Singapore Budget 2014 – Sustainability and Innovation Credit (SIC)
The Singapore Budget 2014 speech will be delivered by Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam, in Parliament next Friday.
At Green Business Singapore, our top wish for this year’s Budget is to see the government introducing a Sustainability and Innovation Credit (SIC) scheme, similar to the existing popular Productivity and Innovation Credit (PIC) scheme that is supposed to end in FY 2015.
With rising public awareness on sustainability and increased risks from climate change, food disruptions and energy price fluctuations, most businesses including small and medium-sized enterprises (SMEs) understand the need to reduce their environmental impacts, especially in terms of energy, water and waste. However, they are usually constrained by the lack of trained manpower and resources to take action.
More government efforts are needed to help local companies reduce their environmental impacts, and save on operating costs or gain a competitive advantage.
The current PIC scheme provides incentives for companies to be more productive, where they can enjoy 400% tax deductions or 60% cash payout for investment in innovation and productivity improvements.
Similarly, there could be a Sustainability and Innovation Credit (SIC) scheme helping companies to be more sustainable. When companies become more sustainable, they are actually also becoming more efficient in their operations and reducing unnecessary wastage of resources, leading to higher productivity.
The existing government green incentives and funding (about 35 different schemes) could be streamlined and included under the new SIC scheme. Furthermore, the SIC scheme could adapt the six productivity improvement activities covered under PIC and base it on sustainability improvement activities:
1. Acquisition and leasing of information technology and automation equipment
Revised activities could include the purchase or lease of environmental improvement products or technologies, such as energy efficient equipment and lighting, water saving devices, recycling bins and equipment, energy monitoring devices, or renewable energy systems.
2. Training of employees
Revised activities could include the training of staff on environmental issues, ISO 14001 Environmental Management System, or sustainability reporting.
3. Acquisition and in-licensing of intellectual property rights
Revised activities could include the purchase of patented environmental technology or use of copyright relating to sustainability.
4. Registration of patents, trademarks, designs and plant varieties
Revised activities could include the registering of patents, trademarks, and designs relating to green products and environmental processes or technology.
5. Research and development activities
Revised activities could include R&D on new environmental processes and green products, or test-bedding of new technologies.
6. Design projects
Revised activities could include the design of sustainable products and processes for consumer or industrial purposes.
With the current economic uncertainty and rising business costs, businesses in Singapore need more financial support from the government. The government should reward companies that take steps to reduce their environmental impacts, and recognise their sustainability efforts. The SIC scheme would be a right and timely move to signal that the government would support local businesses on their sustainability journey.
Helping local companies to be more sustainable is also in line with Singapore’s drive to be a clean and green city, and creates more opportunities in exporting sustainable business solutions for the region.