5,500 (US$4,064).

The EP is issued to foreign executives, managers, or skilled professionals.

This increase applies to new applications from September 2022, and from September 2023 for renewal applicants.

Changes to S Pass

As for S Pass holders, the qualifying minimum monthly salary will increase to S$3,000 (US$2,217) from S$2,500 (US$1,847). Meanwhile, the minimum monthly salary for S Pass holders in the financial sector will increase to S$3,500 (US$2,586).

The increase will apply to new applicants from September 2022 and renewal applicants from September 2023.

Increase in the tier 1 levy

The tier 1 levy for S Pass holders will be progressively increased from the current S$330 (US$243) to S$650 (US$480) by 2025. The S Pass is similar to EP except that it is designed for mid-level skilled foreign employees.

Singaporean businesses are limited in the number of S Pass holders they can hire by a quota. They must also pay a monthly levy for each S Pass holder they employ.

The levy liability starts from the day the S Pass is issued and ends when the pass is expired or is canceled.

The S Pass holders that a Singapore company can hire is capped at:

• 10 percent of the company’s total workforce in the services sector; and
• 18 percent of the total workforce for the construction, manufacturing, marine shipyard, and process sectors.

However, from January 1, 2023, the S Pass quota for the construction, manufacturing, marine shipyard, and process sectors will be reduced to 15 percent of the company’s total workforce.

The progressive wage credit scheme

A new progressive wage credit scheme has been introduced in Budget 2022. Through the scheme, the government will co-fund the wages of lower-wage workers between 2022 and 2026.

The government will co-fund 30 percent of the gross monthly wage of workers earning S$2,500 (US$1,848) and up to S$3,000 (US$2,218) between 2022 to 2023. Those earning less than S$2,500 (US$1,848) will receive a co-funding of 50 percent of their monthly wages.

From 2024 until 2026, the co-funding rate for workers earning S$2,500 (US$1,848) and up to S$3,000 (US$2,218) will be reduced to 15 percent, and 30 percent for those earning less than S$2,500 (US$1,848).

Co-funding Levels for Wage Increases in Singapore
Qualifying year	First-tier	Second-tier
	Gross monthly wage less than S$2,500 (US$1,848)	Gross monthly wage of more than S$2,500 (US$1,848) and up to S$3,000 (US$2,218)
2022	50%	30%
2023	50%	30%
2024	30%	15%
2025	30%	–
2026	15%	–

The productivity solutions grant

Some S$600 million (US$443 million) has been allocated for the productivity solutions grant (PSG), which supports businesses keen on adopting IT equipment and solutions to enhance their business processes.

New Singapore global enterprises

A new program launched by the government, the Singapore global enterprises initiative will provide customized assistance to large local enterprises in areas such as internationalization, innovation, and establishing partnerships with other businesses.

Enhanced merger and acquisition loan

The enterprise financing scheme – merger and acquisitions (EFS-M&A) has been enhanced for four years from April 1, 2022, to March 31, 2026, and to include domestic M&A activities.

Under the scheme, the maximum loan quantum is S$50 million (US$36.9 million) per borrower or borrower group, and the maximum loan repayment is five years.

The government’s risk share is 50 percent, but this is increased to 70 percent for young enterprises.

Further Reading

• New Tax Measures Impacting Businesses and Individuals in Singapore’s Budget 2022
• Why Use Singapore as a Base for ASEAN Expansion
• Indonesia and Singapore Sign Important Defense, Airspace Management, and Extradition Treaties

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