The Singapore Budget over the years

Budgets that built a nation
Singapore's first post-Independence Budget was delivered in December 1965, as the country grasped its national purse strings for the first time. Fiona Chan and Marissa Lee chart the story of Singapore's growth and prosperity through 50 years of annual Budget statements.
The Straits Times, 7 Feb 2015

Since 1965, Singapore’s annual revenue and spending have grown tenfold. But even as the economy powered from Third World to First, the Government was always careful to balance its Budgets.

BARELY four months after Singapore was abruptly turfed out of the Malaysia federation, the new nation's first Finance Minister rose in Parliament on Dec 13, 1965, to deliver its inaugural Budget.

On the face of it, it was an unenviable task. Newly independent Singapore faced stiff economic challenges: despite having no natural resources and no more hinterland, it had to create jobs and better housing for its citizens, which required policies enabling trade and industrialisation.

Yet, in a speech that lasted for an hour and 20 minutes, Mr Lim Kim San revealed that Singapore was well-placed financially to face its uncertain future.

Its official foreign reserves were 15 times its external debt - "a position which is strong by any international standard", he said.

Although it had been only six years since the island obtained full self-government in 1959, this was due to "prudent budgeting and careful allocation of resources" in that time.

External debt stood at 59 million Malaya and British Borneo dollars - the currency Singapore shared with Malaya, Brunei, North Borneo Sarawak and Riau at that time - while foreign reserves were more than 15 times that, at M$914.7 million.

Fifty years later, as Singapore prepares for its Golden Jubilee Budget on Feb 23, this financial fortitude has not wavered.

The country has gone from Third World nation to First World metropolis - with per capita gross domestic product (GDP) shooting up from just $1,734 in 1966 to more than $69,000 in 2013 - and has done so without running large deficits or incurring external debts.

Its coffers bulge with decades of budget surpluses - the result of 50 years of judicious Budgets, as well as revenue from land sales and some income from investing the national reserves.

The latter two are not included in the yearly budget position presented to Parliament.

Yet ask any Singaporean what they expect in the upcoming Budget, and few will mention these economic intricacies.

Rather, many view it as a lottery of sorts where they might get goodies such as one-off cash payouts, depending on the "lucky" target group each year.

In the 1980s, taxpayers and companies cheered a series of tax cuts, while in the last decade, the Budget has been generous to low-wage workers and the needy in particular.

"The focus of the man in the street tends to be on what the Budget presents immediately, whether goodies or specific policy announcements," says former Nominated MP Laurence Lien, chairman of the Lien Foundation and previously director of governance and investment at the Finance Ministry.

Role of the Budget

BUT that is to ignore the big picture, as Mr Lien notes.

Over the last 50 years, the initiatives unveiled during the annual Budgets have driven Singapore's economic development and formed the cornerstone for its success in many other areas.

In the early years after Independence, most spending was earmarked for bread-and-butter issues essential to economic survival, such as job creation, and developing the infrastructure for a self-sufficient nation.

"Unemployment has always been the central economic problem of Singapore," said then Finance Minister Goh Keng Swee in his 1967 Budget speech.

He pushed for industrialisation to step up a gear from the easygoing "shoes and ships and sealing wax" phase to the deliberate selection of high-growth, labour-intensive industries such as engineering and metal fabrication.

Funds were also set aside in those early Budgets to seed the institutions Singaporeans take for granted today.

In 1972, Mr Hon Sui Sen allocated $10 million to develop Sentosa as a tourist attraction. In 1979, Mr Goh Chok Tong, standing in to deliver the Budget for Mr Hon, gave $393 million to develop Changi Airport and roads.

With manufacturing and tourism powering growth in the 1970s, the emphasis in the 1980s shifted towards upgrading the economy over the longer term.

More was spent to grow research and development, expand the services sector and raise productivity - strategies that remain relevant today.

The Budget purse was also used to keep the economy vibrant amid slowing workforce growth over the years. Baby-making incentives swelled, as finance ministers tried to get parents to have more children and to have them earlier.

