Mr Teo Ser Luck at the ICPAS Budget 2012 Update Seminar, 1 Mar 2012

WELCOME SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY, AND ADVISOR TO INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF SINGAPORE, AT THE ICPAS BUDGET 2012 UPDATE SEMINAR ON 1 MARCH 2012, 9.10 AM AT THE NTUC CENTRE 

Dr Ernest Kan, President of the Institute of Certified Public Accountants of Singapore

Ladies and Gentlemen

A very good morning to you.

I am delighted to see so many of my fellow accountants here today at the ICPAS Budget Update Seminar, which provides the highlights of the Budget 2012 and what it means to businesses and households.

Dr Kan had shared with me that this annual seminar is well-attended by our members. As the ICPAS Advisor, I am heartened to know that these programmes organised by the Institute are closely relevant to your professional development.

To this end, I hope that ICPAS continues to find new ways to bring value to our members. To help the Institute in this effort, I strongly encourage members to provide ICPAS with feedback on how we can better support and advance your needs as Singapore seeks to transform into a leading accountancy hub for the region by 2020.

You would have heard the Budget 2012 speech by DPM Tharman and the Budget debate over the past few days.  I am sure you must have read the various media commentaries and reports as well.  I would like to take this opportunity this morning to reiterate some of the key elements in the Budget.

Budget 2012: “An Inclusive Society, A Stronger Singapore”  

Budget 2012 is built on the theme of “An Inclusive Society, A Stronger Singapore”. This is intended to address the longer-term challenges facing Singapore: an ageing population, a maturing economy, and a widening income distribution, amongst others.

Under the Budget, measures have been introduced to help Singaporeans across all levels, from individuals, families, to businesses.  For individuals and families in need, the higher CPF contributions for the elderly, the doubling of our healthcare spending over five years, and a permanent GST Voucher Fund will go towards enabling more people to have a better quality of life.  This shows the Government’s commitment to inclusive growth, and to ensuring the fruits of our economic growth are shared with segments of society. In general, response to these initiatives has been positive and most people are supportive of the efforts to foster a more inclusive society.

Managing Rising Business Costs

The Budget has measures for businesses as well. Many have expressed concerns about rising costs and how businesses, especially SMEs, need help in this aspect. To help businesses cope with rising operating costs amidst a weaker economic environment, the Government will give out one-off cash-grants of up to $5,000.[1]  The grant is sized to help smaller companies more.  Some $320 million in funding is expected to be distributed under this scheme.

In addition, the Budget has enhanced the Productivity and Innovation Credit (PIC) scheme, which encourages companies to invest in productivity for long-term growth. In particular, businesses will be able to receive payouts for their PIC claims on a quarterly basis, rather than yearly. This will be useful for SMEs who are cash-strapped and would need more cash upfront[2] as they invest in productivity enhancements.

The Budget also saw enhancements to the Special Employment Credit, to encourage businesses to employ and retain older Singaporean workers above 50 years old.  This helps businesses offset the higher CPF contributions for these experienced workers.  This is a win-win situation for all – businesses can tap on the valuable experience of these older workers, while our older Singaporeans can continue to remain meaningfully engaged.

Need for Upskilling

Another series of Budget initiatives to help businesses focus on skills upgrading for workers.  The Government recognises the need for businesses to continuously upgrade the skills of their workers. Upskilling takes on greater urgency as Singapore’s economy restructures, as higher value-added jobs will call for a better-trained workforce.  I would like to encourage businesses to help their workers upgrade, so that the businesses in turn can become more productive and competitive.

Businesses can now claim tax deductions of up to $10,000 for in-house training costs under the expanded PIC scheme. Furthermore, in-house training will no longer need to be certified by the Singapore Workforce Development Agency (WDA) or Institute of Technical Education (ITE). In this way, companies can exercise more flexibility in customising their training needs.

It’s also easier for businesses to send their staff for training.  The absentee payroll cap will be raised from $4.50 to $7.50 per hour over the next three years to cover the costs incurred for training that takes place during office hours.

Companies which send their staff for courses certified by WDA and academic programmes under the Continuing Education Training (CET) framework at the polytechnics and ITE will now enjoy a much higher subsidy of 90 per cent of the course fees.

Need to Restructure Our Economy 

Over the longer term, we need to ensure that we are on the right track to build a “stronger Singapore”, even as we face a more uncertain global economic landscape and domestic challenges in terms of labour, energy and land constraints.  To ensure our long-term competitiveness and sustain our economic growth, we need to reduce reliance on foreign labour and shift towards productivity-driven growth. 

The National Productivity and Continuing Education Council (NPCEC), chaired by DPM Tharman, was set up in April 2010 to push national productivity growth to two to three per cent per annum over the next 10 years. This is a long-term effort that will enable us to create higher value-added and better-paying jobs for Singaporeans, which is integral to inclusive growth.

Adding Momentum To National Productivity Drive

The productivity level of the accountancy sector is roughly on par with the national average.  But the sector needs to do more to embrace productivity.  There is certainly scope for the sector to raise its game and strive for higher productivity growth.

In January this year, the NPCEC, identified the accountancy sector as one of the 16 sectors with the potential for productivity gains. The sector can tap on the National Productivity Fund of $2 billion set aside to provide more targeted support for industry efforts to restructure and upgrade over the next 10 years. 

The inclusion of the accountancy sector in the national productivity drive will give further momentum to the sector’s efforts to restructure for long-term growth.  As most companies require accounting services, productivity improvements in the sector will also have potential spill-over effects to the rest of our economy.

The productivity plan for the accountancy sector is still being worked out and will be finalised later in the year.  We will be able to share more details with you then.  I understand that ICPAS has invited its members to participate in drawing up the sector productivity plan. You can take this good opportunity to contribute innovative ideas on how the national accountancy body can help improve the sector’s productivity and move the sector towards its goal of developing Singapore into a regional accountancy hub.

Engagement and Feedback

s.  I encourage all of you to take advantage of these initiatives to improve your work processes and train your staff.

We will also continue to engage industry stakeholders so that we can understand your concerns and your needs.  We do not want to develop our policies and programmes in silos, but to do things that will really help the industry.  Together, we can secure a future for a stronger Singapore, and better jobs for all Singaporeans. But we will need to stay the course and restructure for long-term growth. I am optimistic that many of you will meet the challenge as we make the leap to develop a more productive workforce.

With that, I wish you all a productive seminar today. Thank you.

[1] Companies will receive a cash grant pegged at 5% of their revenues in YA2012, capped at $5,000.

[2] Under the enhanced Productivity and Innovation Credit (or PIC), the cash payout has doubled and businesses can now claim 60 per cent for up to $100,000 of their PIC expenses. Payouts will now be given out quarterly rather than annually.