Singapore unveils 'Emerging Stronger Together Budget 2021'

Sector support packages, job support and other schemes to help Singapore emerge stronger.

Deputy Prime Minister Heng Swee Keat revealed on 16 February the Singapore Budget 2021 with key focus on sector support for those continuing to feel the impact of the pandemic, extension of the job support schemes, more financial help for low-income families as well as safeguarding public health.

Here are some of the key highlights.

1. Avian sector to received $870m

Heng said vaccines against COVID-19 are giving hope that borders may reopen soon, but warns that it is no silver bullet. One of the sectors relying most on reopening of the borders is the avian sector that will take some time to recover. A total of $870m in cost-relief and support has been allocated to the avian sector.

Meanwhile, the land transport sector has been allocated $133m for COVID-19 Driver Relief Fund.

2. Extension of Job Support Schemes

With some sectors still under stress, the government has decided to extend the Job Support Schemes, with $700m allocated for the extension.

The extensions are based on a bracket with the worst hit sectors like aviation, tourism, and aerospace. It will cover wages paid from April to September whilst sectors like food services, retail, and entertainment will have support from April to June. Sectors considered recovering will be covered until March only.

3. GST hike imminent

The 2% increase in goods and services tax will not be implemented this year. According to Heng, the government cannot put it off indefinitely. He said the GST hike will be vital to meet its rising recurrent spending and the GST hike may happen sometime between 2022 and 2025.

To cushion the negative impact of the hike, the government has allotted a $6b Assurance Package that will give adult Singaporeans cash payouts between $700 and $1,600 over five years. Singaporeans living in one to three-room flats, however, will get up to 10 years worth.

The Budget's new Assurance Package means all adult Singaporeans will get cash payouts of between $700 and $1,600 over five years, so most households will get enough to offset at least five years' worth of additional GST expenses.

Aside from the imminent GST hike, low-value goods bought online and imported by air or post will be subject to GST starting January 1, 2023. It will also be extended to imported non-digital services for consumers. According to Heng, this will level the playing field for local businesses to compete effectively

4.$11b in COVID-19 Resilience Package

To defend against the threat of the virus, the government will roll out the $11b COVID-19 Resilience Package with focus on safeguarding public health. From the $11b, $4.8b will go to safeguarding public health with vaccination being the key. According to Heng, everyone who is eligible will be given the vaccine for free.

5. Manpower

To help more citizens, Singapore will boost the hiring of local workers as well as mature workers and persons with disabilities.

The government plans to moderate reliance in foreign labour with the Local-Foreign Workforce Complementary and Industry Transformation that will extend the wage credit scheme by one year with co-funding level of 15% as well as the extension of Capability Transfer Programme to end in September 2024.

The retirement age will also be raised to 63 with re-employment up to 68 effective in 2021. To support more companies to raise retirement and re-employment, the budget for grants will be raised by $200m.

Heng also urged businesses to redesign jobs and upskill local employees.

6. $24b to transform workforce and businesses

Heng said the government will continue to build on the transformation push when Singapore launched the Industry Transformation Maps five years ago.

He noted that businesses must remain globally competitive. To help businesses, the government piloted the Corporate Venture Launchpad with the goal to drive new innovative ventures by providing co-funding for companies to build new ventures through collaborative venture studies. The aim for this is to rekindle a startup mindset.

The government will also set up risk-sharing arrangements with providers of capital and provide grants to support businesses at various stages of growth.

This comes in the form of increasing the Venture Debt Programme cap from $5m to $8m where the government will co-fund the adoption of digital solutions and new technologies. A new Emerging Technology program launch will also co-fund the cost of adopting frontier technologies.

7. Sustainability

Heng said the government acknowledges the threat of climate change. One of the key focuses for Singapore’s more green and sustainable future is the adoption of Electric Vehicles (EVs). The government has set aside $30m for EV-related activities such as the plans to develop 60,000 EV-charging infrastructures such as charging ports and car parks by 2030.

To further the use of EVs and public transport, the government will impose additional duty for premium grade petrol; it will be raised by 15 cents per litre. Intermediate grade petrol will be raised by 10 cents a litre.

Heng said there will be rebates given out to help taxis and other Singaporeans who drive for a living. A 15% road tax rebate for taxi and private-hire drivers will be given for a year, and a $369 of additional petrol duty rebate over the next four months. Cars using petrol will have a one year tax rebate of 15%. Tax rebates will be applicable starting 1 August 2021 to 31 July 2022.

8. $90b new bonds to be issued

New bonds under the Significant Infrastructure Government Loan Acts will be issued. According to Heng, this will be a "fair and efficient way of distributing fiscal responsibility."

The bonds will be issued to finance major, long-term infrastructure with proceeds to be used to finance assets for Singapore’s long-term developments, such as MRT lines and other infrastructures to protect against rising sea levels.

The bonds will have a $90b borrowing limit.

Emerging Stronger Together

The government has divided its plans into three with immediate plans focused on continued pandemic relief. Medium-term plans will see the government invest strategically for growth and press on for economic transformation whilst long-term plans will focus on giving a caring and sustainable environment for all.