Budget 2024 propels Singapore's investment-focused growth

Budget 2024 saw an “investment tilt” towards promoting green, human, and infrastructure investments.

Singapore's Budget 2024 pivots towards fostering economic growth through a balanced investment in green initiatives, human capital, critical infrastructure, and attracting high-quality Foreign Direct Investments (FDI). 

As opposed to last year’s budget which concentrated on supporting lower-income households and redistributing wealth, this year's budget showcases an "investment tilt," underscoring the nation's commitment to sustainable development and innovation.

Brian Lee, an economist at Maybank Securities, said that the Budget 2024 is designed to "protect competitive advantages" by enhancing tax incentive schemes for fund managers, financial sector development funds, and focusing on emerging fields such as FinTech, green transition, and AI development.

"The idea was for Singapore to double down on pursuing economic growth, and this is through a true focus on productivity and innovation," he noted. This move is crucial for the city-state which is known for its limited domestic market size but renowned for its global business position. 

He said that the budget introduces a shift in strategy to attract foreign investments through a more active industrial policy. "The refundable investment credit will be replacing concessionary tax rates as the main source of attracting and incentivizing investments," Lee explained, highlighting the focus on sectors such as chip manufacturing, R&D, and green transition solutions.

Addressing the challenges of escalating business costs, Budget 2024 unveiled a $1.3 billion Singapore dollar enterprise support package. Lee said that this comprehensive initiative aims to alleviate the financial pressures businesses face from increased wage bills, supplier costs, rental fees, and utilities.

"Key parts of this enterprise support package include a corporate income tax rebate for the year of assessment 2020 for up to $40,000 with minimum $2,000 cash payouts, even for unprofitable firms. And also, the enterprise financing scheme will be enhanced with maximum working capital loan quantum permanently raised to $5,000," Lee elaborated.

The budget also extends the enterprise SkillsFuture credit until June 2025, offering additional support for employers to manage workforce and business transformation expenses.

“The last component of the package, the SkillsFuture credit, was extended by a year to June 2025. This helps to provide additional support for employers to defray workforce and business transformation expenses,” he said.

Lee said the budget also featured enhanced support for green loans under the enterprise financing scheme and the expansion of the energy efficiency grant to include sectors like manufacturing, construction, and maritime.

"An initial $5 billion will be injected into a new future energy fund," Lee highlighted, demonstrating the government's proactive stance in building the infrastructure needed for a nationwide energy transition, including investments in submarine cables for electricity, grid upgrades, and energy generation and storage facilities.

Furthermore, the exploration of alternative energy sources such as hydrogen, geothermal power, and evolving nuclear technologies is set to complement clean energy imports, positioning Singapore at the forefront of the global green transition.