B. Growing Our Economy, Creating Opportunities For Our People

    Growing Our Economy, Creating Opportunities For Our People

  1. Let me start with growing our economy and transforming our enterprises.
  2. Singapore as a Global-Asia Node of Technology, Innovation, and Enterprise

  3. The structural changes I described earlier bring both opportunities and challenges.
    1. Technology and innovation will drive our productivity and our next phase of growth.
    2. Amidst declining support for globalisation, most of Asia remains committed to free trade and economic integration.
    3. The Asian economies have strong growth drivers, and are projected to account for half of global GDP by 20402.
  4. Singapore is well-positioned to make the most of these structural changes. We recognised these changes early, and made an early start on economic transformation. We set up the Future Economy Council, or FEC, in 2017, and now have 23 Industry Transformation Maps, or ITMs.
    1. Our restructuring is bearing fruit.
      1. In the last three years, overall productivity, as measured by real value-added per actual hour worked, rose by 2.6% per year. This is an improvement over the 2.2% per year growth in the preceding three-year period3.
    2. Our enterprises are also entering new markets, and doing business globally.
      1. Singapore Business Federation’s 2019 National Business Survey shows that 8 in 10 enterprises have an overseas presence, up from 7 in 10 the previous year, despite global uncertainties.
      2. Their spirit of enterprise augurs well for the future.
    3. Overall, these efforts at enterprise transformation have translated into good wage growth.
      1. Between 2016 and 2019, real median income for Singaporeans grew by 3.7% per year, up from 3.2% per year in the preceding three years4.
  5. Two years ago, I set out our vision of Singapore as a Global-Asia node of technology, innovation, and enterprise.
    1. Our economy will be one driven by innovation and digitalisation.
    2. Singapore will serve as a launch pad for multi-nationals and regional corporates to access Asia, and for Asian enterprises to go global.
    3. Our enterprises will compete on value, and reach new customers.
    4. And these enterprises will be powered by a skilled, adaptable and Asia-ready workforce.
  6. To support this vision, in this Budget, I will introduce a set of measures to drive our Transformation and Growth strategy. There are three key thrusts:
    1. First, enabling stronger partnerships.
    2. Second, deepening enterprise capabilities.
    3. Third, developing our people.
  7. Including sums allocated in previous years, I am allocating a total of $8.3 billion over the next three years to enable Transformation and Growth.
  8. Enabling Stronger Partnerships

  9. Let me begin with the first thrust of our Transformation and Growth effort, which is to enable stronger partnerships:
    1. With the world, to expand our economic space, and
    2. Within Singapore, to build on our work through the FEC and ITMs.
  10. Partnerships with the World

  11. As a small, open economy, we must continue to strengthen partnerships with the world.
  12. We have an extensive network of economic linkages, including Free Trade Agreements, International Investment Agreements, and Avoidance of Double Taxation Agreements.
    1. For example, Minister Indranee signed our latest Avoidance of Double Taxation Agreement with Indonesia earlier this month.
  13. Beyond economic connectivity, we are enhancing our digital connectivity to create new value.
    1. Singapore Customs is connecting our Networked Trade Platform with the customs portals of our trading partners.
    2. Just last month, we concluded our first Digital Economy Agreement with Chile and New Zealand. It will foster interoperability, and address frontier issues like artificial intelligence governance, to enable more trade.
  14. The digitalisation of finance will also open up new ways of doing business.
    1. Between 2015 and 2019, annual investments in FinTech (Financial Technology) have risen six-fold to over $1 billion.
    2. Players from different domains and around the region are coming together to bid for MAS’s digital banking licences.
  15. Partnerships within Singapore