Meanwhile, several Budgets told the story of a struggle to balance allowing more foreign workers in to spur growth, and avoiding over-reliance on them.

In 1970, Dr Goh outlined Singapore's "open-door policy", which would "ensure rapid growth right from the start". A decade later,

Mr Goh Chok Tong highlighted the need for skilled professionals, including from abroad, to develop Singapore into a modern industrial economy.

But by 1982, Dr Tony Tan Keng Yam - who is now President - was saying Singapore aimed "to free ourselves from reliance on foreign labour by the end of this decade" - mainly by keeping more women and seniors at work and raising productivity.

Yet the need for foreign workers did not disappear. In 1990, Dr Richard Hu decided to allow them to work in more sectors, including retail and banking.

Walking the tightrope continues till today, with the most recent Budgets heading in the direction of tightening the tap once again and lifting domestic productivity.

Another consistent theme has been the steady reduction in income taxes over the last 50 years, as Singapore sought to improve its competitiveness and provide a friendly environment for companies and workers.

In 1978, Mr Hon started the ball rolling by changing the personal income tax brackets so that the top rate of 55 per cent affected much fewer people. A series of tax cuts, for both companies and individuals, followed over the decades.

To balance out the lower income taxes, Dr Hu announced the Goods and Services Tax (GST) in 1993. It started at 3 per cent and has risen to 7 per cent today.

The Budget today

RECENT Budgets, though, may be unrecognisable to the pioneer finance ministers.

Under a new generation of leaders, the Budgets have become less about the hard numbers and what the economy needs, and more about a softer approach to what people want.

"In the earlier years, our Budgets tended to focus on the economic developments and infrastructure building," says MP (Holland-Bukit Timah GRC) Liang Eng Hwa, who sits on the Government Parliamentary Committee for Finance and Trade and Industry.

"In more recent years, emphasis has shifted towards more social development and people's well-being."

Citizens' demands are very different now from 50 years ago, notes Bank of America Merrill Lynch economist Chua Hak Bin.

"The earlier generation was just happy with a job," he says.

"Today's generation has more aspirations, about the education, jobs and wages they expect."

He adds that the Budget has become more responsive to social needs, for instance in spending more on expanding public transport and housing.

Building health-care infrastructure, rewarding pioneers and planning ahead for an ageing population are some recent Budget policies that "go beyond dollars and cents", agrees OCBC economist Selena Ling.

Another big shift has been in the area of social transfers.

The thinking that dominated the first four decades was that everyone should take responsibility for their own livelihood.

In 1974, Mr Hon had laid out this guiding principle, saying subsidies provided by higher earners would encourage more freeloading "passengers".

This position has evolved since then. Prime Minister Lee Hsien Loong, who was Finance Minister from 2001 to 2007, gave Economic Restructuring Shares to all Singaporeans in 2002 to help them adjust to changes in the economy.

Recent moves to top up the incomes of lower-wage workers - through schemes such as Workfare in 2007 and the Wage Credit Scheme in 2013 - also mark a "quantum leap", says Ms Ling.

"In the past, that whole concept of direct cash transfers, even if tied to wages, was never done before," she says. The proactive policies in this area have helped bring about a "meaningful" reduction in income inequality.

The Government has also changed the way it uses public funds - being more careful to save some income on the reserves for a rainy day, yet willing to open the reserves umbrella when it pours, as it did during the 2009 recession.

Finance Minister Tharman Shanmugaratnam asked to tap Singapore's formidable reserves for the first time, in offering a massive $20.5 billion package to save jobs and companies amid the onset of a global recession.

The state is also freer with its chequebook for worthwhile causes, such as a recent multi-year programme to support lower- and middle-income Singaporeans.

"Previously, the priority was to save for a rainy day. Now there's more willingness to say 'Okay, this is worthwhile', even if it's not a rainy day," Ms Ling says.

Some things stay the same

STILL, there are many core principles that have not changed in Budget speeches over the years. One is the emphasis on careful spending, which has been reiterated by every finance minister.

