Singapore continues to demonstrate its commitment to maintaining a dynamic and resilient economic environment by consistently updating its regulations. These changes reflect the government’s ongoing efforts to balance stringent oversight with business-friendly policies, ensuring that Singapore remains an attractive hub for global commerce and investment. This commitment is evident in the establishment of nearly 4,900 new companies in Singapore in August 2024 alone.
In this blog post, we will review key updates that are particularly relevant for entrepreneurs doing business in Singapore. These include changes to the Singapore AML legislation, updated Employment Pass regulations, new developments in government financing schemes, preferential business loans, and other topics of interest for business owners.
Singapore’s AML Checks Efficient Yet Business-Friendly
Singapore continues to strike a balance between maintaining robust Anti-Money Laundering (AML) measures and ensuring a conducive environment for legitimate business activities. The recent passage of the Anti-Money Laundering and Other Matters Bill underscores this approach, focusing on a risk-focused strategy that targets only “instances of concern.” Second Minister for Home Affairs Josephine Teo emphasized that Singapore’s AML regime is designed to be both stringent and adaptable, aiming to safeguard the financial system without burdening businesses with excessive compliance costs.
During the parliamentary debate, concerns were raised about the potential impact of these measures on Singapore’s attractiveness as a global business hub. Members of Parliament highlighted the importance of not allowing these regulations to deter investments or stifle economic activity. In response, Minister Teo reassured critics that Singapore’s stable and predictable business environment would remain a priority, even as the AML framework evolves to meet new challenges.
The Bill also introduced changes to the management of seized properties linked to money laundering, enhancing the courts’ ability to act in the interest of justice with efficiency. These amendments are part of Singapore’s consistent efforts to strengthen its financial ecosystem while maintaining the country as a global financial center.
Private-Sector Economists Maintain 2024 Growth Forecast for Singapore
Private-sector economists have maintained their 2024 full-year growth forecast for Singapore, even after the Ministry of Trade and Industry (MTI) adjusted its official forecast range to 2-3%, down from an earlier projection of 1-3%. This adjustment aligns with expectations set by the Monetary Authority of Singapore, which had previously indicated that the economy’s growth would probably hover closer to its potential rate of 2-3% for the year.
The Ministry’s report revealed that Singapore’s economy grew by 2.9% year-on-year in the second quarter of 2024, consistent with the advance estimates released in July. On a sequential basis, the economy expanded by 0.4%, showing stable growth despite fluctuations in different sectors. While there were downward revisions in manufacturing and construction performance, these were counterbalanced by stronger-than-expected growth in the services sector.
Economists view these figures as a sign of resilience in Singapore’s economy, despite global uncertainties and sector-specific challenges. The stable GDP growth rate, coupled with the MTI’s narrowed forecast, suggests that Singapore is on track to achieve its projected economic targets for the year, supported by steady performance across various industries.
Business Optimism Among Singapore Firms Hits Two-Year High in Q2: BT-SUSS Poll
Business optimism among Singapore firms reached a two-year high in the second quarter of 2024, according to the latest BT-SUSS Business Climate Survey. The net balance for business prospects rose to 8%, a significant 5-point increase from the previous quarter. This positive sentiment reflects a more favorable business environment and suggests that more firms are optimistic about their future growth.
The survey also highlighted improvements in other key indicators, including sales, profits, and new orders. Although these metrics remained in negative territory, the net balance for sales improved by 16 points, rising to minus 2%. This upward trend points to a gradual recovery, particularly in the manufacturing and services sectors, as reported by recent economic surveys.
Interestingly, the survey noted stronger performance in overseas markets compared with domestic operations. The net balance for overseas business prospects climbed to 16%, indicating that Singaporean firms are finding more growth opportunities abroad, especially in sectors like transport and communications.
Updates to Employment Pass Salary Benchmarks
On August 2, 2024, the Ministry of Manpower (MOM) announced updated salary benchmarks for Employment Pass (EP) applications under the COMPASS (Complementarity Assessment Framework). These new benchmarks will apply to new EP applications from January 1, 2025, and to EP renewals expiring from July 1, 2025. This update follows the earlier announcement in March 2024 regarding the minimum qualifying salary for EPs, which also takes effect from January 2025.
