SINGAPORE: Amid the COVID-19 outbreak and other global uncertainties, the Government on Tuesday (Feb 18) proposed a stabilisation and support package worth S$4 billion to help workers and businesses deal with near-term economic uncertainties.
“Our foremost concern is jobs”, followed by helping enterprises with cash flow, said Deputy Prime Minister and Finance Minister Heng Swee Keat during his Budget speech in Parliament.
Additional support will also be given to sectors directly affected by the coronavirus outbreak, such as tourism, aviation, retail, food services and point-to-point transport services.
READ: Budget 2020 - S$4 billion stabilisation and support package for workers, firms amid COVID-19 outbreak
The proposals came on the back of “modest” 0.7 per cent economic growth in 2019 – the weakest since the 2008 financial crisis.
And “just as the global economy was beginning to recover”, the COVID-19 outbreak “hit us”, said Mr Heng.
The outbreak prompted Singapore to raise its Disease Outbreak Response System Condition (DORSCON) level to Orange on Feb 7. As of Monday, 77 people have tested positive for the virus in the island, 24 of whom have been discharged.
With an expected impact on the economy, the Ministry of Trade and Industry downgraded this year’s GDP forecast from between 0.5 per cent and 2.5 per cent to between -0.5 per cent and 1.5 per cent.
“However, the duration and severity of this outbreak and the impact on the global economy are still unclear.
“While MTI’s baseline is for GDP growth to come in at 0.5 per cent for the full year, we must be prepared that the economic impact may be worse than we projected,” Mr Heng added.
Here is what you need to know about the stabilisation and support package included in Budget 2020:
1) HELPING WORKERS STAY EMPLOYED
To help workers stay employed, the Government will support businesses by defraying their wage cost through two schemes, as well as redeployment programmes for selected sectors.
- Jobs support scheme: The Government will offset 8 per cent of every local worker’s wage, up to a monthly cap of S$3,600 for three months.
This will support more than 1.9 million local employees in Singapore and will be paid out to employers by the end of July 2020.
- Wage credit scheme: The existing scheme, which supports wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000, will be expanded to workers earning up to S$5,000 a month.
The proportion of wages co-funded by the Government will also be increased by five percentage points to 20 per cent and 15 per cent, for 2019 and 2020 respectively.
- Redeployment programmes: Employees in tourism, aviation, retail and food services sectors will receive enhanced support under the adapt and grow initiative, specifically through redeployment programmes, with the funding period for reskilling extended from three months to a maximum of six months.
Together with the Jobs Support Scheme, this will support employers in these sectors retain and train more than 330,000 local workers.
2) RENTAL WAIVER FOR FOOD SERVICES AND RETAIL SECTORS
Stallholders in hawker centres and markets managed by the National Environment Agency will be given a full month of rental waiver. Other agencies, such as the Housing and Development Board, will provide half-a-month of rental waiver to commercial tenants.
Establishments operating in qualifying private properties will get a 15 per cent property tax rebate. “I strongly urge landlords to pass this on to their tenants by reducing rentals,” Mr Heng said.
3) HELPING FIRMS MANAGE CASH FLOW
The stabilisation and support package will also provide “economy-wide support to help enterprises with cash flow”, said Mr Heng.
- Corporate income tax rebate: At a rate of 25 per cent of tax payable, capped at S$15,000 per company, this rebate will benefit all tax-paying companies for year of assessment 2020.
To put more cash in the hands of enterprises, several tax treatments under the corporate tax system will also be enhanced for year of assessment 2021. For instance, firms will be given a faster write-down of their investments in plants and machinery, and renovation and refurbishment.
- Working capital loan under enterprise financing scheme: The maximum loan quantum will be raised from S$300,000 to S$600,000, and the Government’s risk-share will be increased to 80 per cent from between 50 per cent to 70 per cent.
- Flexible rental payments: Tenants and lessees of Government-managed properties can approach the relevant agencies “to discuss options for more flexible rental payments such as instalment plans”, which will be assessed according to the firm’s individual circumstances, said Mr Heng.
- Property tax rebate: A 30 per cent rebate will be given for the accommodation and function room components of hotels, serviced apartments and meetings, incentives, conventions and exhibitions (MICE) venues.
International cruise and regional ferry terminals will receive a 15 per cent rebate, and the rebate for the integrated resorts will be 10 per cent.
4) TAX REBATES FOR AVIATION
Changi Airport will receive a 15 per cent property tax rebate. Rebates will also be given on aircraft landing and parking charges.
There will also be assistance for ground-handling agents and rental rebates for shops and cargo agents at Changi Airport.
5) SUPPORT FOR POINT-TO-POINT TRANSPORTATION
A support package worth S$77 million will be provided to help taxi and private-hire drivers, as previously announced by the Ministry of Transport.
The ministry had announced the package, with the largest component being a S$73 million Special Relief Fund that will help active full-time taxi and private-hire car drivers defray business costs.
The Government will contribute S$45 million towards the whole package, with the remaining provided by taxi and private-hire car operators.
“We will continue to monitor the situation closely. If needed, we can and are prepared to do more,” said Mr Heng.
A care and support package will also complement the stabilisation and support package in providing “timely help” to households with the cost of living. More help will be given to the less well-off, added Mr Heng.
The stabilisation and support, as well as the care and support packages, add up to a total budget of S$5.6 million.
Separately, agencies at the forefront of fighting and containing the outbreak will get an additional S$800 million, the bulk of which will go to the Ministry of Health.
On behalf of the Government, Mr Heng thanked “frontline officers who have been working tirelessly, day and night, over weekends” in fighting the outbreak.
“You exemplify the resilience and indomitable spirit of our people. But please take care of yourselves,” he added. “I am confident that together, we will stay strong, and get through these trying times.”