IN the upcoming Singapore Budget 2019, more help could be given to small and medium-sized enterprises (SMEs) to access policy assistance schemes and to support those firms venturing into the Asean region, a report from DBS suggests.
DBS senior economist Irvin Seah, the author of the report - the second in a series of three - noted that some policy measures continue to be "skewed in favour of bigger companies".
For example, schemes such as the SME Working Capital Loan are administered by participating financial institutions (PFIs), but the preference for these PFIs is typically skewed towards bigger companies with better financial standing, he argued.
"Despite some risk coverage by the government, the outcome is that smaller companies which need more financing help may not get the necessary support regardless of their product innovation or business ideas."
Mr Seah said the government "could consider taking a bigger share of the risk for smaller companies that apply for financial support". This would put such assistance schemes more within their reach.
While this was done previously for the Automation Support Package, further enhancement of the policy direction in favour of smaller companies can also be applied to many of the existing support schemes, he added.
SMEs below a certain level of sales turnover should also be given added attention in their grant applications, and the documentation requirements for the grant applications could be simplified, he suggested.
He also recommended that policy effectiveness be sharpened by expediting the grant-approval process, as well as by supporting the trade associations (TACs).
A fast-track scheme for grant approval could be implemented for high-growth industries (such as the aerospace industry) to attract investments into those clusters.
TACs should be given more support so they can set up more overseas offices to better facilitate the local companies that venture abroad, he said.
"With a better understanding of the various types of businesses and markets, the TACs would be able to leverage their local contacts and resources to help their members explore overseas markets," he said.
"This could be more effective than the overseas offices of Enterprise Singapore (ESG), which tend to be overloaded with both commercial and bilateral-relations issues."
Mr Seah also believes that helping companies venture abroad, particularly to Asean countries, could receive added impetus in Budget 2019.
With trade and investment flows likely to be diverted to the region in the next few years, he pointed out that Singapore will be in a unique position, given its regional-hub status, a comprehensive free-trade agreement network and a higher level of business sophistication.
"Policy measures by the government to provide greater support for companies in the development of their capabilities and in their internationalisation efforts would likely yield positive outcomes in the mid- to longer term.
"Indeed, we expect the government to double down on the efforts in this regard in the upcoming Budget."
While the overall economic outlook has become bleaker, Mr Seah said the risk of recession risk is still remote this year.
Regardless, the government is likely to stay the course on restructuring to prepare the economy for the future, rather than use fiscal stimulus as a counter-cyclical policy tool, he concluded.