  16. To make the most of our global links, we must strengthen partnerships within Singapore to bring good ideas to global markets.
  17. Under our Research, Innovation and Enterprise 2020 Plan, we are sustaining investment into promising ideas.
    1. These include artificial intelligence, industrial robotics, urban solutions and sustainability, and the biomedical sciences, among others.
  18. Through partnerships among the Government, industry and the research community, we are turning these ideas into new businesses with global potential.
    1. For instance, Singapore was one of the first cities to allow autonomous vehicle, or AV, testing on public roads. Many AV players have set up here, testing their technologies with the National University of Singapore and Nanyang Technological University, seeking to win the global race.
    2. In the biomedical industry, the number of startups has doubled from 2014. More than 300 biomedical startups are now bringing discoveries from bench to bedside, and looking to export them to the region.
    3. In fact, our research institutes are part of the global fight against COVID-19, developing diagnostic kits already in use here and sent to China. This is one of the fruits of our long-term investments in research and innovation.
  19. Within each industry, we need to strengthen partnerships to deepen industry-wide capabilities. Even as our enterprises compete to differentiate themselves, they must come together to solve common challenges.
  20. Trade Associations and Chambers or TACs play an important role.
    1. For example, the Container Depot and Logistics Association (Singapore) is developing an electronic payment system that can help depot operators and transport companies save time and cost. Details are in the Annex. [See Annex B-4.]
  21. To sustain the good progress, we will enhance our support for TACs to scale up and raise the capabilities of their industries.
    1. Enterprise Singapore will launch a pilot Executive-in-Residence programme, to fund more than 10 TACs covering all sectors of the economy, to hire experienced executives and provide expert advice to enterprises in their industries.
  22. Likewise, Merchants’ Associations play a critical role in upgrading heartland enterprises, such as what the Chong Pang City Merchant and Hawker’s Association has done.
    1. This year, Enterprise Singapore will launch a new Heartland Enterprise Upgrading Programme to support Merchants’ Associations to drive transformation of heartland enterprises. [See Annex B-1].
  23. Deepening Enterprise Capabilities

  24. I have covered how we are deepening partnerships. The second thrust of our Transformation and Growth is to deepen capabilities, at every stage of an enterprise’s growth. From starting up, to growing, to transforming further.
    1. Our enterprises must be the incubators of innovation, the crucibles for skills upgrading, and the creators of good jobs for our people.
  25. Many of our enterprises are deepening their capabilities – by innovating, digitalising, and venturing overseas.
    1. These include smaller companies like Yong Leng Trading Company, a local provider of sealing solutions for industrial customers, and PDS International, a developer and distributor of personal protective equipment. By adopting digital platforms, they have accessed new markets, raised revenues, and reduced costs.
    2. Larger local companies are also transforming. Goldbell Group, an industrial vehicle leasing company, launched an in-house accelerator, while Moveon, an optics manufacturer, partnered our research institutes to develop enhanced production technologies for micro-optical systems. More details are in the Annex. [See Annex B-4.]
  26. We will enhance our support to enterprises, at each stage of their growth, to deepen their capabilities in an enterprise-centric way.
  27. Starting Up

  28. Let me begin with startups. Our startup ecosystem is vibrant.
    1. There are about 3,800 technology startups in Singapore, and about 150 venture capital funds investing in startups here and in the region.
    2. Our startup ecosystem is ranked in the top 15 globally in the Global Startup Ecosystem report5.
  29. Startup SG helps startups get their ideas off the ground.
    1. It provides holistic support, including co-investments, mentorship, and physical space.
    2. Through co-investment schemes like Startup SG Equity, we have catalysed over $560 million in private sector funding over the last four years.
  30. This year, we will improve support for deep-tech startups.
    1. Deep-tech startups are those in emerging technology areas such as pharmbio and medtech, advanced manufacturing, and agri-food tech. They have high potential to be competitive and stimulate innovation in their sectors.
    2. But these startups need larger investments, longer gestation periods, and face higher risks. Investors are hence less prepared to invest in deep-tech startups.
    3. To catalyse investment into deep-tech startups, I will set aside an additional $300 million under the Startup SG Equity. We expect this to draw in more than $800 million of private funding over the next 10 years. This will give deep-tech startups better access to capital, expertise and industry networks. [See Annex B-1.]
  31. Growing

  32. Beyond startups, many enterprises, both new and established, are seeking to grow. We have been supporting them, through schemes such as:
    1. The SMEs Go Digital programme; and
    2. The Market Readiness Assistance grant.
  33. This year, we will enhance support for these enterprises through an Enterprise Grow Package. This Package aims to help enterprises identify business needs, adopt pre-approved digital technologies, and take the first steps to enter new markets.
    1. First, we will launch the GoBusiness platform, a single touchpoint for enterprises to transact with Government digitally.
    2. Second, we will drive greater adoption of digital technology. We will expand the SMEs Go Digital programme. Across all 23 ITM sectors, we will have Industry Digital Plans or equivalents, and enable enterprises to access pre-approved digital solutions.
    3. Third, to help more enterprises enter new markets, we will enhance the Market Readiness Assistance grant by expanding the funding support and coverage, to include, for example, FTA consultancy. [See Annex B-1].
  34. Transforming Further

