Utilisation of Productivity and Innovation Schemes by Businesses

Assoc Prof Randolph Tan asked the Deputy Prime Minister and Minister for Finance what are the statistics on the proportion of businesses for which the utilisation of schemes, such as the Productivity and Innovation Credit (PIC) and Innovation and Capability Voucher (ICV) has been followed by a moderation in manpower requirements and/or an expansion in revenue.

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Assoc Prof Randolph Tan asked the Deputy Prime Minister and Minister for Finance if he can provide an ordering, by number and value of applications, of the six qualifying activities of the Productivity and Innovation Credit scheme.

The Government adopts a multi-pronged approach to promote productivity and innovation. It includes both broad-based and targeted initiatives designed to complement one another in supporting industries and businesses. As productivity is shaped by many factors, including demand for a firm's products or the cyclical conditions it faces, it is difficult to attribute productivity changes to specific schemes. We are also mindful of the fact that the business transformations that underpin productivity growth are a medium to long-term endeavour. It is, hence, best to assess results of a firm's efforts – be they an investment in equipment, software or intellectual property or improvement in employee engagement and work processes – over a sustained period.

Nevertheless, the take-up rates of various schemes are an indication of their relevance to businesses. Both the PIC and ICV schemes that Assoc Prof Tan asked about have been well-received. Fifty-four thousand or 46% of active companies filed claims under the PIC scheme in the Year of Assessment (YA) 20141, up from 36,000 or 33% in the YA 2011 when the scheme was introduced. As for the ICV scheme, about 13,000 SMEs have benefited since the scheme was launched in June 2012.

Assoc Prof Tan also asked for the number and value of applications of the six qualifying activities under the PIC scheme. Based on corporate income tax returns for YA 2014, the 54,000 companies which filed PIC claims made more than 75,000 claims on the six qualifying activities in total2. The highest number of claims is for automation equipment, followed by training. Please refer to the table below for the proportion of claims and the expenditures incurred on the six activities for YA 2014.

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