Budget 2024: Thoughts on KPMG's Proposal on Digitalisation

With the Budget 2024 speech around the corner, many are doubtlessly eager to find out what the Singapore Government has planned to help businesses overcome challenging economic conditions and a weakened business outlook.

In advance of the speech, KPMG and the Singapore Business Federation (SBF) released a joint Budget 2024 proposal on 8 January 2024. In it, they offered numerous recommendations to promote the prosperity of Singapore amidst ongoing global uncertainties.

This included focus areas on how to elevate Singapore as a competitive regional hub, empower local enterprises for global growth and competitiveness, and enhance their resilience and capabilities.

Being a long-standing ERP software and managed services partner for SMEs and fast-growing businesses in Singapore (over two decades!), we came across some interesting points that caught our attention.

In this article, we’ve highlighted some recommendations proposed by KPMG, and our thoughts as an IT vendor in the productivity and digitalisation space.

1. Raise Cybersecurity Posture of Enterprises

One recommendation that KPMG and SBF makes for Budget 2024, is for the government to help small- and medium-sized enterprises (SMEs) beef up their cybersecurity posture.

The proposal noted that cybersecurity concerns have emerged as the top new trend impacting businesses over the next 12 months according to SBF’s NBS 2023/2024. Thus, it recommends that the Government enhances existing programmes – such as the Chief Information Security Officer-as-a-Service (CISOaaS) programme – to help SMEs with support for training and implementation.

The proposal also recommends that the Government supports SMEs in upskilling and reskilling their existing employees in emerging technologies, such as AI, to gain greater awareness and capabilities to manage the risks involved in new and evolving cyber threats.

Why This Caught Our Interest

Being an ERP software and Microsoft Gold managed services partner, we understand the obstacles that businesses encounter in maintaining their cybersecurity measures up-to-date, particularly those that must comply with stringent government regulations like MAS. This challenge becomes even more pronounced for those operating on limited budgets compared to large enterprises.

However, the fact remains that ransomware attacks can have devastating financial consequences for smaller businesses, with an average cost of approximately US$713,000 per incident. This includes the ransom payment itself, as well as the subsequent downtime and recovery efforts.

How Can You Defend Against  Ransomware Attacks? Here Are Our Six Best Practices For You to Get Started In

In fact, the total global cost of ransomware attacks in 2020 is estimated to be as high as US$25 billion. These expenses directly impact the profitability of businesses affected, which makes it even more crucial that SMEs prioritise cybersecurity measures even despite their high upfront costs.

Any proposal that could assist SMEs to bolster their cybersecurity capabilities would be a good initiative to have in Budget 2024 . 

Managed IT Services Can Help Your SME Meet Its Business IT Needs. Here's Our Rundown On The Various Types You Can Call Upon To Bolster Your In-house IT Capabilities.

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2. Streamlining and Digitising Payment Verification Processes for Smaller Enterprises

Another recommendation that was laid out in the KPMG-SBF proposal was for the Singapore Government to explore the streamlining and digitisation of payment verification processes. One measure suggested include the implementation of e-signatures and user-friendly digital interfaces to expedite payments, to reduce time-consuming verification and certification procedures.

It was also recommended to introduce clear certification criteria which might potentially be accompanied by KPIs to facilitate quicker payments, and explore guidelines that promote milestone payments. This would expedite the payment process, and alleviate the financial burdens that SMEs and fast-growing businesses face.

Why This Caught Our Interest

In 2020, the Infocomm Media Development Authority (IMDA) introduced InvoiceNow - a nationwide e-invoicing network based on the PEPPOL network - to promote the transition of local SMEs to e-invoicing, to help them overcome difficulties and delays in sending and receiving invoices and payment during the COVID-19 pandemic.

Have Questions About InvoiceNow? We Have Answers For Them; Click Here To Find Out More.

As an ERP software partner, we've helped many of our clients integrate the InvoiceNow nationwide e-invoicing network into their solutions, enabling their businesses to invoice and receive payment over the PEPPOL Network. We’ve seen how this has greatly streamlined and optimised their payment processes, helping them receive payment from their customers much faster than before.

In addition, IMDA will introduce a mandatory requirement in 2024, for all InvoiceNow-approved solutions to receive orders and convert an incoming order from the InvoiceNow network into an invoice. 

