In Focus
ECONOMY | Staff Reporter, Singapore
view(s)

Singapore Budget 2021 Full Coverage: GST hike in 2-4 years; $11b for COVID-19 resilience package

Singapore’s national budget will be delivered by Deputy Prime Minister Heng Swee Keat from 3:00 pm today.

2:45 pm Singapore Business Review is tracking developments from Singapore’s 2021 budget statement live as they are announced by Deputy Prime Minister Heng. The formal presentation kicks off from 3:00 pm today. Follow us live!

3:07 pm

ECONOMY

  • The economy faced the worst recession since Singapore’s independence.
  • GDP contracted by 5.4% in 2020.
    • Without measures, GDP would have shrunk more than double (-12%)
  • Budget deficit—largest since independence—$64.9 billion dollars, 13.9% of GDP.
    • Saved 165,000 jobs over 2020-2021
  • Budget 2021 describes the fiscal resources and energies of the people

3:20 pm

COVID-19

  • Arrival of vaccination gives hope, but emergence of more infectious strains might disrupt resumption of economic activities
  • Community cases have remained low since June
  • The trajectory of the pandemic will mirror recovery
  • Heng is confident that Singaporeans can take on the crisis
  • Aviation sector will take some time to recover as the international border remains closed
  • $133 million COVID-19 Driver Relief Fund for the land transport sector
  • Two key trends
    • (1) Rising protectionism of supply chains, resources, data and technology.
    • (2)Unprecedented level of public debt globally to finance the extraordinary fiscal response during the pandemic.
  • Singapore’s economic recovery is contingent with how the global economy pans out.
  • “I am confident that we as Singaporeans can once again summon our resolve to tackle challenges and to emerge from the crisis.”
  • Global expected economy will recover this year.
  • Singapore’s GPD is expected to grow 4% to 6% in 2021.
  • $11b for COVID-19 resilience package:
    • $4.8b to safeguard the health and safety of Singaporeans: address our immediate needs—public health and reopen safely
      • Close to 240,00 people have received the first dose of the vaccine.
      • Calls for residents to continue precautionary measures of contact tracing, testing, and safe distance to continue.  
    • Support workers and businesses when needed.
      • Continue to provide JSS:
      • Aviation, aerospace, tourism - extend JSS by six months; will receive 20% support until June; 10% support between July to September.
      • Retail, Arts & Culture, Food Services, Built Environment - 10% support for next three months
      • Recovering sectors - extended until March 2021.
      • Karaoke and parks not yet permitted to open
    • Support sectors that are still under stress
  • JSS extension will cost $700m

3:22 pm

SECTOR SUPPORT PACKAGES

  • The COVID-19 resilience package has approved 5k applications since 15 February.
  • Aviation sector to receive $870m support.
  • Aviation sector will take some time to recover. International border remains closed.
  • Total volume of travelers in Changi was only 2% of how it was pre-COVID.
  • For land transport sectors hard-hit by the pandemic, set aside $133 million COVID-19 Driver Relief Fund.
  • Arts & Culture, Sports Resilience package extended in FY 2021; set aside $45m for the enhancement and extension of these packages.

3:27 pm

“Emerging Stronger Together”

  • Three changes

1) Changing competitive landscape

  •    COVID-19 has shifted the US-China technology race to a global race.

2) Rising inequality

  •    Singapore working with like-minded countries to promote global access to vaccines.

3) Importance of sustainability

  • From counter cyclical policies to structural economic policies.
  • Over the next three years, we will allocate $24b to firms and workers to emerge stronger and to drive transformation.

3:33 pm

THREE KEY ENABLERS

  • Three key enablers for emerging stronger: vibrant business community, financial capital, and developing people.
  • To secure its position as aviation hub, Singapore will restore Chinese connectivity and on-arrival testing and bio-safety systems.
  • Two key shifts post-COVID:

1) Shift from physical to digital transactions.
2) Shift from tangible to intangible assets of value creation.

  • To support Singapore businesses, government will invest in three platforms:

1) Corporate system launchpad will provide co-funding for corporates to build new ventures in pre-qualified venture studios.

  • Venture Studio example: BCG Digital Ventures, which built a farmer services platform to increase crop yield and distribution.

2) Open innovation platform (OIP) - match of problems of businesses and industries to solution providers

  • New features enhancement: cloud-based digital bench

3) Global Innovation Alliance (GIA) - enhances cross-border alliance between Singapore and major hubs

  • 680 students, 780 businesses took part in innovation launchpads, 40% of these in Southeast Asia.
  • Over 100 potential business matches between Indonesian and Singapore companies.
  • Currently have 15 city links, including Bangkok, Jakarta, and Manila. Will expand to other cities over the next five years.
  •  Co-innovation program will support up to 70% of costs for cost-innovation and partnership projects. In 2019, 21 companies supported over 11 countries.