Another steadfast philosophy is self-reliance, not just for individuals but for the nation as a whole.

In 1965, Mr Lim said Singapore could tap external loans but should not over-rely on them.

Singapore's aim was "more trade, not more aid", he said. "By this, we retain our freedom of action and self-respect."

The third Budget constant is the undying belief in a better future for Singapore - a note on which many Budget speeches have ended.

Back in 1965, Mr Lim had concluded his Budget speech by saying that "Singapore has never before failed to seize any opportunity for its advancement".

"I am sure they will not let slip this golden opportunity to build themselves into a great and prosperous nation, a spur for like-minded neighbours to achieve for themselves."

His words set the tone for 50 years of prudent Singapore Budgets, which helped build a nation that can well afford to celebrate its economic success today.

GOLDEN OPPORTUNITY FOR ADVANCEMENT

Singapore has never before failed to seize any opportunity for its advancement... I am sure they will not let slip this golden opportunity to build themselves into a great and prosperous nation, a spur for like-minded neighbours to achieve for themselves.

- Mr Lim Kim San, finance minister in 1965, in the conclusion of his Budget speech

Memorable Singapore Budgets
By Marissa Lee, The Straits Times 7 Feb 2015

SINGAPORE'S Golden Jubilee Budget is expected to be one for the books. The Government has promised a "Budget for the future", one that will open a new chapter in Singapore's growth story.

Over the years, the annual Budget address has been a platform for the Government to formalise new policy directions, counter fresh concerns, and even let off some fireworks to wrap up a boom year. Insight picks 10 of the most memorable Budgets since the start:

1965 Apart from being the first Budget for a newly independent Singapore, this was notable for its political tone.

Then Finance Minister Lim Kim San pledged that Singapore would never embark on any policies to cause rifts with Malaysia.

He also called on Malaysian leaders to talk with their Singaporean counterparts to discuss how to work together.

"Let us sit round the table, ministers and officials, instead of each country being forced to work out how each can do without the other," Mr Lim said.

1978 Those on middle incomes burdened by high marginal tax rates had cause to cheer. A more equitable tax regime was introduced. Noting that income tax ceilings had been raised three times in two decades, the Government said it did not want high tax rates to discourage people from working harder. More tax cuts came in 1980, when technicians, engineers, managers and professionals were found to be carrying the greatest burden of income tax.

1984 Married women with a secondary school education were encouraged to have more children, as the Government grew concerned about the quality of the workforce. It broadened its tax incentives for "better-educated" mothers to include non-graduates. Mothers with five GCE O Levels credit passes were now allowed to claim higher child relief. Before, only university graduates qualified.

Then, in 1987, the "stop-at-two" campaign officially gave way to "three, or more if you can afford it" when the Government rolled out tax incentives to encourage parents to have a third child. And in 1990, more carrots were dangled for families to have their second child earlier, as delayed child-bearing posed a threat to workforce growth.

1993 A GST offset package brought some relief to households which were worried about the new 3 per cent Goods and Services Tax which would take effect in April the next year. The introduction of the GST was part of broader tax reform that also involved lowering the corporate tax rate from 30 per cent to 27 per cent. "In the long term, Government aims for a 25 per cent corporate tax rate," said then Finance Minister Richard Hu. The lower corporate tax would boost Singapore's competitiveness and the GST would help make up for the loss in revenue.

2001 Income earned from Singapore's past reserves came under the Budget spotlight, as the Government decided to lock up half of its annual net investment income (NII).

Before 2001, NII accrued fully to current reserves and was all spendable. The new 50:50 rule was intended to safeguard against pressures for more social spending.

Budget 2008 later loosened this rule slightly by replacing NII with net investment returns, which includes capital gains - and not just interest and dividend income - in the definition of returns.

2006 The Progress Package introduced the Workfare Bonus, giving a leg-up for the first time to older lower-wage workers who were on the wrong side of the skills gap. A Singaporean twist on welfare, Workfare tops up the pay of those who keep working.

