Commentary: The Singapore Budget and Heng Swee Keat’s shift away from Big Government

What will Finance Minister Heng Swee Keat’s leadership style look like as Prime Minister?

Since rumours he may take over the top job in the country swirled a few years back, many have been looking for signs of his cast of mind and how he would govern a Singapore facing complex challenges.

A longtime economic czar, with deep experience in the Monetary Authority of Singapore and the Trade and Industry Ministry before his move to politics, Mr Heng’s knack for collaboration has been evident in his strategy to grow the economy over the last few Budgets, including this year’s announced on Monday (Feb 18).

While most companies typically look for additional aid from the Government amid global business uncertainties in each Budget, Mr Heng focuses instead on giving the private sector more skin in the game in transforming the economy. 

In Mr Heng’s track record since taking over the Finance Ministry in October 2015, a shift away from a top-down model of government to one that seeks to develop stronger partnerships to position Singapore for the future has been evident.

Several initiatives were announced at Budget 2019, which aimed to give the larger business community a bigger stake in the growth of Singapore companies.

One example was the injection to the Co-Investment Programme (CIP), which has almost reached its goal of catalysing S$1.5 billion over 10 years to nurture Singapore-based globally competitive companies since its launch. Mr Heng said he will set aside another S$100 million.

It is not new, nor is the amount particularly large. And tax incentives and business grants, like the expanded SMEs Go Digital, still make up the mainstay of the more-than-S$1 billion government measures this fiscal year to help businesses build deep capabilities.

But the enhanced CIP builds on a concert of schemes rolled out in recent Budgets to catalyse private sector resources to help Singapore companies reach the next stage of their development, including the S$500 million of government support for the Aviation and Maritime Transformation Programmes, with matching investments from industry partners announced at Budget 2018.

Budget 2017 saw the launch of a S$600 million International Partnership Fund (IPF), which applies the principle of co-investment to help firms break into overseas markets.

At Budget 2016, Mr Heng introduced a Small and Medium-sized Enterprise (SME) Working Capital Loan scheme, to co-share half of the default risk with participating financial institutions to encourage lending to SMEs.

In this context, the enhanced CIP is a reaffirmation of the co-investment approach, which brings to bear the know-how and commercial discipline of the private sector to public sector programmes to support businesses, as one worth pursuing.

Notably, the CIP and previously announced IPF are managed by Heliconia, whose parent company Temasek’s strong reputation in taking smart investment bets will benefit backed companies, giving them a better chance of securing good investors.

This co-investment approach has so far reaped multiplier effects in nurturing a vibrant business environment. Singapore has seen over 220 venture capital deals of close to US$4.2 billion each year, a surge from the 80 worth US$136 million in 2012.

Other initiatives announced this Budget also reflect this preference for partnerships to encourage various actors to contribute to Singapore companies’ growth.

The freshly announced Innovation Agents Programme, which seeks to provide local firms access to experienced industry champions, gives the business community a larger part in their growth.

While trade associations and chambers (TACs) have long been recognised to play a leading role, this role has been strengthened after Mr Heng’s announcement that Enterprise Singapore will work on five-year roadmaps with TACs that have demonstrated strong leadership and shown ambition to do more for businesses.