3:41 pm

Singapore Intellectual Property Strategy 2030

  •  To support innovative businesses Singapore. It will include equipping businesses with tools to value IP and IA.
    •  More details in World IP Day on April 26
  • Singapore Business Federation to open offices in Jakarta and Ho Chi Minh City.
  • Infrastructure investments

3:46 pm

Financial Capital

  • It is precisely during these times that those that are ready to seize opportunities will emerge stronger.
  • Government will provide grants to support businesses at different stages of growth.
  • Extending and enhancing the venture-debt programme.
  • Emerging technologies programme for mature organisations.
  • CTO-as-a-service initiative
  • New Digital Leaders programme will support promising firms in implementing digital technology.
  • Extend the enhanced support levels of up to 80% for existing schemes (such as the StartUpSG programme) to the end of March 2022. $1b has been set aside for these schemes.
  • $500m from the government to be co-invested with Temasek in a Local Enterprises Funding Platform to be launched commercially.
    • Temasek will also invest $500m for a total of $1b
    • $1b growth capital to support LLEs to transform or expand overseas
  • Growth and transformation scheme (GTS)
  • Adoption of DfMA technology doubled from 19% in 2017 to 39% in 2020

3:52 pm

EMPLOYEES AND UPSKILLING

  • Mercer study: 90% global employees more productive despite working from home.
  • JGI: 110,000 local job seekers collectively hired within two months upon launch
  • Allocate an addition $5.4b for a second tranche of Jobs & Skills Package
    • $5.2b allocated to JGI to extend hiring window to end-September 2021.

       - Companies hiring eligible locals given 12 months of support.
       - Those hiring mature workers, persons with disabilities, ex-offenders will gain 18 months of support.

  • Set aside for the hiring of 200,000 locals under JGI.
  • Provide 35,000 traineeship and upskilling.
  • Groom leaders in tech and innovation, especially deep tech
  • The NRF will support 500 fellowships under the Innovation & Enterprise Fellowship programme in the next five years.
  • First partners: SGInnovate, recently launched Power X (Robotics)
  • Nine-month programme to develop robotics-related skills

Changes in employment accelerated by COVID

  • Businesses need highly skilled workers with deep talent
  • Employees need to have broader and deeper skills
  • Working from home
  • Higher productivity despite employees working remotely
  • Over 80% of firms to implement more flexible working arrangements
  • Singaporeans may find more opportunities but may face stiffer competition
  • Singaporeans need to learn and adapt to get these opportunities

3:55 pm

Healthcare Sector

  • Enhance the salaries of nurses and healthcare workers, such as support care staff.

         - Publicly funded community hospitals
         - Public healthcare institutions
          - Long-care service providers

  • To announce details at the COS

3:59 pm

Manpower

  • Support employment of Singaporeans, moderating reliance of foreign labour
  • Local-Foreign Workforce Complementary and Industry Transformation

           - Extending wage credit scheme by one year with co-funding level of 15%
           - Capability Transfer Programme (CTP). 140 companies, 970 locals have benefitted, or will benefit, from 40 projects.

           - Will extend CTP up to end September 2024

4:02 pm

Manufacturing

  1. A significant pillar for Singapore economy: Heng
  2. S Pass framework to continued to be reviewed
  3. Reduce the S Pass sub-DRC in Manufacturing sector:
  • 18% from 1 January 2022
  • 15% from 1 January 2023

4:08 pm

Household Support Package

  1. Lower and middle income households: all Singaporeans eligible to GST, they will receive a one-off GSTV of $200
  2. Will also provide GST voucher to eligible households: 50% of GSTV
  3. For families with children below 21 years old: provide $200 per child to invest in children’s future
  4. CDC Vouchers of $100 per household
  5. Household Support Package totals $900m

4:11 pm

Ageing Workers, PWDs

  1. Older workers may need more support
  2. Retirement age to be raised to 63, Re-employment to 68, will become effective in 2021
  3. Senior Worker Early Grant adoption has exceed expectations: Heng
  4. To support more companies to raise retirement, re-employment: budget for grants to be raise by $200m.
  5. Built 1,200 new jobs for PWDs
  • Open Door Program
  • Enabling Employment Credit