Workfare became a permanent scheme the following year, when then Second Minister for Finance Tharman Shanmugaratnam announced that the Workfare Income Supplement would join home ownership, health care and retirement savings as the "fourth pillar" of social security in Singapore.

Budget 2006 was also the first time "growth dividends" were given out in cash, rather than through a shares scheme where holders can opt to earn dividends over time, or to encash their shares. Citizens got their payouts of $200 to $800 in May, and the General Election was held that same month.

2008 A $1.8 billion surplus-sharing hongbao was handed out after Singapore ended the 2007 fiscal year expecting a bumper budget surplus of $6.4 billion.

Thanks to a buoyant property market, Singaporeans also received goodies such as personal income tax rebates of up to $2,000, and "growth dividends" ranging from $100 to $400 in cash.

2009 The Resilience Package, delivered during the Global Financial Crisis, was the largest basic deficit ever budgeted by the Government, at $14.9 billion, or about 6 per cent of GDP.

It set aside a whopping $20.5 billion to be pumped into saving jobs and stimulating bank lending.

To fund its temporary extraordinary measures, the Government even sought the permission of then President S R Nathan to perform an unprecedented drawdown of past reserves, to the tune of $4.9 billion.

In the end, the recession was milder than feared and the Government drew just $4 billion, which it returned to the pot in 2011. And the basic deficit ended up at $8.5 billion, 3.3 per cent of GDP.

2011 The last election-year Budget announced a "growth dividend" of $100 to $800 to be paid in cash to each citizen. The popular personal income tax rebate of up to $2,000 also made a reappearance.

These goodies came as the rising cost of living emerged as a key issue in the election run-up. Finance Minister Tharman Shanmugaratnam acknowledged the concerns in his speech.

He said he would share Budget surpluses with Singaporeans, but emphasised that the "main way" to deal with rising prices is to grow incomes over time.

2014 The Pioneer Generation Package set aside $8 billion to help Singapore's first generation of pioneers pay for the cost of their health care, with no strings attached.

The subsidies and Medisave top-ups for 450,000 Singaporeans for life was one of the most generous Budget packages ever.

What's in the budget mix?
Amid SG50, Budget 2015 is likely to have more goodies, but Insight finds that greater importance will lie in how it helps set up Singapore for the future
By Fiona Chan, Charissa Yong And Nur Asyiqin Mohamad Salleh, The Straits Times 14 Feb 2015

COMING hot on the heels of Chinese New Year celebrations, expectations are high that Budget 2015 will also hit a festive note.

This year, the annual slicing of the fiscal pie - make that, sharing of the communally tossed "lo hei" raw-fish salad - coincides with the nation's 50th anniversary of independence.

But economists expect that the jubilee Budget, which will be unveiled on Feb 23, will both mark Singapore's past success that led it to this historic milestone, and set the scene for the future.

As DBS economist Irvin Seah puts it: "Transient measures (such as cash handouts and tax rebates) can be expected amid the SG50 celebration. But the focus will be on shaping the next 50 years."

This is especially as Singapore is experiencing growing pains as it moves into the next phase of middle age.

Economic growth is more modest now, so the need to step up the transition from over-reliance on cheap foreign labour to higher domestic productivity has become more urgent. More measures are expected to help accelerate this.

This will also allow those who can to better save for their own retirement and health-care needs, while the nation starts bearing more of the cost for the rest as the population ages.

In line with these shifts, Finance Minister Tharman Shanmugaratnam is expected to lay the foundation for some far-reaching policy directions when he delivers a Budget that he said earlier this month will "look towards the future".

Economists and MPs have signalled measures, including a fresh approach to worker training, a new system of aid for needy retirees, significant changes to the Central Provident Fund savings scheme and the start of the universal health-care programme MediShield Life.

Some of these build on longer-term themes, such as making companies more productive and creating a more inclusive and compassionate society.

Can the purse this year take the strain? Some think so. Bank of America Merrill Lynch economist Chua Hak Bin estimates that the Government has accumulated up to $12.6 billion in surpluses during its current term, not including this year's accounts.

