Pre-Budget 2019 Proposal themed “Becoming Smarter”, calling for measures to help companies in five key sectors that hold the greatest upside for Singapore to realise our Smart Nation vision.
KPMG in Singapore today released its pre-Budget 2019 Proposal themed “Becoming Smarter”, calling for measures to help companies in five key sectors that hold the greatest upside for Singapore to realise our Smart Nation vision. The sectors in spotlight are financial services, real estate, healthcare and life sciences, consumer retail and technology. Beyond these sectors, the firm also called for greater investments in cyber security and resilience, the vital building block of a Smart Nation that all sectors rely on.
Mr Tay Hong Beng, Head of Tax at KPMG in Singapore said: “For the last few years, national strategies, expertise, creativity, entrepreneurial drive and smart money have come together to foster the development of a Smart Nation for Singapore. The next phase of our development is poised for take-off. Budget 2019 can be that catalyst for the next growth spurt if the government can offer stimulus and incentives to these five sectors that hold the greatest potential to turn Singapore’s Smart Nation vision into reality.”
A $225 million Financial Sector Technology and Innovation (FSTI) scheme was announced on 29 June 2015 to fund the setting up of innovation labs and experimentation through proof-of-concept projects, as well as incubate new industry initiatives in digital payments and blockchain.
While much progress has been made since the introduction of this scheme, many companies are still facing deployment challenges in a number of areas such as time, financial costs and resistance in implementing new technologies such as cloud platforms due to work required and security concerns, and a lack of skilled resources in implementing emerging technology areas.
KPMG recommends a new Financial Sector Digital Deployment scheme in three key areas to address these challenges:
Mr Leong Kok Keong, Head of Financial Services at KPMG in Singapore said: “After extensive nurturing with targeted government support, banks and fintech companies have reached a stage where a number of “proven solutions” are now ready for deployment on a wider scale. A new Financial Sector Digital Deployment scheme that focuses on driving digital adoption, extending FSTI grants to cover cloud migration exercises and developing a platform to monitor trade transactions for money laundering and proliferation financing activities will drive greater growth of the sector and move fintech deployment from an experimentation to implementation phase.”
A green real estate sector is key to making Singapore more sustainable.
However, until there is an incentive for developers and the private sector can see a direct correlation between a building’s sustainability and its occupancy, rent and valuation, greening of buildings will remain a top-down agenda.
The government can provide the initial impetus for the inception of a green ecosystem by incentivising the private sector to make financing, developing, owning and adopting sustainability feasible.
We propose key measures in four areas:
Ms Lo Mun Wai, Partner, Real Estate at KPMG in Singapore adds: “By introducing additional tax incentives and grants for landlords and tenants who align with the government’s sustainability goals, and encouraging the adoption of proptech such that it becomes easier and cheaper to make buildings green, these measures would allow the government to gradually shift its role from prescription to setting up and monitoring of sustainability standards.”
Smart nations can live well only with smart healthcare. Singapore can be a world leader in smart healthcare by moving towards a “patient-centric”, data-sharing approach.
Yet, healthcare in Singapore has not been able to capitalise on this opportunity to take the sector forward as data is fragmented across various players and platforms. What is required now is more effective and secure healthcare data-sharing, and increased collaboration.
To accelerate this process, we propose that the government adopt these measures:
Ajay Sanganeria, Head of Life Sciences, KPMG in Singapore commented: “Singapore’s conducive healthcare ecosystem holds significant strengths: a diverse population base for genetic profiling, an advanced system with electronic databases, strong academia and research, top pharmaceutical and medical technology companies, and increased adoption of wearables and smart devices.
He adds, “However, taking healthcare to the next level will require decisive executive action. Various sector players must be compelled to share and synchronise their data, while incentives need to be put in place to drive sustained innovation. Only then can Singapore be a world leader in smart healthcare.”
Singapore is already well-suited to be a base and global headquarters for international retail brands with its strengths in logistics and technology. The possibilities and benefits of digital transformation are many.
However, while modern consumers have been quick to embrace such new retail platforms and concepts, many brick-and-mortar retailers have not kept pace.
We propose the following measures to encourage retailers to embark on their digitalisation journeys:
Mr Jeya Suppiah, Head of Consumer and Retail, KPMG in Singapore said: “As a smart nation, Singapore needs to urgently move from traditional retail to e-commerce – or, better still, a hybrid approach – to tackle regional and global competition, which would help to generate spinoffs in other sectors, including logistics and transport, fintech and consumer analytics. More can be done to ensure retailers are incentivised to rethink their business models, get end-to-end support for digital transformation, and have better access to trained resources.”
IoT is a fundamental building block on our path towards becoming a Smart Nation. It is therefore critical that we encourage the development and adoption of IoT in Singapore.
However, despite all of IoT’s potential as a key Smart Nation enabler, its adoption has generally been slow due to high implementation costs, a lack of implementation skills, cyber security threats and complexity of integration and interoperability.
We recommend the following measures to encourage the development and adoption of IoT:
Mr Juvanus Tjandra, Head of Technology, Media and Telcommunications, KPMG in Singapore said: “Singapore is well-placed to harness the potential of IoT with its highly-skilled workforce, proven track record in major infrastructure projects and a strong base of high-growth enterprises that could adopt IoT quickly in new areas of growth. Incentives that attract technology companies to set up their global and regional headquarters here will be key to laying the foundation for Singapore to be recognised as the “Silicon Valley” of the region.”
As Singapore becomes even more of a digital nation by adopting new and emerging technologies such as blockchain, cloud, IoT and robotic process automation, cyber-attacks will remain a significant risk.
At the commercial level, security by design is often not a consideration when launching digital products and platforms as many business owners want to rapidly gain market share or competitive advantage ahead of their competitors. Expertise is also lacking in many sectors, especially in capabilities in threat intelligence, cyber incident response as well as cyber crisis management and recovery.
Hence, we recommend measures in three key areas to assist companies to build and sustain cyber security preparedness:
Mr Daryl Pereira, Head of Cyber Security, Management Consulting at KPMG in Singapore commented: “Cyber resilience is a key fundamental of building and sustaining a base of national security and the core foundation on which all other efforts to foster growth can proceed. It is our hope that Budget 2019 can offer more subsidies and funding to less mature sectors to help organisations build up their cyber security capabilities.”
Along with the sectoral and cyber security recommendations, we have put forth other key tax proposals that aim to encourage innovation and value creation and enhance personal reliefs:
To conclude, Mr Tay Hong Beng, Head of Tax at KPMG in Singapore said, “Few countries have aligned themselves with digitalisation as closely and determinably as Singapore. While there is no universal roadmap for cities to become “smarter”, Singapore is pursuing a whole new model of a smart nation that reflects its unique priorities, challenges, strengths and areas of value-add to the world. Budget 2019 can be that critical turning point to double down on the sectors that offer the greatest upside for Singapore to move decisively into its next phase of growth.”