By Fiona Chan

As the economy takes a turn for the worse, companies are asking the Government for just one thing in next year's Budget: Help them survive.

With sales and orders starting to slow, firms will need aid to cope with high operating costs, avoid retrenching staff and get easier access to the credit that will help them stay afloat in these turbulent times, say tax experts, business associations and chambers of commerce.

With the prospect of a global recession on the scale of the 1930s Great Depression, calls are being made to the Government to go beyond the short-term relief packages of past downturns and to introduce 'extraordinary measures' this time.

These include a reduction in the goods and services tax (GST) to encourage consumer spending.

'Drastic times do call for extraordinary measures,' said the Singapore Chinese Chamber of Commerce and Industry, which is recommending a cut in GST from 7per cent to 3 per cent.

Added PricewaterhouseCoopers Singapore's tax partner David Sandison: 'The Government has always aimed at a balanced Budget, based on the premise that there is a need to save for that rainy day. It is pouring at the moment.'

Ernst & Young's partner for tax services, Mr Russell Aubrey, expects that there will be some quick relief injected in the form of a 'Christmas Budget' ahead of the annual Budget in February next year.

'Singapore needs to be quick on its feet before the economy contracts too much. The sooner the better, or we'll have to climb out from a deeper hole.'

High costs and cash-flow problems top the list of concerns that companies are voicing as Singapore enters a downturn.

The plea for aid is especially heartfelt from small- and medium-sized enterprises (SMEs). They are being squeezed by slower cash inflows and difficulties in obtaining the new financing they need.

'More SMEs are reporting that their customers are taking a longer time to pay for goods and services,' said Mr Lawrence Leow, president of the Association of Small and Medium Enterprises.

'This is compounded by the tightening of credit facilities... banks are becoming extremely careful with lending and are, in some cases, pulling back credit facilities.'

He felt the Government could enhance some of its existing schemes to make it easier for SMEs to get loans.

At the same time, companies regardless of size are grappling with steep costs of operation, with property values still close to their peak and the recent electricity tariff hike.

Mr Dennis Ng, director for research and corporate communications at the Singapore Manufacturers' Federation (SMa), cites the case of a local food manufacturer which has seen utility costs jump almost a third from about $30,000 a month to close to $40,000.

It requires 24-hour operation of a cold room and uses high-energy consumption ovens.

Companies said they would welcome rebates for utilities and transportation costs, such as road tax and Electronic Road Pricing charges.

To help with property costs, the Government could grant tax exemptions for unoccupied property and land under development, said Mr Leow. He urged government agencies like JTC Corporation and the HDB to reduce commercial and industrial rents.

Industries that will bear the brunt of the slowdown could do with more targeted aid, experts said. Tax rebates could be given to makers of consumer electronics and semiconductors, as well as logistics and transportation firms, offered Barclays economist Leong Wai Ho.

For sectors that are still hiring, such as construction and hospitality, a reduction in the foreign worker levy would be helpful, said Singapore Business Federation chief Teng Theng Dar.

Tax experts also recommended a slew of measures to reduce companies' tax burdens. Deloitte Singapore's director of corporate taxes Chan Huang Chay suggested increasing the minimum income that may be partially exempted from tax, which would bring some relief to SMEs.

More drastic cost-cutting steps would include a temporary cut in the corporate tax rate or a reduction in employers' Central Provident Fund contributions.

Higher training grants to help staff become more productive will help too, said firms. Some 80 per cent of members surveyed by SMa said they would freeze headcount and focus on more training.

This article was first published in The Straits Times on November 16, 2008.