  35. We must continue to support the growth of our enterprises, and as they mature, drive deeper transformation.
    1. Today, through the Enterprise Development Grant, or EDG, Enterprise Singapore provides integrated support for enterprises to innovate and internationalise.
    2. For enterprises to transform, they need to strengthen their leadership and management capabilities.
  36. This year, we will introduce an Enterprise Transform Package, with a focus on leadership.
    1. Enterprise Singapore will launch the Enterprise Leadership for Transformation Programme, to support business leaders of promising small and medium enterprises in achieving the next bound of growth.
      1. Over the next three years, we aim to support business leaders of 900 enterprises in business transformation, with training and mentorship.
      2. We will work with Institutes of Higher Learning or IHLs, banks, and industry experts, and facilitate collaboration.
    2. In tandem, we will continue to broaden transformation through the EDG, by expanding its reach. In FY2020, we expect to support about 3,000 projects through the EDG, an increase of more than 10% from the number today.
  37. Developing Our People

  38. The third thrust of our Transformation and Growth effort is to develop our people, so as to enable our people to access good jobs, earn good wages, and stay employable.
  39. Economic growth is a means to a better life for our people. We must nurture every Singaporean to their fullest potential.
  40. The Government's promise to Singaporeans is this: regardless of your starting point, as long as you are willing to learn, we will support you to learn throughout life – in pre-employment, in your working years, and as we pursue lifelong learning and employability.
  41. We will bring in different partners, including IHLs, enterprises, and the labour movement, to help you do so.
  42. Pre-Employment Training – Tertiary Education

  43. Let me begin with the role of our IHLs.
  44. Our IHLs provide a strong foundation in learning, and have partnerships with industry. IHLs and the industry have distinct roles, and by aligning these to keep learning relevant, students can secure good jobs.
    1. Employment rates are high, and starting salaries have increased.
    2. We develop Singaporean talent in partnership with enterprises under the Singapore-Industry Scholarship scheme. Many of them have graduated and are developing their careers with leading enterprises like ST Engineering and Micron.
  45. Our local students are well-prepared to thrive in other countries and cultures, including in Asia.
    1. About half of all local IHL students today gain experience abroad, through programmes such as internships, exchanges, and service learning or study trips.
  46. In my pre-Budget dialogue with youth leaders, I was struck by their understanding of the importance of learning new skills and exploring new opportunities. They look forward to overseas exposure and postings in the region.
  47. To support our local students to acquire cross-cultural skills and understand our region better, we will set ourselves a “70-70” target – 70% of local IHL graduates to have an overseas experience, and 70% of this group to have exposure to ASEAN, China, or India:
    1. To achieve this target, we will introduce a new Asia-Ready Exposure Programme to support local youths’ visits to cities in ASEAN, China, or India. We will also enhance support for internships under the Global Ready Talent Programme.
  48. Working Years – SkillsFuture

