Yes, you read it correctly. In fact, the Government wants to co-invest in your business under the Co-Investment Programme (CIP), and is now ready to pump in an additional of $150 million, as announced at Budget 2014. However, there has been a great deal of confusion among companies on whether they qualify for the CIP scheme, and what it really can do for them. These are some of common questions about the CIP answered for your easy understanding.
What is the CIP basically?
CIP is essentially the government’s provision of capital for SMEs without being impatient for returns. This is fundamentally meant to empower mature SMEs to compete in the international arena by allowing them access to mid-stage funding. Deputy Prime Minister Tharman Shanmugaratnam said that the CIP Scheme will “provide the capital to help SMEs that need more time to execute their expansion and internationalization plans”, during the Budget 2014 announcement.
The CIP is now entering Phase II of its programme, during which the government has announced to inject $150 million of additional capital into two equity funds that will be managed by the private sector. Specifically, these equity funds will be managed by Heliconia Capital Management, which has matched the Government’s investment at a 1:1 co-investment ratio. This has resulted in over $500 million amassed for the purpose of catalyzing the global growth of SMEs.
Is my company eligible for the CIP?
If your SME rakes in an annual revenue of up to $500 million, and is based in Singapore with at least three strategic decision-making members of the board including the Chief Executive Officer in Singapore, then your company qualifies for the Phase 1 of Co-Investment Programme.
Does this mean foreign companies do not qualify?
Not necessarily. Should your company plan to relocate its international headquarters to Singapore, your company can be considered for the CIP funding. However, there will be no restriction on the nationalities of the company owners or key managers.
Are there any other incentives for foreign companies to set up headquarters here?
If your foreign company qualifies under the Headquarters Programme by EDB, it will be eligible for the Regional Headquarter Award. This award offers a concessionary tax rate of 15% for three years on the revenue generated by your company from Singapore. Your company can continue to enjoy the 15% concessionary tax rate for two more years, provided it fulfills the additional requirements stipulated by EDB within the first three years in Singapore. For more information, you can visit the EDB page on the Headquarters Programme.
What if my company earns less than $1 million? Will the Government still help my business?
Of course! The Budget 2014 has unveiled many incentives for young companies to grow and succeed, and one such incentive is the Micro-Loan Programme (MLP). Similar to the CIP scheme, the Government will account for 70% participation, however not in funding, but in sharing the risk with banks and financial institutions to grant you working capital loans easily and quickly. For more information on the MLP, visit the Rikvin page on the Enhancements to the MLP.