TAKEAWAYS
Every year, the Institute of Singapore Chartered Accountants (ISCA) engages with its members, business leaders, and industry experts to gather insights ahead of the national Budget. The consultative activities include a survey1, a series of focus group discussions, and the signature annual ISCA Pre-Budget Roundtable.
The ISCA Pre-Budget Roundtable was held on 14 January 2025. Co-chaired by Liang Eng Hwa, Chairperson, Government Parliamentary Committee (Finance, Trade and Industry), and Don Wee, Council Member, ISCA, the diverse panel comprised:
Chairperson, ISCA Charity Accounting Committee
President, Association of Small & Medium Enterprises
Country Managing Director, Deloitte Singapore
Pro-tem Chairman, SGListCos
Economist, DBS Bank; The Association of Banks in Singapore
Associate Editor, The Business Times
EY Asean Regional Managing Partner; EY Singapore and Brunei Managing Partner
President, Singapore Computer Society
Council Member, Singapore Chinese Chamber of Commerce & Industry
Council Member, Institute of Valuers and Appraisers of Singapore
Vice Chairman, Singapore Business Federation
President, Singapore Manufacturing Federation
Chairman, Tax Academy of Singapore
This year, amid global uncertainties, our survey reveals a growing sense of caution: 52% of respondents express pessimism about Singapore’s economic outlook, and 54% of employers feel pessimistic about their own organisation’s business prospects (up from 45% last year). There is a clear need for proactive measures.
Singapore’s economy thrives on being a global nexus, hosting both American tech giants like Google and Microsoft, and Chinese powerhouses like Alibaba and ByteDance. But this unique position brings vulnerabilities. A full-blown technological decoupling between the US and China could shrink our GDP by 10%. That’s not just an abstract number, it actually represents a potential shock to every Singaporean household and business.
With the world fragmenting into competing blocs, our traditional strategy of strategic ambiguity may no longer suffice. The recent expansion of BRICS, admitting six new members, signals a shift towards a more multipolar world order, challenging the western-dominated multilateralism we’ve long navigated.
To safeguard our future, we must double down on diversifying our economic partnerships. With a trade volume that’s 337% of our GDP, over-reliance on any single market is a risk we can’t afford. Diversification isn’t a luxury, it’s a necessity.
Investing in strategic sectors like semiconductors, green technologies, and digital infrastructure will bolster our economic security. Already, supply chain disruptions are leading to longer lead times and uncertainty in deliveries, as noted by focus group participants. Establishing real-time trade intelligence hubs, with up-to-date insights on supply chain dynamics and emerging markets, could help businesses adapt swiftly to global shifts.
Climate change isn’t a distant threat for Singapore, it’s an existential one. Rising sea levels and increased flooding are pressing concerns for our low-lying island nation. The government’s plan to raise the carbon tax from S$5 to $25 per tonne in 2024, aiming for $50 to $80 by 2030, underscores a serious commitment to sustainability. But businesses are understandably anxious about the financial and operational impacts.
Many express uncertainty due to a lack of clear guidelines on environmental regulations and available incentives, which hinder their ability to plan ahead. To bridge this gap, the government could provide a detailed roadmap outlining carbon tax increases, eligibility criteria for incentives, and straightforward application processes for grants. Transparency can turn hesitation into action.
Public-private partnerships can drive innovation in sustainability. Investing in renewable energy research and circular economy models can position Singapore as a leader in sustainable technologies, creating new industries and jobs. Let’s also be bold and consider the untapped potential of the space economy. With initiatives like the Office for Space Technology and Industry (OSTIn) and a $150-million Space Technology Development Programme, intensifying investments in this area could spur advancements in technology and sustainability, thus fuelling two important drivers of our future economy.
On the professional services front, building capabilities in areas like carbon accounting and reporting is crucial. ISCA and the Law Society of Singapore are collaborating on a Sustainability Apex Programme, supported by Enterprise Singapore. While firms are keen to expand their expertise in sustainability, many are cautious due to the complexity. Government support can mitigate these challenges, and enable firms to build necessary competencies. Strengthening our professional services sector ensures businesses have access to expert guidance, facilitating compliance and contributing to a greener economy.
SMEs are the backbone of our economy, but they’re facing headwinds. Digital transformation is no longer optional, yet only 4% of SMEs are using AI, hindered by data challenges and lack of expertise. In our survey, 35% of employers ranked digital transformation and innovation as their top concern.
Talent shortages exacerbate these issues, with 55% highlighting manpower as a primary concern. High salary expectations and competition from larger firms make it tough for SMEs to attract talent. One focus group participant put it bluntly, “We know we need to digitalise, but we don’t have the expertise or the resources to make it happen.”
To address this, we could develop industry-specific starter kits, giving SMEs clear steps to adopt AI and digital tools. Establishing a network of accredited consultants through a government-supported Centre of Excellence could provide the necessary expertise at affordable rates.
Simplifying access to government support is also crucial. Enhancing visibility of initiatives like SMEs Go Digital can boost their impact. Regular roadshows showcasing successful AI adoption can build confidence and facilitate peer learning.
With our aging population – citizens over 65 are projected to reach 24% by 2030 while the fertility rate has fallen to just 0.97 in 2023 – tapping into the wisdom of senior workers is both respectful and practical. Incentivising companies to employ seniors in advisory or part-time roles can help leverage their experience, alleviate talent shortages, and promote knowledge transfer.
In uncertain times, social cohesion is our anchor. The non-profit sector, with over 2,000 registered charities, plays a crucial role but faces challenges due to increased compliance burdens. One charity leader shared, “Yes, tighter compliance rules might build trust, but let’s face it, they also come with costs, which sometimes force charities to divert resources from their core missions to meet regulatory demands.” Simplifying compliance through regulatory reviews can balance transparency with operational realities.
Talent shortages in skilled roles like accounting further hinder their effectiveness. Facilitating collaborations between charities and professional associations can mobilise community resources. Encouraging professionals to contribute their expertise pro bono, such as accountants enhancing financial governance, can significantly strengthen the sector. ISCA’s Charity Accounting Committee embodies this spirit.
Providing grants for adopting cost-saving technologies, such as cloud-based accounting systems, may help to reduce operational costs in the long run. Additionally, developing digital transformation roadmaps for the non-profit sector can guide charities in aligning technology solutions with their needs.
The younger generation of Singaporeans is yearning for a refreshed Singapore Dream – one that goes beyond material success to embrace meaningful contributions to society. It’s about building a nation that’s inclusive, resilient, and forward-looking.
We may not control global tides, but we can adjust our sails. In a world fracturing along geopolitical lines, Singapore can model how resilience and cohesion prevail. It’s not just about survival, it’s about leading with vision and purpose.
Singapore has always thrived by anticipating challenges and turning them into opportunities. The journey ahead won’t be easy but, if history is any guide, we’re more than capable of rising to the occasion.
Guo Binglian is Research and Insights Manager, ISCA.
1 The ISCA Pre-Budget 2025 Survey was completed on 16 September 2024. It gathered 437 responses from accountancy and finance professionals across all ranks.
© 2024 Institute of Singapore Chartered Accountants
