SINGAPORE: To help Singapore companies adapt to the new tariff environment, the government will be launching a Business Adaptation Grant in October, the Singapore Economic Resilience Taskforce (SERT) announced on Thursday (Jul 10).
The grant will be capped at S$100,000 (US$78,000) per company and will have a co-funding element, said Minister for Manpower Tan See Leng.
Revealing details of the new grant at a SERT press conference, which was held two days after US President Donald Trump started firing off letters on reciprocal tariffs to several countries, Dr Tan said local small and medium enterprises (SME) will likely be able to receive a higher percentage of co-funding from the government than local non-SMEs.
Small and medium enterprises employ around two-thirds of Singapore workers, he added.
The grant will cover two categories of businesses and eligible companies will get support for a “time-bound period” of two years.
The first group includes companies that export to or operate in overseas markets and are affected by tariffs, and the second group includes companies with manufacturing operations overseas or locally that need support with reconfiguration costs, including logistics and inventory holding costs.
For the first group, the grant will help them conduct free trade agreements, trade compliance advisory, legal and contractual advisory and supply chain optimisation and market diversification advisory.
“It’s not meant to eventually cover everything,” said Dr Tan. “I don’t think it is realistic, nor is it possible.”
He added that the two-year window will, however, provide some sort of reassurance for businesses that if there is a protracted period of negotiations, the grant would still be available for them.
More details of the grant will be available later.
The Business Adaptation Grant complements other schemes that help businesses enter new markets, transform, innovate and grow, said Dr Tan, who is also Minister-in-charge of Energy and Science and Technology.
Since the task force was formed in April, it has engaged more than 3,000 people, including business leaders, union leaders, workers and new graduates, said Minister for Digital Development and Information Josephine Teo.
For businesses, she said some are monitoring the situation, while others have decided to defer or hold back major investment decisions, or are reviewing their plans.
“Companies in the outward oriented sectors, they feel the impact much more imminently, and their plans, therefore will be much more likely to have to be adjusted sooner rather than later,” she said.
Chairman of the Singapore Business Federation (SBF) Council Teo Siong Seng said businesses gave feedback that they need to diversify into different markets and reconfigure their supply chain.
“We have raised this concern to SERT,” he said. “SBF is very heartened to see that the government has taken swift and decisive action in response to the needs of the business community.”
Mr Teo said the grant will help businesses with their first step in restructuring business operations and this will help them to be more decisive in seizing opportunities in the “new tariff environment”.
He added that the public-private sector partnership is crucial in the coming months. SBF will continue to work with the government and businesses to navigate the uncertainty and help companies press ahead with growth and transformation.
AUG 1 TARIFF DEADLINE
SERT’s update comes as US president Trump continues to send letters to countries informing them that they would be subject to sharply higher tariffs from Aug 1.
While Singapore has not received a letter, neighbouring countries such as Malaysia and Indonesia will face tariffs of 25 per cent and 32 per cent respectively.
The letters hinted that there will be opportunities for additional negotiations, but the deadline appears to be fixed.
Deputy Prime Minister Gan Kim Yong noted that tariffs for some countries in Asia were reduced from what was initially announced in April, but others will see higher levies.
“This will likely prolong the uncertainty and volatility and challenges for the economies around the world,” he said.
“We hope that negotiations and consultations will continue and that the US will be able to reach deals (with these countries).”