Under the COMPASS framework, EP candidates must meet a two-stage eligibility process. The first stage requires candidates to meet the minimum qualifying salary, which has been increased to SGD $5,600 per month for non-financial sectors and SGD $6,200 for financial services, with further adjustments based on the candidate’s age. The second stage involves scoring at least 40 points across various criteria, including education, diversity, and support for local employment.
The recent updates to the salary benchmarks reflect the findings from the MOM’s Comprehensive Labour Force Survey. The benchmarks saw an average increase of around 3% for the 65th percentile, with sectors like Fund Management experiencing a 12.5% rise, while Arts, Entertainment, and Recreation saw a slight decrease. For the 90th percentile, the average increase was about 2.5%. The Real Estate sector led with a 16.5% rise, contrasting with a 6% decrease in the Retail Trade sector.
Philanthropy Tax Incentive Scheme: MAS Receives 9 Applications
Launched as part of Budget 2023 and effective from January 1, 2024, Singapore’s Philanthropy Tax Incentive Scheme (PTIS) offers qualifying donors a 100% tax deduction on overseas donations made through approved local intermediaries. The tax deduction is capped at 40% of the donor’s Singapore statutory income, with the incentive approval period lasting for five years from the date of commencement. This initiative aims to encourage greater philanthropic contributions while fostering Singapore’s position as a global hub for philanthropic activities.
In August 2024, the Monetary Authority of Singapore (MAS) announced on its website that it had received nine applications and expressions of interest from Single Family Offices (SFOs) seeking to benefit from the Philanthropy Tax Incentive Scheme. As the first reporting cycle is set to begin next year, detailed data on the total donations made through the program is not yet available. However, the early response suggests a positive reception among SFOs, indicating that the scheme is likely to be effective in encouraging charitable giving, both within Singapore and internationally.
MAS has been actively engaging with various industry stakeholders, including SFOs, tax professionals, private banks, and charitable organizations, to refine and promote the PTIS. Feedback has been largely positive, with stakeholders recognizing the scheme’s potential to strengthen Singapore’s philanthropic ecosystem. MAS has expressed that they remain open to suggestions for streamlining the scheme’s requirements and will continue to monitor its uptake and effectiveness, making adjustments as needed based on ongoing feedback.
Agri-Food Cluster Transformation Fund: S$25.7 Million of S$60 Million Utilized
The Agri-Food Cluster Transformation (ACT) Fund is a Singapore government program designed to support the transformation of the agri-food sector by promoting high productivity, climate resilience, and resource efficiency. This fund plays a vital role in Singapore’s broader efforts to enhance food security and sustainability by encouraging local farms to adopt innovative technologies and improve their energy efficiency.
On August 7, the Senior Minister of State for Sustainability and the Environment, Dr. Koh Poh Koon, announced that the ACT Fund had been enhanced with energy-efficiency programs. These enhancements allow local farms to conduct energy audits and upgrade their operations to become more sustainable. While the fund does not directly offset operating expenses like rising electricity costs, it supports long-term sustainability by enabling farms to implement energy-saving measures such as installing solar panels. These initiatives help reduce energy costs while contributing to the overall durability and sustainability of the agri-food sector.
The Singapore Food Agency recently reported that S$25.7 million of the S$60 million ACT Fund has been allocated to 42 companies across 68 projects. Despite this significant disbursement, funds are still available for companies seeking to expand their operations or enhance their energy efficiency.
Loans to Female Entrepreneurs Surge By More Than 30% Following April Initiative for Women-Led SMEs
In April 2024, OCBC launched the Women Unlimited programme, an initiative designed to accelerate the growth of women-led Small and Medium-Sized Enterprises (SMEs). This program has made financing more accessible to startups founded by women, offering loans of up to S$100,000 within the first two years of incorporation, with processing fees waived. Additionally, the initiative now includes a new category of social loans under OCBC’s SME sustainable finance framework, further enhancing access to capital for women entrepreneurs.
According to a recent OCBC report, the number of loans extended to female entrepreneurs in Singapore surged by over 30% in the two months following the launch of the Women Unlimited programme. In contrast, loans to male-owned enterprises grew at a slower rate of more than 20% during the same period. This significant increase highlights the programme’s impact in empowering female business owners.
Beyond financing, the programme provides female entrepreneurs with access to customized educational workshops as well as networking and mentorship opportunities with successful female business leaders. OCBC has also committed to supporting the cross-border expansion of women-led businesses by facilitating networking events in Malaysia and Hong Kong.
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