  49. Beyond pre-employment education, we must also support our people who are already at work.
    1. With shorter technology cycles and more intense global competition, skills acquired when we are young need to be constantly refreshed.
    2. Career transitions will be more common, even the norm.
  50. Our SkillsFuture movement seeks to enable our people to learn, develop new skills, and stay employable.
    1. Five years after the launch of SkillsFuture, we have made good progress.
      1. The training participation rate has risen, from 35% in 2015, to 49% in 2019.
      2. As of end 2019, the SkillsFuture Credit has helped more than half a million Singaporeans pick up new skills and develop new interests.
      3. This includes Mr Koh Wui-Tek, a FinTech executive who applied his learning in project management to serving his clients, as well as Madam Juriah Jahaya, a certified trainer who deepened her people development skills.
    2. Singaporeans are also upskilling and accessing good jobs in growth sectors, with the support of employers.
      1. Younger Singaporeans are undergoing on-the-job training while getting a qualification.
      2. Singaporeans who have been working for some time have adapted and grown their skills.
      3. One good example is Ms Nur Hidayah Binte Abu Bakar, whom I met at WSG last year. After leaving the electronics industry, Ms Hidayah joined AETOS Holdings as an Auxiliary Police Officer. She went through the tough training as part of the Professional Conversion Programme. Today, she not only earns more, and has a clearer career pathway, but she is also helping to keep Singapore safe. [See Annex B-4.]
  51. I am very encouraged by the efforts made by Singaporeans to acquire new skills, in the midst of the major structural changes in the global economy. To further support them in this journey, the Government will invest in the Next Bound of SkillsFuture. There will be three elements in this:
    1. First, enabling the individual;
    2. Second, enhancing the role of our enterprises; and
    3. Third, a special focus on mid-career workers.
  52. First, to support Singaporeans to continue learning, I will provide a one-off SkillsFuture Credit top-up of $500 for every Singaporean aged 25 years and above6.
    1. The top-up will be available for use from 1st October 2020.
    2. Unlike the earlier $500 credit which had no expiry date, this top-up will expire in about five years, by end-2025. This is to encourage Singaporeans to take action early to learn new skills, and to make the best use of this period of economic slowdown. [See Annex B-2.]
  53. Second, we want to enhance the role of enterprises in developing their staff.
    1. Enterprises know best the skills needed for their business to transform, and can play a key role in helping their workers learn and apply new skills. By investing in their staff, they build a stronger workforce, which can in turn help enterprises succeed. So, we must strive to achieve this virtuous cycle.
    2. A good example is Containers Printers, a local food packaging company. It has adopted digital technology and trained its workers to take on higher value-added roles like real-time monitoring of production.
    3. In our unique tripartite model, the labour movement plays a crucial role. We cannot keep jobs, enterprises, or even industries that are no longer viable. Instead, we refresh, retrain, and rejuvenate for the long term.
      1. For example, the United Workers of Electronics and Electrical Industries, and Thales, a French technology leader, have set up a Company Training Committee. Management staff and union members are working together to develop training plans and deepen skills, so that workers can take on better jobs. On my visit to Thales, I was very heartened to hear how its employees are upskilling and contributing to Thales’ transformation. This is a good example of how unions and enterprises can work together to keep workers up to date as enterprises transform. [See Annex B-4.]
  54. Let me outline five measures to enhance the role of our enterprises in the Next Bound of SkillsFuture.
    1. First, I will introduce a new SkillsFuture Enterprise Credit to encourage employers to embark on the transformation of their workforce and enterprise in tandem. Employers can use this enterprise credit to defray 90% of out-of-pocket costs of business transformation, job redesign, and skills training. The SkillsFuture Enterprise Credit, at $10,000 per enterprise, will benefit over 35,000 enterprises, most of which will be SMEs.
    2. Second, we will also provide more support for job redesign. The Productivity Solutions Grant supports enterprises to adopt pre-approved digital solutions and equipment. We will expand the Productivity Solutions Grant to include job redesign consultancy services.
    3. Third, we will work with large anchor enterprises to support training for their sectors and value chain partners. Anchor enterprises are supported by many SMEs. By helping to raise the skills of workers in these SMEs, the entire supply chain benefits. We aim to partner up to 40 of such anchor enterprises to benefit 4,000 SMEs over the next five years.
    4. Fourth, our IHLs will work with more enterprises to enable local students to learn in a real work setting, through SkillsFuture Work-Study Programmes. We will now more than double the capacity of these programmes by 2025. Our aim is to make this a mainstream pathway, with 12% of each cohort going through these pathways, up from 3.5% today.
    5. Fifth, as more enterprises train their workers, we will deepen workplace learning capabilities. MOE launched the National Centre of Excellence for Workplace Learning, or NACE, at Nanyang Polytechnic in July 2018. MOE will expand NACE to two more IHLs over the next few years, and aim to benefit over 1,200 enterprises, especially our SMEs.
  55. In line with our focus on the role of industry in SkillsFuture, we will also recalibrate Government funding towards training providers and courses with a stronger link to job and wage outcomes.
  56. Working Years – SkillsFuture Mid-Career Support Package

