What small businesses need now

Small businesses need to be armed with the technology to survive and to provide continued employment for Singaporeans going forward; so is this the time to bring back the Productivity and Innovation Grant (PIC)? By Faizal bin Yahya and Shazly Zain

The recent rise in Covid-19 cases has created a new working paradigm in Singapore.

As the numbers of locally transmitted cases and clusters increase, many businesses have moved some or almost all their activities online and towards a working-from-home set-up. With the closing of all non-essential workplaces, teleworking is the new norm for the foreseeable future.

Businesses need to be equipped with the necessary technology to telework. They need to acquire more laptops and set up teleconferencing facilities. And, in lieu of letting their staff go, companies also need to quickly train their workers to be deployed in new roles. They must give their workers more responsibility and independence during this crisis.

But most businesses, especially small and medium sized enterprises (SMEs), are focused on immediate concerns such as rent or cash flow. The one-off $500 top-up of the SkillsFuture Credit for technology-led economic transformation; and the SkillsFuture Enterprise Credit, which provides businesses a one-off $10,000 credit to cover up to 90 per cent of out-of-pocket expenses on enterprise transformation, are much needed.

However, some businesses may not tap these programmes for fear of red tape and paperwork. They may not have the time or mental capacity to apply for grants that require long approval processes or send employees for training as suggested in previous budgets.

So what can be done to render immediate help to small businesses on both the technology and the human-resource front?

Make SkillsFuture more relevant

To date, only 49 per cent of Singaporeans have utilised courses on the SkillsFuture platform despite previous incentives. Some have found the website difficult to navigate and understand, with similar courses being offered by different vendors.

Some SME owners may feel overwhelmed by the information and not know which courses to recommend to their employees. Additionally, after taking an introduction course via SkillsFuture, there is little guidance on what courses to take subsequently.

The current crisis offers an opportunity to streamline and update the SkillsFuture website. Courses that are immediately useful to businesses, like basic data analytics, database and website management; and understanding teleworking tools like Zoom or Microsoft Teams; can be highlighted clearly.

Another way to increase the uptake of SkillsFuture courses during this critical time is to organise them by specialisation and offer these as training packages. Learning platforms like Coursera and Khan Academy already link relevant courses together, creating a natural and deeper progression in skills learning. Coursera’s Deep Learning Specialisation links four courses together, which are also available individually. SkillsFuture could do the same.

Promote digitalisation

The Productivity Solutions Grant (PSG) has recently been enhanced to encourage enterprises to continue their digitalisation and productivity upgrading efforts. The maximum funding support level will be raised to 80 per cent until 31 December 2020.

While this coverage is welcome, businesses are concerned about the current prolonged approval process, which can take from three to six months. One way to streamline the approval process of the enhanced PSG grant is for it to adopt the requirements of the former Productivity and Innovation Grant (PIC).

While the PIC was eventually retired because of abuses to the system, businesses liked the PIC because application was easy and approval took only one to two months.

Under PIC, businesses would receive 400% tax reductions for qualifying expenditure under six categories, which included the acquisition and leasing of IT and automation equipment, and the training of employees.

Adopting a simpler and broader approval process could solve many immediate workflow problems for companies in this current crisis. It ensures employees have the equipment to continue working from home immediately. Businesses will also be able to easily leverage more on e-business solutions to service new and existing customers and manage their employees remotely.

Many medical experts estimate the Covid-19 pandemic could last for a year with possible economic recovery seen only in 2021. Singaporeans and businesses, therefore, need to be prepared for immediate challenges as well as long-term economic viability.

Small businesses need to be armed with the technology to survive and to provide continued employment for Singaporeans going forward. And they need that help quickly.

Dr Faizal bin Yahya is a Senior Research Fellow and Shazly Zain is Research Assistant at the Institute of Policy Studies.