4:16 pm

Lower Income Families

  • Second group badly affected by pandemic
  • CommunityLink, one of MSF’s key initiatives to help these family’s children, launched in 2019
  • MSF is now supporting 1,000 families under ComLink
  • To extend ComLink to a nationwide programme and cover 14,000 families with children
  • Details to be provided to families

4:20 pm

Children with Special Needs

  • Looking to pilot an Inclusive Support Programme
  • Early intervention, early child services to benefit children with developmental needs

Charity Sector

  • Donations to certain platforms like specific causes, such as COVID-19 have risen, but donations to other charities have fallen
  • Heng encouraged individuals to do more to charity sector
  • Extend tax reduction to Institution of a Public Character (IPC) until end-2023
  • $20m Chance for Charity grant

4:30 pm

Community Efforts

  • N-Lab: Put close to $1m of their own money to design and donate masks to community
  • For initiatives that meet needs of community
  • Government will give $3 for ever $1 raised
  • Heng is setting aside $50m to match CDC’s Care and Innovation Fund

SUSTAINABILITY

  • Heng acknowledges the climate change threat. He said tackling climate change needs a global solution:
    • (1) Will continue to support international and regional efforts and play an active role at the United Nations.
    • (2) Sustainable development is a major priority for Singapore
  • To improve air quality, restructured diesel tax was introduced in 2017 and 2019. Carbon tax was introduced as well.
  • Last week, government launched Singapore Green Plan 2030
  • Technology is a game changer for sustainability
  • Investments to go on research for a more sustainable and livable environment
  • $60m for new Agri-cluster transformation fund

4:36 pm

Technological Transformation

  • EVs: Aim to deploy 60,000 charging points by 2030, more than previous target of 28,000
  • Set aside $30m over the next five years for EV-related initiatives
  • Narrow the cost of EV and Internal Combustion Engine (ICE) cars
  • Lower Additional Registration Fee floor to zero between January 2022 to December 2023

Raise petrol duty rates effective today

  • Price of premium petrol raised 15 cents per litre
  • Price of intermediate petrol raised 10 cents per litre

All tax rebates to take effect by August 2021 are the following:

  • Provide 60% tax rebate to all motorcycles for one year
  • Additional petrol duty rebate of $50-$60 depending on capacity, up to 400cc
  • For taxis and passenger cars using petrol, 15% rebate and $360 given out over four months
  • Goods vehicle and buses enjoy 100% tax rebate for one year
  • For cars using rebate, 15% road tax rebate for one year

4:41 pm

Public Transportation

  • Within this decade, the government will spend $60b to expand and upkeep public transport systems.

Green Finance

  • Government to issue green bonds on select public infrastructure projects
  • Reference for SG dollar green bond market
  • Identified up to $19b of public infrastructure to start

4:51 pm

PRIORITIES IN THE COMING YEARS

  • For the immediate term, the government will continue to provide relief.
  • For the medium term, the government will invest strategically for growth and press on for econ transformation.
  • For the long term, caring and sustainable home for all.
  • Fiscal approach is to balance addressing immediate needs and long-term structural needs.
  • Running a fiscal deficit is warranted to address the impact of COVID-19.
  • COVID-19 did not change fundamental drivers of our fiscal trends.
  • We must meet these structural needs in a disciplined and sustainable way.
  • Will draw $11b from past reserves in 2021, for a total of $53.7b drawn in past reserved between FY2020-FY2021. This is a net increase of $1.7b from what the government expected to draw.
  • Healthcare spending tripled from FY2010 to FY2019

4:59 pm

TAX INCREASE

Will need to increase GST rates, but it will not take effect in 2021. The increase will be made sometime between 2022 to 2025, sooner rather than later.

  • We will not be able to meet rising recurrent needs otherwise, particularly for healthcare spending.
  • Government sets aside $6b to cushion the effect; it will delay the effect in five years.

Ongoing discussion to change international tax rules

  • It will impact Singapore’s corporate tax revenues if changed; we will consider revising tax rules.

GST extended to include imported low-value goods from 2023

  • Ensures level playing field for local businesses and overseas suppliers

5:05 pm 

BONDS
Government to issue new bonds under the Significant Infrastructure Government Loan Act (SINGA)

  • “Fair and efficient way of distributing fiscal responsibility.”
  • Government will issue bonds to finance major, long-term infrastructure.
  • Proceeds will be used to finance assets for Singapore’s long-term development, such as new MRT lines and other infrastructures to protect against rising sea levels.
  • Set a $90b borrowing limit based on expected project pipeline

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.