In Focus
ECONOMY | Marianne Estioco, Singapore

Check out the biggest winners and losers of Budget 2016

It was disappointing for transport operators, developers.

Singapore’s recently-released Budget 2016 saw an increase in government spending in order to boost growth, but market watchers caution that not all sectors will benefit from the expenditure spike.

For instance, analysts were hoping that Budget 2016 will provide more clarity on the funding scheme for the bus service enhancement programme (BSEP). However, these hopes were dashed when the Finance Minister revealed that the total bus procurement budget for this year is just $224.8m.

“Market participants expect a windfall for the operators from the sale of their existing bus assets to the government. Excluding the announced contract for new buses, total outstanding budget for the next three years is $488m compared to the bus assets owned by the operators, which we estimate to be worth $1b,” Maybank Kim Eng analysts noted in a report.

“Worse, the budget could be utilized for the purchase of new buses and may not be confined to buying older buses from the existing operators. We did not see any budget set aside for the purchase of rail assets from the operators. This is negative and may weigh on sentiment for SMRT and ComfortDelGro,” Maybank Kim Eng’s report added.

The budget also provided no respite for policy-battered residential property developers. The government reiterated its stance that it is too early to lift property cooling measures, and refused to defer foreign worker levies for the construction sector.

“It is a double whammy for property developers as manpower costs will increase due to the non-deferment of the previously announced increase in foreign worker levies for the construction industry,” said Low Hwee Chua, Head of Tax Services, Deloitte Singapore and Southeast Asia:

Although the budget was particularly disappointing for transport players and property developers, it was positive for other beleaguered sectors such as oil and gas, construction, manufacturing, and industrial property.

“We see upside in some manufacturing and services sectors, particularly in the high-technology segments. This should help offset the downward swing in the overall manufacturing sector,” said Standard Chartered analyst Jeff Ng.

“We expect a short-term boost to certain industries this year, particularly in the construction, health and education sectors,” Ng added.

Industrial landlords can also expect a demand boost from increased R&D spending.

“With a heavy focus on R&D and scaling up enterprises, [industrial REITs] are the main beneficiaries,” Maybank Kim Eng noted.

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