As uncertainties swirl over Singapore’s economy, Deputy Prime Minister and Finance Minister Heng Swee Kiat delivered a generous, expansionary budget to aid companies and business tide through this period. The estimated budget deficit of SGD$10.9 billion, or 2.1 per cent of gross domestic product, even exceeds the forecasted budget deficit in 2009 of SGD$8.7 billion. Then Singapore was facing the global financial crisis. This time around geopolitical tensions, a protracted trade war between the US and China as well as uncertainty from the COVID-19 outbreak poses great challenges to Singapore’s economy in the short to medium term. Sectors such as tourism, aviation, retail, transport and food services have been adversely hit by the COVID-19 outbreak in Singapore, further exacerbating the already slowing economy.
Stabilisation and Support Package
The aim of this package is to help workers to remain employed and help companies with their cash flow.
- Jobs Support Scheme
SGD$1.3 billion will be spent on this. The aim is to help companies retain local workers. Employers will receive an 8 per cent cash grant on the gross monthly wages of each local employee on their Central Provident Fund payroll for the months of October 2020 to December 2020. This is subject to a wage cap of SGD$3600 per worker. This payment will be made to employers by the end of July 2020. This will affect some 1.9 million Singapore citizens and permanent residents.
- Enhancement of the Wage Credit Scheme
SGD$1.1 billion will be spent on this. This is to support companies in their transformation efforts and encourages them to share productivity gains with their employees in the form of wage increases. The scheme currently co-funds increases for Singaporean employees earning a monthly wage of up to SGD$4,000. This will be raised to SGD$5,000 for qualifying wage increases given in 2019 and 2020. The government co-funding rates will also be increased to 20 per cent and 15 per cent for 2019 and 2020 respectively. More than 700,000 Singaporeans employed by 90,000 companies will benefit from this enhancement.
- Corporate Income Tax Rebate for Year of Assessment (YA) 2020
SGD$400 million will be spent on this. There will be a corporate income tax rebate for YA 2020 of 25 per cent of tax payable. This will be capped at SGD$15,000 per company.
- Year-long enhancements for several tax treatments
Companies will be allowed a faster write-down of their plant and machinery investments and renovation and refurbishments incurred for YA 2021.
- Improvements to the Enterprise Financing Scheme’s Working Capital Loan
For a year, the maximum loan quantum will be doubled from SGD$300,000 to SGD$600,000. The government’s risk-share will be increased to 80 per cent from the current 50 to 70 per cent.
- Flexible rental payments
Tenants and lessees of Government-managed properties will gain access to flexible rental payments in the form of instalment plans. Each application will be assessed individually.
Support for sectors that are directly impacted
To support sectors that are directly impacted by the COVID-19 outbreak, namely tourism, aviation, retail, transport and food services, a few initiatives were announced.
- Enhancement to the Adapt and Grow initiative
For the affected sectors, the funding period for reskilling workers will be extended from three months to a maximum of six months.
- Property tax rebate for the tourism sector
A property tax rebate of 30 per cent for the year 2020 will be granted to the accommodation and function room components of licensed hotels and serviced apartments, and three meeting, incentives, conventions and exhibitions (MICE) venues, Suntec Singapore Convention and Exhibition Centre, Singapore Expo and the Changi Exhibition Centre.
A property tax rebate of 15 per cent for international cruise and regional ferry terminals.
A property tax rebate of 10 per cent for integrated resorts.
A property tax rebate of 15 per cent for Changi Airport.
- Temporary bridging loan programme for companies in the tourism sector
Eligible companies can borrow up to SGD$1 million with the interest rate capped at 5 per cent per annum from participating financial institutions. The government will undertake an 80 per cent risk-share for these loans. This programme will run for a year from March 2020.
- Further rebates for Changi Airport
There will be rebates on aircraft landing and parking charges, assistance to ground handling agents and rental rebates for shops and cargo agents at Changi Airport.
- Rental Waivers
The National Environment Agency (NEA) will waive one month of rent to stallholders in NEA-managed hawker centres and markets.
The Housing Development Board (HDB) will waive half a month of rent to its commercial tenants.
A 15 per cent property tax rebate will be granted to qualifying commercial properties. The finance minister encouraged landlords to pass this savings on to their tenants by reducing rents.
- Contribution to the SGD$77 million Point-to-Point Support Package for taxi and private-hire car drivers
The government will contribute SGD$45 million towards the package with the rest provided by taxi and private-hire car operators.