By Glendon Gwee
SINGAPORE — The Singapore government will set aside $11 billion in the COVID-19 Resilience Package to address the nation's immediate public health needs and support workers and businesses that are still under stress, Deputy Prime Minister and Finance Minister Heng Swee Keat said on Tuesday (16 February).
Heng announced the new package as part of the "Emerging Stronger Together" Budget presented in Parliament yesterday. The government will also set aside $24 billion for economic transformation over the next three years: to boost business, catalyse capital, redesign and create jobs.
The measures announced in Budget 2021 will help Singapore to "press with economic and workforce transformation strengthening our social compact and building a sustainable future for all".
Heng said while last year’s Budgets were tilted towards emergency support in a broad-based way, this year’s Budget will focus on accelerating structural adaptations. Last year, in addition to the usual spending, the government committed nearly $100 billion through five Budgets to support Singaporeans, and help businesses during the pandemic.
"In the face of major changes, we must move from just counter-cyclical fiscal and monetary stabilisation policies to structural economic policies to equip our businesses and workers with deep and future-ready capabilities," Heng said.
To fund the spending, Singapore will dip into its past reserves for the second year in a row, Heng said. Singapore is expected to post a deficit of $11 billion, or 2.2 per cent of gross domestic product (GDP) this year.
“This Budget is a very balanced one. It addresses the immediate needs by supporting the worst-hit sectors in a targeted manner, while supporting the medium-to-long-term needs of digital transformation, upskilling of workers and sustainability, both from an environmental and fiscal perspective. ” Ajay Kumar Sanganeria, head of tax, KPMG in Singapore, said.
Here is a look at the winners and losers of Budget 2021.
The government has also outlined $24 billion to be spent over the next three years to help companies and workers emerge stronger in the transformation push. The funds will mainly be used to build an ecosystem for innovation, a vibrant business sector, digitalize businesses and to strengthen the workforce.
Singapore Business Federation Chief Executive Lam Yi Young welcomed the government’s help on the extension of the JSS, saying "the new Budget measures, like the Emerging Technology Programme and Digital Leaders Programme, further strengthen the suite of measures that companies can tap on to increase their competitiveness and position for growth post-COVID."
The aviation sector will get $870 million in aid this year. The government expects the aviation sector to use this lull to sustain and upgrade its capabilities and to prepare for the recovery.
Taxi and private car hire
In the land transport sector, taxi and private hire car drivers have been hard hit by the pandemic and will continue to need support in 2021. The government has set aside S$133 million for the COVID-19 Driver Relief Fund, which was announced previously.
Arts and Culture and Sports
About $45 million is set aside for the extension and enhancement to the Arts and Culture Resilience Package and Sports Resilience Package to support businesses and self-employed persons in these sectors.
Large local enterprises
The government will set aside $500 million to be co-invested with Temasek in a Local Enterprises Funding Platform, to be managed commercially. Temasek will match the Government’s funds on a one-for-one basis, so the platform will have S$1 billion available for its investments. The platform will invest in non-control equity and mezzanine debt of selected LLEs, which are willing to work with the fund manager to pursue their next phases of growth.
Cash flow support
The Temporary Bridging Loan Programme and the enhanced Enterprise Financing Scheme – Trade Loan will be extended till 30 September 2021.
SGUnited Jobs and Skills Package
An additional $5.4 billion will be added to the package. Out of this new inflow, $5.2 billion will be allocated to extend the Jobs Growth Incentive by seven months till the end of September 2021. This measure aims to create 200,000 jobs and provide up to 35,000 traineeships.
The SGUnited Skills, SGUnited Traineeships, and SGUnited Mid-Career Pathways programmes will be extended for a year, till March 31, 2022.
The National Research Foundation will support about 500 fellowships in the next five years under an Innovation and Enterprise Fellowship Programme.
Larry Sim, Partner, Tax, KPMG in Singapore said that the $5.4 billion package will help in the process of upskilling, in turn developing a stronger Singapore economy.
Wage subsidies under the Jobs Support Scheme (JSS) will be extended by up to six months to help businesses that remain badly hit by the Covid-19 pandemic to retain workers. This extension will cost the government S$700 million. This will mainly be for specific sectors such as aviation, aerospace and tourism, retail, arts and culture, food services and the built environment.
The government will also increase the budget allocation for the Senior Worker Early Adopter Grant and the Part-Time Re-employment Grant by over $200 million. Further details will be provided by the Ministry of Manpower.
Our frontline medical workers will also see an enhancement to their salaries and the minister of health will share further details at a later stage.
Household Support Package
All eligible Singaporeans will receive a one-off GST Voucher of $200, on top of the regular GST voucher. HDB households can also enjoy a one 50% U-Save rebate on utilities. There will also be an additional top-up of $200 per child for Singaporean children under 21. All Singaporeans will also be entitled to $100 worth of CDC vouchers per household and these can be used at participating heartland shops and hawker centres.
The government has announced the Singapore Green Plan 2030 last week and one of the key focus would be the EV-related initiatives which will cost $30 million.
To continue supporting technology adoption in the agri-food sector, Singapore will set aside $60 million for a new Agri-Food Cluster Transformation Fund. This will replace the Agriculture Productivity Fund.
Capital is required to fuel Singapore's sustainability drive and the government will take the lead to issue green bonds on select public infrastructure projects. For a start, some S$19 billion of public sector green projects have been identified for this.
GST will be extended to low-value goods — those valued up to the current import relief threshold of $400 — imported via air or post, as well as to business-to-consumer imported non-digital services, starting from Jan 1, 2023.
Lam Kok Shang, head of indirect tax at KPMG Singapore noted that it was to be expected that GST will be placed on online purchases. “The imposition of GST on the importation of low-value goods from 1 January 2023 is not unexpected, as more Singapore residents gravitate to online purchases, a behaviour that was accelerated by the COVID-19 pandemic."
Petrol duty rates are raised from 16 Feb. For premium petrol, the duty will be raised by 15 cents per litre, and for intermediate petrol, the duty will be raised by 10 cents per litre. To help offset increased costs, the government will introduce road tax rebates.