  57. The third element in the Next Bound of SkillsFuture is a special focus on mid-career workers currently in their 40s and 50s.
    1. Born in the 1960s and 70s, they grew up in a time when our economy was just starting to take off.
    2. When they started work, it was normal, even celebrated, to stay with one job, in one company, for life.
    3. As enterprises restructure, the nature of jobs has changed. Many have adapted to these changes, picked up new skills, and even switched careers.
    4. Ms Ng Lee Chun, 50, is one of them. After leaving her previous job, WSG helped her to secure a logistics role with ST Logistics. Through the Professional Conversion Programme for Supply Chain Professionals, ST Logistics sent her for training for this role.
    5. Some workers in their 40s and 50s have not seen any job or career changes since leaving school, or had the chance to upskill earlier. But they are now facing greater competition, from younger workers and workers overseas. I understand their anxiety.
    6. At the same time, with broader global shifts, exciting jobs will emerge. Our mid-career workers can seize these opportunities and do better for themselves and their families. The Government will do more to support them.
  58. We will introduce a new SkillsFuture Mid-Career Support Package for locals in their 40s and 50s, to help them stay employable and move on to new jobs or new roles. We aim to double the annual job placement of locals in their 40s and 50s, to around 5,500, by the year 2025. To reach this goal:
    1. We will increase the capacity of reskilling programmes. These will include the Professional Conversion Programme under the Adapt and Grow initiative, career transition programmes delivered by Continuing Education and Training Centres, or CET Centres, like IHLs, and sector-specific programmes like the TechSkills Accelerator Company-Led Training for ICT jobs.
    2. In tandem, our employers must step up to recruit, retain and retrain our local mid-career workers. We will support them to do so.
      1. I will provide a hiring incentive to employers who hire local jobseekers aged 40 and above through a reskilling programme. For each eligible worker, the Government will provide 20% salary support to the employer for six months, capped at $6,000 in total.
      2. In parallel, we will streamline our manpower schemes, including support for hiring and retention, to maximise their impact.
    3. To improve access to reskilling programmes, I will also provide a special SkillsFuture Credit top-up of $500 to every Singaporean aged 40 to 60 in 2020. This will be over and above the top-up that I announced earlier.
      1. This additional credit can be used for selected reskilling programmes at CET Centres.
      2. Like the broad-based top-up, this additional credit will expire in about five years, to encourage early action.
    4. Apart from Government support, we will assemble a group of volunteer Career Advisors from professional communities. These advisors will provide peer-level support and career guidance to local workers in navigating professional pathways.
    5. We hope that all these initiatives will provide meaningful support to those in their 40s and 50s, to further their careers with confidence.
  59. Supporting Lifelong Learning and Employability

  60. Lifelong learning and contribution does not stop at the 40s and 50s.
    1. As the Chinese say, “活到老,学到老”. You are never too old to learn.
  61. As our people live longer, we will provide more support to help them remain active, and contribute to our society and economy.
    1. Many seniors have told us that they want to continue working, and learning. Besides saving more for retirement, it is about a sense of agency and purpose, and staying active and connected.
    2. The Government has strongly supported enterprises that employ our seniors,
      1. Through the Special Employment Credit or SEC, and the Additional SEC or ASEC, and WorkPro.
    3. For our seniors who wish to work longer, earn more, and save more, PM had announced at last year’s National Day Rally that we are raising the Retirement and Re-employment Ages. We are also increasing CPF contribution rates for workers aged 55 to 70.
  62. To ease in these changes for employers and workers, I will introduce a Senior Worker Support Package comprising four measures.
    1. First, I will refashion SEC and ASEC into a Senior Employment Credit, which will take effect from 2021. Like SEC and ASEC, this Senior Employment Credit will provide employers with wage offsets when they hire Singaporean workers aged 55 and above, with the support levels tapering down over time as the Retirement and Re-employment Ages are gradually raised.
    2. Second, when employer CPF contribution rates go up in 2021, we will provide employers with a CPF Transition Offset for the year, to offset half of the increase in employer contributions.
    3. Third, we will introduce the Senior Worker Early Adopter Grant to support enterprises that raise their own Retirement and Re-employment ages ahead of the legislated changes.
    4. Fourth, we will introduce the Part-Time Re-employment Grant to support and encourage enterprises to formalise part-time re-employment provisions. [See Annex B-3.]
    5. In short, even as we support workers’ aspirations to work longer, we hear employers’ concerns. As part of our unique tripartite system, the Government has stepped up to support both our workers and our enterprises.
  63. Even for seniors who choose to retire, but wish to continue to learn and stay active, the $500 SkillsFuture Credit top-up that I just announced will support this. Retirees can use this to deepen their interests, or even explore a whole new area – be it cooking or coding.
  64. Foreign Worker Policy