Economy of the future

ENSURING that Singapore's economy and workforce stay relevant in the coming decades is likely to be one of the main thrusts.

This is the motivation behind one of the critical planks of Budget 2015: the SkillsFuture initiative.

It aims to help workers master skills that will remain in demand by employers in a world where technological advances and global competition are making many jobs obsolete, and to foster a culture where age is no barrier to learning or to switching careers.

While the details have yet to be worked out, some have suggested grants or subsidies for continuing education or vocational training.

Going one step further, NTUC assistant secretary-general and MP Patrick Tay (Nee Soon GRC) reiterates his call to create an individual Skillsave learning account for every Singaporean. This would enable and encourage all citizens - including stay-at-home mums and freelance professionals - to take the reins of their own lifelong career development, he says.

The expected focus on workers could reflect a new approach to the lagging productivity drive, says Barclays economist Leong Wai Ho.

The 10-year exercise is now past midpoint, with little to show. Productivity gains averaged just 0.2 per cent a year between 2011 and 2013, far from the target of 2 to 3 per cent annually.

While the Government is likely to continue with existing productivity measures such as giving companies incentives to invest in technology, training and research, SkillsFuture could bolster the drive from a different angle.

"We interpret this as a shift in emphasis towards employees taking greater ownership of productivity gains, incentivising Singaporeans to want to improve their career prospects," says Mr Leong. "This should complement the existing top-down approach of employers implementing training initiatives."

Companies themselves may get more of a push to step up to the plate.

Mr Low Hwee Chua, partner and head of tax services at Deloitte Singapore and South-east Asia, suggests widening the Productivity and Innovation Credit (PIC) scheme to cover a broader range of innovative activities.

MP Tin Pei Ling (Marine Parade GRC) also called for an update on the results of the myriad productivity measures so far, to assess their effectiveness.

But there may also be comfort for business owners squeezed by rising costs and a manpower shortage.

UOB economists Francis Tan and Jimmy Koh expect the Wage Credit Scheme - which helps firms pay for salary increases but expires this year - to be extended and enhanced for sectors that need a bigger push.

Old is gold

EVEN as the Government helps able companies and workers thrive in a fast-changing economy, it is likely to also be mindful of those who are less fortunate.

One clear goal of this year's Budget is to continue the theme of providing enough support for Singaporeans in their golden years, to ensure the ageing population can retire without fretting about money woes.

Last year there was the $8 billion Pioneer Generation Package, and a major initiative to be introduced this year is a Silver Support scheme that will aid low-income elderly folks with insufficient retirement savings, no housing assets and little or no family support.

While some expect cash payouts for these seniors, help may instead take the form of vouchers and offsets for everyday bills, say UOB's Mr Tan and Mr Koh.

The scheme was announced by Prime Minister Lee Hsien Loong in his National Day Rally speech last year. Up to $12 billion could be set aside for it in the Budget, tips DBS' Mr Seah.

He adds that the scheme is likely to be funded with returns from investing this money - a structure similar to the Pioneer Generation Fund set up last year to help pay the medical costs of first-generation citizens.

Also on the cards are official changes to the 60-year-old Central Provident Fund system, after a panel tasked to review the national savings scheme made its first proposals this month.

Among other things, the panel suggested giving CPF members the option of withdrawing an additional lump sum of up to 20 per cent of their Retirement Account balance at age 65.

All these moves aim to make retirement more enjoyable, not only for today's seniors but also for the generations of retirees to come as the population ages.

"Over the past few years, the Government has done a lot to help cushion the health-care costs for older Singaporeans," says MP Tin.

Other recent elderly-friendly efforts include Medisave top-ups. "But retirement adequacy in other areas is definitely something that people are paying attention to," Ms Tin adds.

Singapore is expected to be a "super-aged" nation by 2030, when one in five people will be 65 or older.

Jubilee gifts

SERIOUS stuff aside, most Singaporeans will have only one question about the Budget: What goodies can I expect this year? The short answer: probably quite a lot.

