The Singapore government unveiled its 2024 budget on 16 February. Deputy Prime Minister and Minister for Finance Lawrence Wong told Parliament that Singapore’s economic resilience was key to avoiding a recession in 2023.
He was optimistic about Singapore’s growth - GDP is forecast to increase by 1 to 3% with lower inflation. However, he said the country would need to operate for some time in a world that “is more fragmented, messy and unpredictable” than in the past 3 decades.
The Singapore Budget 2024 is the first of many concrete steps designed to enhance the country’s competitiveness. Here are key takeaways for the cross-border payment industry.
SGD 2 billion for the Financial Sector Development Fund
Singapore is one of the world’s leading global financial hubs. While funding was reduced globally in 2023, payments remain resilient and well-funded in Singapore with USD 120 million across 8 deals in the first half of 2023, according to KPMG.
To extend this lead in the financial services sector, Singapore will inject SGD 2 billion into the Financial Sector Development Fund. Wong said this would give MAS more resources “not only to do more in core areas of banking, capital markets, asset management and insurance but also to build capabilities in new areas like fintech, as well as green and transition finance”.
This move will attract more cross-border payment startups to the country and encourage existing companies to scale up.
SGD 3 billion into R&D
Singapore launched the Research, Innovation and Enterprise 2025 plan in 2020 with an initial fund of SGD 25 billion. The budget adds another SGD 3 billion, or 1% of GDP, to “sharpen our competitive edge globally, as a knowledge-based and innovation-driven economy”, Wong said.
This investment is another nod towards the importance of fintech, as it is a sector driven primarily by aggressive technological innovation. The government’s focus on enhancing R&D in digital infrastructure and financial services allows cross-border payment companies to come up with more efficient, secure and cost-effective solutions.
New Cybersecurity Command Centre
Singapore is setting up a new National Cybersecurity Command Centre to improve its capabilities to defend against cyber threats, which cost USD 100 billion to financial institutions globally.
The cross-border payment industry is particularly susceptible to data theft and ransomware as it taps into the world’s payment networks. This measure is a timely and welcomed shot in the arm for the fintech community in Singapore. While many have privately developed cybersecurity measures, governmental support is needed to ensure a holistic approach to data integrity.
SGD 1.3 billion Enterprise Support Package
This package is meant to help Singaporean businesses manage rising costs. SMEs are the backbone of Singapore’s economy, contributing almost half of the country’s GDP in 2022. Helping them address working capital woes and financial constraints will allow them to focus on innovation and build contingencies.
The headliner is of course the immediately noticeable 50% Corporate Income Tax Rebate, capped at $40,000. For those that may miss out on the rebate, Singapore is giving SGD 2,000 in cash to any company that employs at least 1 local employee in 2023.
Together with the Enterprise Financing Scheme and the 1-year extension to the SkillsFuture Enterprise Credit, this will help cross-border SMEs restructure and transform to prepare for an uncertain future.
The complete Budget Speech and all information related to the Singapore Budget 2024 is available here.