3. Support Enterprises In Innovation, Digitisation and Smart Tech Adoption

Although digitalisation, adoption of smart technology and R&D remains an important means for businesses to improve their productivity and operational efficiency, high upfront investment costs remain a significant barrier; especially for SMEs.

The proposal also notes that at present, existing government grants for encouraging technology adoption by businesses – such as the Productivity Solutions Grant (PSG) and the Enterprise Development Grant (EDG) – are deployed on a reimbursement basis. This means that businesses are still required to shoulder high costs upfront, which for SMEs might be an insurmountable obstacle.

Thus, KPMG and SBF recommends that the Government review existing grants during Budget 2024, and subsidise them so that SMEs need only pay the net cost of the solution they chose through these grants – a manageable amount to get them started on their digital transformation journeys. Solution vendors could then claim the rest of the subsidy from these grants directly from the Government.

Why This Caught Our Attention

AFON has long been a PSG vendor for our ERP software solutions, such as Microsoft Dynamics 365 Business Central. In addition, we’ve also helped our clients apply for other government grants such as the EDG, as well as the Tech-n-Go Grant for social service agencies (SSAs).

Here Are The Top 13 FAQs, And The Answers To Them, On The Productivity Solutions Grant (PSG).

We’ve seen how useful grants are in helping customers manage the costs for implementation. Any initiative that can improve and smoothen their application process for digitalisation projects would be much welcomed and anticipated for during Budget 2024 .

4. Fine-tuning the MRA Grant To Support Overseas Expansion

One more recommendation that KPMG and SBF makes in their proposal is to empower local businesses to achieve global growth and competitiveness, and one way to do that is to fine-tune the Market Readiness Assistance (MRA) Grant.

This because, with the re-opening of national borders following the COVID-19 pandemic, they project that overseas expansion plans will become a priority for local businesses. However, rising business costs are one of the biggest challenges to pursuing these plans that local businesses face, along with rising interest rates, high energy and manpower costs, and supply chain disruptions.

To help alleviate these costs, the proposal recommends that the Government reviews the overall quantum of the MRA Grant in Budget 2024, and raise the cap to S$150,000 amongst other changes.

Why This Caught Our Interest

AFON IT has assisted many of our clients with their business expansions into regional markets over the years. Because of this, we’re well aware that businesses like yours with regional expansion plans require a robust solution that helps them monitor the operational performance across all of their subsidiaries, to ensure that productivity and growth levels are on track.

Such a solution needs to be capable of providing you with real-time visibility into the business processes of all your subsidiaries, along with essential features such as multi-currency consolidation, intercompany auto-elimination, multi-language support, and compliance with multiple tax regimes. Only a specialised tool such as Oracle NetSuite Oneworld can bring all of the above to the table, and even then at a premium price point.

Here Are Four Challenges You're Likely To Encounter When Pursuing The Expansion Of Your Business Overseas, And Why You Need NetSuite OneWorld To Address Them.

With the challenges highlighted by KPMG and SBF this year, we agree that SMEs like yours which are planning to expand overseas could use more financial assistance to get things off the ground. Therefore, we hope that the Government will review the funding that the MRA Grant provides for our local SMEs, and adjust the funding it provides to assist businesses like yours in its overseas expansion plans this year.

Hopes Are Riding High On Budget 2024

With the Budget 2024 speech just around the corner, business owners like yourself are eager to see what financial assistance the Government would provide businesses like yours this year.

And the joint proposal from KPMG and SBF reflects their insights on the challenges that businesses like yours would most likely face this year, and what sort of assistance from the Government would be most useful.

These include further assistance to help bolster the cybersecurity profile, exploring more ways of streamlining and digiting payment verification processes, reviewing how existing government grants are disbursed, and fine-tuning the MRA Grant to help SMEs like yours pursue your plans of regional expansion.

We will be covering the actual Budget 2024 speech when it’s delivered later this year, on 16 Feburary 2024. Until then, if you’d like to know more about the ERP software and services we offer (perhaps so you can take advantage of any government grants or assistance that will be announced?), do give us a call at +65 6323 0901, or drop us a note here and we’ll get back to your shortly.

Otherwise, if you’d like a refresher of existing government grants that you can use to power the digital transformation of your business, do click on the image below to find out more.