Apart from commemorating SG50, this Budget could potentially be the last one before the next General Election, which must be held by January 2017.

This means the Government can technically choose to spend all the surpluses it has stored up since its term started in 2011. If not, these will be locked up as past reserves when the next government takes power.

"Given our electoral cycle, no matter how prudent you are at the beginning, towards the end people will expect you to use up the surpluses," says former Nominated MP Laurence Lien.

UOB's Mr Tan and Mr Koh expect a "geared-to-the-masses" Budget "that will address the needs of the majority of eligible voters". These would be the middle-income "sandwiched class", who are balancing the twin pressures of raising children and caring for elderly parents.

Since most of them do not pay income tax, tax rebates - as some experts are expecting - would likely benefit only a relatively small group.

Instead, DBS' Mr Seah believes there may be a one-off cash handout and rebates for all Singaporeans, similar to those given in 2011. That cost the Government $1.5 billion.

Other help for the middle class could take a more considered, targeted approach.

The Association of Women for Action and Research (Aware), for instance, has mooted eldercare leave for full-time workers to care for their aged parents, and an allowance for home-based caregivers, who might have quit their jobs to look after their parents.

Working mothers, on the other hand, would benefit from subsidies that cover not just childcare centres but also babysitters and nannies, to give them more childcare options, says MP Ang Hin Kee (Ang Mo Kio GRC).

Meanwhile, single parents, including those who are divorced or widowed, may also be struggling without government aid.

"We should look into ways to offer more help to single parents, who may face financial hardship and lack family support," says MP Lee Bee Wah (Nee Soon GRC).

Of course, even with its robust finances, the Government cannot fund every demand on its purse. It must weigh priorities and spending trade-offs accordingly.

But this is as good a year as any to expect a blockbuster Budget, one that lives up to its SG50 tag.

Goodies seen for SG50, election year
But Govt may also make off-Budget changes when needed, say analysts
By Marissa Lee, The Straits Times 19 Feb 2015

MANY market watchers reckon that next week's Budget will be the last before the General Election is called.

And even if a GE isn't held this year, many Singaporeans hope that some Jubilee Budget goodies will come their way.

"These measures could be similar to what we saw from Budget 2011, which was delivered before the May 2011 GE," said Barclays economist Leong Wai Ho.

Popular "growth dividends" in the form of cash were announced in the last two election-year Budgets, in 2011 and 2006.

But wealth transfers do not necessarily have to be delivered in the Budgets as the Government can unveil one-off measures when circumstances change.

Credit Suisse economist Michael Wan noted: "Several elections have coincided with periods of economic stress, in 1997 and 2001, for example."

While generous tax rebates were unveiled in the 2001 Budget, the real surprise came when the economy slipped into recession a few months later.

That October, just weeks before the Nov 1 polling day, a round of off-budget measures worth $11.3 billion was announced.

This year, economists have warned that the uncertain global economic outlook might also make the Government more sparing with one-off handouts.

Meanwhile, the softening property market has many home owners hoping for a lift, but Mr Wan doubts that the Government will unwind cooling measures "at a time when we have not got clarity on the timing and pace of the United States federal funds rate hikes".

That said, Credit Suisse analyst Yvonne Voon sees some opportunities for the "fine-tuning" of certain "pressure points", such as the Qualifying Certificate for developers and the Additional Buyer's Stamp Duty for citizens in the Budget.

Citibank economist Kit Wei Zheng is predicting that an early election will be held in the second half of the year, "riding on disinflation that has historically been associated with higher share of the popular vote for the PAP (People's Action Party)".

This implies more generous spending will be budgeted, said Mr Kit in a research note.

Budget: More industry-sensitive steps?
Economists expect easing of pressure on firms hit by foreign worker curbs
By Marissa Lee, The Straits Times 21 Feb 2015

ECONOMISTS expect Monday's Budget will ease the pressure on firms hit by tough rules aimed at curbing the use of low-skilled foreign workers.

