COMING out of 2019's slowdown, companies here have been looking to the upcoming Budget for support - a hope that has intensified as the Covid-19 outbreak threatens to hammer the Singapore economy.
But, with the abuse of past schemes such as the Productivity and Innovation Credit (PIC) and SkillsFuture Credit, tailored measures will be needed to avoid the pitfalls of a one-size-fits-all approach.
Under the broad umbrella of productivity, observers have named digital transformation, innovation, and manpower as some key issues to tackle - just as stimulus measures could be unveiled as the five-year term of government comes to an end.
Citi analysts Kit Wei Zheng and Ang Kai Wei said in a report on Tuesday that they are looking at, among other things, "new measures and enhancements to ongoing schemes" that help companies digitalise, scale up and innovate - such as the SMEs Go Digital initiative, the Automation Support Package (ASP), the Enterprise Development Grant, and research and development (R&D) incentives.
"There will likely be some income tax rebates, but a blanket across-the- board corporate or personal income tax cut is unlikely," said Maybank Kim Eng senior economist Chua Hak Bin.
Calling the defunct PIC scheme "overly generous and abused", Dr Chua instead expects "more targeted productivity grant and tax relief schemes", especially for small and medium-sized enterprises (SMEs).
In fact, the Monetary Authority of Singapore divided the trade-reliant economy into three groups late last year, based on their links to electronics industries hard hit by both a cyclical slump and global trade woes.
The central bank also said in an October report that weakness in electronics-related industries in Singapore could persist in the near term.
To address this, Soh Pui Ming, Ernst & Young Solutions' tax head, proposed tailoring help to "specific issues faced by these industries, such as manpower costs and driving automation". For example, last year's Budget saw the launch of a two-year pilot Innovation Agents Programme, which helps businesses get advice on innovation from industry experts.
The SMEs Go Digital scheme, announced in Budget 2017, was also expanded to new sectors and solutions, while the ASP, which defrays the cost of rolling out large-scale automation, was extended for two years, to 2021.
But "given that these enhancements were announced only a year ago, it remains to be seen if they will achieve the objectives of promoting innovation and productivity among businesses", Ms Soh added.
Meanwhile, Ho Kok Yong, financial services industry leader at Deloitte, mentioned the risk of financial institutions being left behind by disruption.
Citing developments like the recent application exercise for digital banking licences, he said: "While it may be a bit premature to announce any tax incentives, some initial help for both the existing brick-and-mortar banks... to give them a head start will go some way to keep the ecosystem vibrant and competitive." Such support could include tax breaks for R&D or investment, Mr Ho added.
Similarly, Barnabas Gan, an economist at United Overseas Bank, suggested in a recent report that the Budget is likely to feature R&D incentives "across the corporate sector, which will in turn help companies move up the innovation ladder".
"Moreover, in a highly digitalised businesses environment, tax incentives to encourage companies to invest in digital solution and tools could also materialise," Mr Gan wrote.
Dr Chua also noted that the expansion of productivity schemes may help companies as they adjust to tighter foreign manpower rules.
When asked what uplift the Budget could provide, James Ong, chief investment officer of homegrown logistics player YCH Group, called for support in testing new technologies. "A lot of our internal resources are needed on testing ideas and proof of concepts on the applicability of new technology on its suitability for operations," Mr Ong told The Business Times, while adding that funds to train workers in the use of the new tech tools would also be welcome.
Still, DBS senior economist Irvin Seah warned that "perhaps some of the existing schemes are more relevant for larger projects" or focus on tech investments, such as the ASP.
"Many of the solutions are more suitable for medium-sized companies," he said in a Jan 30 report, calling smaller firms' needs "more micro in nature and less sophisticated".
Mr Seah suggested "a one-off cash voucher for bite-sized productivity enhancement projects", similar to the PIC scheme, but with enhanced safeguards to oversee funding approval.
Also on the cards could be a return of the SME Cash Grants handed out in Budget 2011, he later told BT. At the time, the cash grant scheme offered up to S$5,000 to small businesses that were paying very little in taxes.