  65. For many years now, foreign workers have been part of our workforce. With our declining local labour force growth, foreign workers are a necessary complement. But we must regulate the inflow carefully, in a way that creates opportunities for our locals.
  66. One area of particular concern is S Passes. These are skilled jobs, many of which can be done by locals, such as polytechnic diploma holders. We created the S Pass category because despite our best efforts, we are not producing enough of such skilled locals. S Passes enable enterprises to top up their workforce with more skilled workers, and to recruit workers with particular skills that locals may lack. But S Passes should not be a means by which enterprises hire low-cost foreign workers, when qualified locals are available.
  67. Last year, we announced cuts for the Dependency Ratio Ceiling, or DRC, and S Pass sub-DRC thresholds for the Services sector. This was to manage manpower growth, and encourage our enterprises to restructure and reskill our local workers.
  68. We have been monitoring the manpower growth closely.
    1. The number of S Pass holders in the Construction, Manufacturing, Marine Shipyard, and Process sectors is growing, by 3.8% per year over the last two years. The number could increase significantly over the next few years, as the Construction and Marine Shipyard sectors recover, and the Process sector begins work on projects in the pipeline.
  69. However, the growth in S Pass holders must be sustainable. The Government has been working closely with industry and educational institutions to build up a pipeline of local manpower, including mid-career workers. We want them to have fair opportunities to grow, while supporting the manpower needs of enterprises.
  70. Therefore, this year, we will take further steps. We will reduce the S Pass sub-DRCs of the Construction, Marine Shipyard, and Process sectors from 20% to 15%.
    1. We will phase in the cuts in two steps. The first step from 20% to 18% on 1st January 2021, and subsequently to 15% on 1st January 2023.
    2. We are announcing the changes about a year ahead, to give time for enterprises to adapt.
  71. Given the economic uncertainties, we will not reduce the S-Pass sub-DRC for the Manufacturing sector at this point. But we do want manufacturing companies to make the effort to recruit local skilled workers and technicians too. Therefore, when conditions allow, we intend to tighten the S Pass sub-DRC for Manufacturing too.
  72. At the same time, we recognise potential concerns of enterprises about the availability of skilled manpower in these sectors.
    1. To help you find skilled local graduates looking to embark on their careers, and older local professionals looking for new careers, SSG and WSG will work with you to improve matching.
    2. Enterprises that have specific needs can continue to apply for additional manpower flexibilities in exceptional cases, through schemes such as the Lean Enterprise Development Scheme.
  73. In view of the economic conditions, I will maintain the foreign worker levy rates for all sectors for 2020. [See Annex B-2.]
  74. Summary

  75. Mr Speaker Sir, the Government appreciates the concerns of our workers and enterprises. In the immediate term, we are facing headwinds with the shocks and uncertainties. But in the medium term, we are facing deep structural shifts in the global economy. We have to tackle both challenges head-on.
  76. The Government will support our enterprises and workers with the near-term challenges, through the Stabilisation and Support Package for workers and enterprises.
  77. To tackle medium-term challenges, our Transformation and Growth strategy will support efforts to deepen enterprise capabilities, develop our people, and forge stronger partnerships, through our tripartite structure.
  78. By positioning Singapore as a Global-Asia node of technology, innovation, and enterprise, we can ride on the next wave of structural changes resolutely.
  79. The respective Ministers will provide more details of the schemes I have mentioned in this section later.
2 Source: “Asia’s Future is Now”, McKinsey Global Institute, July 2019.
3 Source: Ministry of Trade and Industry, Department of Statistics.
4 Median gross monthly income of full-time employed Singapore citizens including employer CPF contribution. Source: Ministry of Manpower.
5 Source: “Global Startup Ecosystem Report 2019”, Startup Genome.
6 As at 31 December 2020.