While the Government has repeatedly said its tight labour measures are here to stay, there is a feeling that it will refine its blunt instruments with more industry-sensitive measures.

DBS economist Irvin Seah has tipped that new measures will be "more targeted and less painful" while OCBC economist Selena Ling notes that the next phase of restructuring must go beyond "cost-cutting solutions" to encourage firms to "think out of the box".

Most economists believe that scheduled hikes in foreign worker levies and the lowering of dependency ratio ceilings in some sectors are unlikely to be undone. "The most benign scenario would be a pause in the pace of tightening," said Ms Ling.

And as Singapore hits the halfway mark of a 10-year productivity drive, observers have their ears peeled for the Budget to announce a new approach to raising productivity.

Barclays economist Leong Wai Ho expects a shift in emphasis towards employees taking ownership of productivity gains and improving their own career prospects.

"This should complement the existing, top-down approach of employers implementing training initiatives," said Mr Leong.

Ms Ling also expects schools, especially institutes of higher learning, to be roped in to help refocus the productivity push and to answer to "rapidly changing industry needs".

And as many local bosses from the retail to the construction sectors have been vocal about how carrots and sticks cannot fix their hiring woes, a cultural shift might also be on the agenda to get more young people interested in now-unpopular fields.

Deputy Prime Minister Tharman Shanmugaratnam has hinted that details of the SkillsFuture initiative will be revealed in the Budget. SkillsFuture is intended to promote greater cooperation between individuals, employers, schools and training providers.

Local firms gain from schemes in productivity push
The Straits Times 21 Feb 2015

MANY Singapore companies have benefited from a range of schemes to help them in their productivity drive, according to figures by the Ministry of Trade and Industry.

The schemes fall into three categories.

The broad-based schemes are available to all businesses to encourage investment in productivity, technology and innovation.

These include the Productivity and Innovation Credit (PIC) and the Innovation and Capability Voucher (ICV).

A second category is where programmes help companies in specific areas such as the Technology Adoption Programme (TAP).

The third category covers sector-specific schemes under the National Productivity Council (NPC), such as the Construction Productivity and Capability Fund and the Community Health Improvement and Productivity Scheme. Among the broad-based programmes, PIC is possibly the best-known. Companies have enjoyed over $1.8 billion in PIC benefits as of Aug 31 last year, for years of assessment 2011 to 2013.

Another popular programme is the ICV.

Since 2013, Spring Singapore has awarded 8,500 vouchers amounting to $42.5 million for consultancy and capability building.

As of June 30 last year, 6,600 ICV applications have been approved since the programme was launched in June 2012, and 3,500 were approved since last January.

There has been a surge in ICV applications approved since the scheme was expanded on March 1 last year to support small and medium-sized enterprises (SMEs) in implementing solutions after completing consultancy projects in innovation, productivity, human resources development and financial management.

More than 75 per cent of the applications approved between January and June last year were for productivity solutions.

Since the launch of TAP in 2013, 12 technology solutions have been commercialised, and 650 local companies have benefited from them.

Over the last two years, there has been a rise in the SMEs that are adopting automation, and information and communications technology.

As of last September, about 1,300 food companies have embarked on productivity upgrading projects, since the productivity road maps for the food service and food manufacturing sectors were rolled out in 2011.

As of last October, over 620 retailers have been supported in various productivity upgrading initiatives, since the launch of the Retail Productivity Plan in 2011.

Excluding the PIC and ICV schemes, around $490 million has been committed to companies through the various broad-based and sectoral productivity schemes under the NPC.

More than 22,000 companies have benefited from these initiatives, with 7,000 companies in 2013 alone.

The productivity performance across sectors has been uneven.

Between 2010 and 2013, sectors such as manufacturing, and finance and insurance showed healthy productivity growth of 2.3 per cent and 2.2 per cent per annum respectively.

Productivity growth in domestically oriented sectors like construction, retail, and food and beverage declined by 0.2 per cent, 2.1 per cent and 0.6 per cent per annum respectively.