By Ananya Roy & Yang Huiwen

SMALL and medium-sized enterprises (SMEs) are broadly applauding initiatives announced in this year's Budget, but many are still apprehensive about how these benefits will filter down to them.

They expressed their views at two seminars: 'Implications of the Budget 2009 for Companies' held at the Ministry of National Development auditorium, and a post-Budget seminar held by the Singapore Chinese Chamber of Commerce and Industry (SCCCI).

At the first, Mr Mohamed Ismail, chief executive of real estate firm PropNex, said the two major problems for SMEs here are rentals and labour costs.

While SMEs must cash in on the corporate tax cut and rental rebates announced in the Budget, he sees these measures helping only in the long term.

'The corporate tax cut will be applicable only for assessment in 2010, and effectively we will have a benefit of only 4 per cent on rentals,' he said.

He also voiced concern over whether, even with the latest incentives, banks will lend to SMEs - and cautioned that 'no stimulus package can really help if entrepreneurs wait for government handouts'.

The first seminar was jointly organised by EDC@Asme, the Ministry of Manpower (MOM) and the Singapore Workforce Development Agency. Enterprise Development Centres (EDCs) offer advice to SMEs and are run by the Association of Small and Medium Enterprises (Asme).

Opening the seminar, chairman of EDC@Asme, Mr Wong Ming Kwong, said that companies should 'view the crisis as an opportunity to build and strengthen their business capabilities'.

He also highlighted Budget measures such as the Jobs Credit scheme, that would encourage firms to retain workers.

Mr Lau Weng Hong, the MOM's deputy director of labour relations, said the first priority for firms must be to retain jobs.

However, if faced with inevitable retrenchments, firms could look at flexi-wage and flexi-work schemes to cut costs, along with training employees to build capabilities for the recovery.

He also said that not all sectors had been badly hit by the downturn.

'Health care and education are some of the resilient industries,' he said. 'New investments in projects such as water and clean energy present hope, and the opening of the integrated resorts will create new jobs as well.'

The chief executive of financial advisory firm SingCapital, Mr Alfred Chia, spoke of measures to help SMEs stay viable.

He said that if SMEs cannot get loans, they should look at mergers or private equity, or even use personal assets such as property as collateral.

At the SCCCI event, PricewaterhouseCoopers (PwC) tax partner Lennon Lee said some of the measures such as Jobs Credit, had been 'unexpected, but more innovative than trying to cut CPF'.

The corporate tax rate, which will be cut to 17per cent from the year of assessment 2010, 'will not put cash back immediately into taxpayers' pockets' but will boost Singapore's competitiveness compared to Hong Kong, whose tax rate is about 16.5per cent, said PwC senior manager David Ong.

This article was first published in The Straits Times on February 12, 2009.